How to protect house and pay off debts - sibling is gambling

[jazzjazz!]

Hi all,

A family member of mine has a gambling addiction for approximately 3-4 years.

As expected the individual has debts, these total approximately £35,000, in addition to this they have a mortgage on their home. Naturally keeping up with the outgoings had become difficult.

I sat down with this individual and gone through their finances, it turns out on a tight budget they will be left with approximately £400 surplus per month. Relative to the debts, this will take years to clear and incur interest along the way which will reduce the effectiveness of the £400 further.

The individual is a single parent with 4 children aged 20, 13, 14 and 7, the house has 3 mortgage charges all with the same lender, the mortgage is a repayment product and the early repayment charge across all 3 charges is approximately £3,000. I have calculated that if they moved their mortgage to another lender consolidating their mortgages and go onto interest only rather than repayment, their debts can be cleared in approximately 2.5 years.

Now the problem is that this individual has very poor credit rating. What are our options?
We have come up with a plan, this is that if the individual was to gift the property to another sibling who will then get an interest only mortgage this will provide the much needed funds. Once the debts are paid and the individual is clean off gambling the property ownership can be returned

This is a solution that we have with limited knowledge of the legal side of things; however I am keen to know of any other options that may exist.

Thank you for reviewing this post and any input that you may have.

[Cinderella66]

Re: How to protect house and pay off debts - sibling is gambling

Have they considered an Individual Voluntary Arrangement. Might be worth talking to an accountancy who provide that service for some advice.

Hi all,

A family member of mine has a gambling addiction for approximately 3-4 years.

As expected the individual has debts, these total approximately £35,000, in addition to this they have a mortgage on their home. Naturally keeping up with the outgoings had become difficult.

I sat down with this individual and gone through their finances, it turns out on a tight budget they will be left with approximately £400 surplus per month. Relative to the debts, this will take years to clear and incur interest along the way which will reduce the effectiveness of the £400 further.

The individual is a single parent with 4 children aged 20, 13, 14 and 7, the house has 3 mortgage charges all with the same lender, the mortgage is a repayment product and the early repayment charge across all 3 charges is approximately £3,000. I have calculated that if they moved their mortgage to another lender consolidating their mortgages and go onto interest only rather than repayment, their debts can be cleared in approximately 2.5 years.

Now the problem is that this individual has very poor credit rating. What are our options?
We have come up with a plan, this is that if the individual was to gift the property to another sibling who will then get an interest only mortgage this will provide the much needed funds. Once the debts are paid and the individual is clean off gambling the property ownership can be returned

This is a solution that we have with limited knowledge of the legal side of things; however I am keen to know of any other options that may exist.

Thank you for reviewing this post and any input that you may have.

[Kati]

Re: How to protect house and pay off debts - sibling is gambling

Tagging [MENTION=48934]Debt Camel[/MENTION]

[Debt Camel]

Re: How to protect house and pay off debts - sibling is gambling

No reputable IVA provider would set up an IVA for someone until there is a reasonable period where they have ceased gambling. You do NOT want to go to the providers that might turn a blind eye to this. If your sibling is still gambling any IVA is very likely to fail, then the IVA fees (thousands) are added to the debts.

[Debt Camel]

Re: How to protect house and pay off debts - sibling is gambling

I have calculated that if they moved their mortgage to another lender consolidating their mortgages and go onto interest only rather than repayment, their debts can be cleared in approximately 2.5 years.
....
We have come up with a plan, this is that if the individual was to gift the property to another sibling who will then get an interest only mortgage this will provide the much needed funds. Once the debts are paid and the individual is clean off gambling the property ownership can be returned .

It is no longer easy to switch to an interest only mortgage. No mortgage lender would take on this person with a poor credit rating and gambling all over their bank statements.

Nor would one of the siblings find it easy to get an interest only mortgage,

Gifting a property then planning to gift it back again has all sorts of implications for benefits and tax, including stamp duty and capital gains tax.

If one of the unsecured creditors is large enough to bother look at the situation in detail, they could view this as an attempt to hide assets and they may decide to make your sibling bankrupt - at that point the gift of property would be overturned by the official receiver and the house would be sold.

Such gifts also go very badly wrong if something happens to the sibling who "temporarily" owns the property - death, bankruptcy, divorce.

Do not go down this route is my advice.

[Debt Camel]

Re: How to protect house and pay off debts - sibling is gambling

So what can you do?

Well there was little in your question about actually stopping gambling. Unless the sibling is DETERMINED to do this, any plan will fail. I suggest you give the kids clothes for Christmas and birthday presents and send food parcels when required but otherwise step back and watch a slow motion train crash

That sounds harsh but unless they want to stop, any help from you will just be funding their gambling habit, wasting your money and postponing the time until reality hits.

If they are serious about stopping they need to

a) self exclude from any local bookies - make sure one of you goes along with them "for moral support" and to see it actually happens
b) add GAMBAN https://gamban.com/ to their phones, PCAs and tablets. It works
c) regisiter with CIFAS for protective registration - this makes it much harder for them to get any more credit.

If they won't do these steps they are not serious. See https://debtcamel.co.uk/gambling/ for other steps.

Then cancel all DDs and CPAs to their unsecured creditors and contact StepChange for a debt management plan. Interest frozen on their debts, £400 a month will start to see them dropping. Their poor credit rating won't get much worse.

When all that is done (NOT before) if they have used payday lenders frequently, look at reclaiming an interest they paid - this could really speed up the DMP. See https://debtcamel.co.uk/payday-loan-refunds/

[warwick65]

Re: How to protect house and pay off debts - sibling is gambling

Hi
As DC has said , an IVA is a bad move ( I think) for a variety of reasons, 1 is that as far as I am aware the terms of the IVA could include releasing equity in the house which with a bad credit score may be difficult.

As far as the gambling is concerned, has your sibling had treatment for this or are they still in denial or are they promising they have stopped. Trust me when I say that a gambler , like other addicts will promise the earth and often not deliver

This is a link to a test to see if you have a problem http://rethinkgambling.org/gambling-screen-test/

here are some resources and info about gambling http://aquarius.org.uk/gambling/

They are based in the midlands but there are national charities as well. Please do not be fooled by some who say that gambling is all about choice, yes of course it is a choice but some people find making that choice much harder than others