Sample case studies relating to financial matters that we have dealt with at East Staffordshire CAB
Sample Case Studies are provided here for guidance purposes only. They should not be taken as the answer to your specific problem. We shall be including more case studies each month, if you do not see something that helps with your situation do not hesitate to obtain advice from your local CAB office.
Click on a question below to view the advice given.
My elderly father is becoming forgetful and has asked me to take over managing his financial afairs. The bank told me I would need "power of attorney" to do this and said I should arrange this now before his memory gets any worse. How do I go about it?
I had a successful career and decided to start my own business. However, I hadn't really expected to earn so little for the best part of a year and now I find myself in debt around £53,000. I don't know where to turn. I've Heard about Individual Voluntary Arrangements as an alternative to bankruptcy. Would this be right for me?
I've heard quite a lot about the Child Trust Funds recently but I don't know if I can apply. Who is it for and what do I have to do?
When I took out a loan I was sold insurance that promised to cover my repayments if I lost my job or was too ill to work. Recently I was made redundant but my claim has been turned down. Is there anything I can do?
We’re thinking of buying a timeshare, but we’ve heard lots of horror stories about them. Would we be making a big mistake?
Q I had a successful career and decided to start my own business. However, I hadn't really expected to earn so little for the best part of a year and now I find myself in debt around £53,000. I don't know where to turn. I've Heard about Individual Voluntary Arrangements as an alternative to bankruptcy. Would this be right for me?
A An Individual Voluntary Arrangement (IVA) is an agreement between you, the debtor, and those people you owe money to, the creditors.
An IVA does allow you to avoid going bankrupt to pay off your debts, instead you pay off a portion of the debt over a fixed period. However, you really need to get advice on your particular circumstances before deciding on your course of action. It may not be the best thing for you.
An IVA allow you to pay off your debts over a number of years. Some of the debt may be written off and you may be able to keep assets like your house. It begins with a formal proposal to your creditors to pay part or all of your debt and if agreed is legally binding on all your creditors, they cannot change their mind. The downside is that if you have equity in your home or valueable assets you may have to release them. Also you MUST be able to afford to make the offer or repayemenst and keep them up; if you fall behind you could end up much worse off and in greater debt because the costs of your failed IVA, which can be quite high, will be added to your debt. And your creditors will be able to take action against you and you could then end up bankrupt.
For more information and to find contact details of your nearest CAB, go to www.adviceguide.org.uk
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Q I've heard quite a lot about the Child Trust Funds recently but I don't know if I can apply. Who is it for and what do I have to do?
A The Child Trust Fund is a long-term investment account to help save money for when your child turns 18. If your child was born after 1 September 2002 and you get Child Benefit for your child, you will be sent a Child Trust Fund voucher when you start getting Child Benefit. When you get this voucher, make sure you open a special bank or building society account with it, so that the Government can start paying money into your child's account. It will not affect any benefits or tax credits you receive.
The Government will make an initial payment of £250 into the account and another payment of £250 when your child is seven years old. If your family is on a low income your child will get twice that amount paid into their Child Trust Fund account. Friends and family can also pay up to £1,200 a year into the account and you wont have to pay any tax on those savings. Money cannot be taken out of a Child Trust Fund account until your child is 18.
For more information about the Child Trust Fund, including how to open an account, go to www.childtrustfund.gov.uk or for more information on benefits you may be entitled to go to www.adviceguide.org.uk.
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Q When I took out a loan I was sold insurance that promised to cover my repayments if I lost my job or was too ill to work. Recently I was made redundant but my claim has been turned down. Is there anything I can do?
A The payment protection insurance (PPI) business is currently facing close scrutiny from regulators after concerns were raised by Citizens Advice and others about excessive profiteering and the high number of policies that fail to pay out. In recent months half a dozen companies have also been fined for mis-selling PPI.
Mis-selling occurs when a company gives false information about a policy, or recommends one that is unsuitable for you, and you are unable to make a claim - for example, if you are above or below the given age limit, are unemployed or work part time.
If a company recommends a payment protection insurance policy, it must take reasonable steps to ensure it is suitable for you. If companies do not offer a choice of policy, they might still be mis-selling if they fail to provide appropriate information about the policy in good time for you to make an informed decision about it and it turns out to be unsuitable.
If you think you have been mis-sold, you should write to the company concerned requesting a refund of the policy premiums (if the policy is completely unsuitable), or compensation if you were misled regarding what you could claim. If the complaint is not resolved within eight weeks, you can ask the Financial Ombudsman Service (FOS) to intervene. For more information about PPI and making a complaint to the FOS consult your local Citizens Advice Bureau or go to www.adviceguide.org.uk
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Q We’re thinking of buying a timeshare, but we’ve heard lots of horror stories about them. Would we be making a big mistake?
A Many people with timeshares are very happy with them, but you’re right to be wary – there are a lot of rogue traders out there. The law is going to be tightened up to stamp out some of the worst abuses, but this won’t be happening until 2010. In the meantime, follow our top tips to avoid being conned:
- Remember that holiday clubs, boats, timeshare re-sales and contracts lasting less than three years are not covered by current timeshare legislation, so you do not get the same cancellation rights or protection if things go wrong.
- Be wary of any prize or holiday which has to be collected at a presentation. Don't claim it unless you want to undergo several hours of high-pressure selling.
- If you are approached on holiday, don't get into a taxi or bus provided by a sales rep. Companies often choose locations away from your hotel and out of town, making it more difficult to leave a sales presentation.
- If you are unsure about a deal, leave. Ignore suggestions that the special offer may not be available later on.
- Be very wary of making an upfront payment to clinch the deal.
- Be wary of cash back schemes. If the company goes bust before the cash is due, or you cannot find them, you will never get the money.
- Ask for written information about costs, companies involved and responsibilities. Take this away and read it before signing. Written information in your own language is a right.
- If you change your mind, act quickly. Check the small print for information about a cooling-off period. You may be able to cancel. If they have lied to you or broken the agreement and you paid by credit card or have a credit agreement, get advice about claiming from the credit company.
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Q My elderly father is becoming forgetful and has asked me to take over managing his financial afairs. The bank told me I would need "power of attorney" to do this and said I should arrange this now before his memory gets any worse. How do I go about it?
A Your father can create what is known as a lasting power of attorney (LPA). An LPA is a legal document made using a special form. It allows you to choose someone you trust to make decisions on your behalf about things such as property and financial afairs or personal welfare at a time in the future when you no longer wish to make those decisions or may lack the mental capacity to make those decisions yourself. You can make an LPA at any time, but it cannot be used until it has been registerd with the Office of the Public Guardian. LPAs replaced enduring power of attorney (EPA) on October 1, although EPAs already registered before this date are still valid, and an EPA created before this date can still be registered. If your father also wants you to be able to make personal welfare decisions on his behalf he will need to make a separate Personal Welfare LPA. Personal welfare decisions can only be taken by somebody else when you are incapable of making them for yourself; for example if you are unconscious or because of the onset of a condition such as dementia.
For more information and details of how to create an LPA go to the website of the Office of the Public Guardian, the Citizens Advice website or contact your nearest Citizens advice Bureau.
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