Why was my windfall used to pay off debt?
Mrs J.N.O. writes: After my husband died and left me with two teenage sons, I got into debt, owing about £14,000. I found a reliable debt management company – Moneyplus – and made arrangements to pay off my debts, eventually entering into an Individual Voluntary Arrangement. I reached a point where only about 18 monthly payments were left due, but meanwhile my two sons and I inherited some money which I invested. Half belonged to a son who is mentally ill. When this matured, Moneyplus took all the money without my knowledge and now wants me to set up another arrangement. THIS is not a happy situation. I am afraid the copy you sent me of your relative’s will only names you as the beneficiary and you invested all the money in your own name. There is nothing to show any of it ever belonged to your son, even if that is what you intended should eventually happen.
The cash was invested with Legal & General and when it matured the company quite rightly asked Moneyplus what to do with the proceeds.
It was legally obliged to say that the money should be used for the benefit of your creditors. Neither Legal & General nor Moneyplus had any choice in this and neither did anything wrong.
With your consent, I have discussed all t his with Manchester- based Moneyplus, which has been helpful. Your debts originally stood at just over £ 10,000, a bit less than you thought, but Moneyplus got your creditors to agree to accept just over £8,500 which you would pay off at the rate of £142 a month over five years. This saved you around £1,500 and you faced no more interest charges.
Moneyplus was recently told about the Legal & General investment. Boss Chris Davis told me: ‘It is unfair to say we “took” the funds that belonged to Mrs O. It was Legal & General that made us aware of it and therefore we are bound to include the windfall in the arrangement.’
He explained you have not been asked to sign up to any new arrangement. Instead, you have been asked to agree to change the terms of the current one so your creditors can be paid in full and the remaining cash from the windfall can go to you.
Because you mistakenly thought this was a new long-term arrangement, you refused to discuss this with Moneyplus. I have been acting as a middleman, passing messages, questions and answers backwards and forwards.
The effort has been worth it. Moneyplus arranged a meeting of your creditors, who agreed to waive their right to charge any interest. You finally consented to the deal and Moneyplus has now sorted out your debts and paid your creditors.
There is £7,695 remaining. This is yours with nothing more to pay. Your Individual Voluntary Arrangement can be closed and you can move on with no debts hanging over you.