advice on full and final offers

jpca

I am working with business debt line to try and get an IVA or dmp (not sure which yet) to sort out my finances. My mother in law has offered a lump sum of cash (equity from her house) to help us out but it only equates to 40% of debt total. Does anyone have any experience of offering creditors full and final offers/ any idea what they would accept and whether I'm best entering into an IVA or DMP? Debt is £75,000 with HSBC, Natwest, Egg and Barclays.
Many thanks!

maxineperry

Hi there

I have £60,000 in debt to various loans and credit cards. Ive just visited the cccs.co.uk website and they have reviewed my situation and advised me to do an IVA. Im really scared but they deal with all my creditors and stop the wolves from coming to the door, they cant even contact me. Problem is if you offer full and final settlement it still stays on your credit file as the debt being unsettled, they just stop chasing you for the money i think?? At least with an IVA after 5 years its gone but your credit is still ruined, its sooo depressing isnt it, at least i had a ball getting into debt...lol

GeorgeUK

I would talk to one of the free debt charities concerning this.
It's alot of money, but creditors usually only accept settlement offers if you've already defaulted. 40% may not be quite enough.

(Taken from Fermi's signature)

Professional, free and impartial advice on debt problems can be obtained from several charitable and 'not for profit' organisations. They never make a penny from the advice they give, which means it will be given with only your best interests at heart. You can contact:

Your local CAB Office and ask to speak to a 'money advisor'
The Consumer Credit Counselling Service (CCCS) - Tel: 0800 138 1111
National Debtline - Tel: 0808 808 4000
Payplan - Tel: 0800 917 7823

jpca

Thanks so much. I thought if I offered full and final settlement and they agreed, it would go on my credit file as settled.
Yes, Maxine Perry, so depressing!
Trying very hard to sort this mess out as have a little toddler and finding keeping creditors at bay very difficult (with up to 10 phone calls a day and only set to get worse).
Thanks for the advice x

SerenaGoode

Hi jpca,

This may not be welcome, but is it really wise to take the money as a lump sum from your mother. You may simply be throwing good money after bad.

Think of it this way - you may be unable to sort this out in spite of taking that money - if so, it will have been given to the banks to no avail in a losing cause, thus impoverishing your mother for no gain - if the money is on offer it may actually be of more use to you either 1) as ongoing support while you are in debt management or 2) later on when you have cleared or defaulted on the debt.

First question:

Do you have enough income left after priority payments (mortgage, bills, tax, basic living expenses etc) to cover paying some money into the unsecured debts? If so, you will be able to give them the same amount whether you are paying off £75K or 40% less though you may have a better chance of persuading them to accept this arrangement if the debts are lower.

Either way, your credit file will be harmed and it may be better to accept that now rather than taking help which will only stave off the problem.

Obviously I don't know the details - a SOA would be useful - but I have had to confront a very similar problem myself recently with an offer of help from my mother that I felt obliged to refuse. I can face struggling with debt on my own, but if I lose her money in the battle I will feel that I have made a bad mistake. Even with a toddler, bankruptcy or an IVA are not the end of the world, and at least there would be a clean start at the end of it (without your mother's money being lost in the meantime).

Deep_In_Debt

I made some F&F's to clear off some debts. I'm on a DMP with CCCS and saved up some money. I waited until my debts had been passed to DCA's (debt collection agencies) and then offered the F&F. The original creditors would accept nothing less than 70% of the outstanding but the DCA's accepted 45% and 55%. You need to make sure that you get this confirmed in writing first and that they nor an associate or third party will chase you in the future for the remainder and that your credit file is marked with satisfied before you offer any money.

Good luck with it and expect some to'ing and fro'ing if you go down the F&F route. Takes a bit of time and patience.

jpca

thanks very much - going to have a think...

Deep_In_Debt

A lot depends on your payment history too. If you've been meeting the minimum payments then it's unlikely that creditors will accept an F&F as they may expect you pay the full amount. However, if you've shown difficulty, like being on a DMP for a while or offering them reduced payments then they may be more amenable. Just my experience though.