Snowballing and Full/Final Offers

sallyjo_2

Hello, advice please. I want to know if it is possible whilst on a DMP to snowball creditors, one by one, but offering full and final settlements to them. I won't be in a position to offer all of them respectable f&f settlement figures but I may be in a position in a few months to get rid of the lowest 2 or 3 balances. I already did pay one off, with the knowledge of my CCCS counsellor, but is it 'kosher' to do that with the rest of them?

My DMP is with CCCS and is working well. I pay as much as I can each month on dependable monthly money but sometimes earn overtime or am given money by friends/family/boyfriend and I put this into killing off the debt as well.

Instead of applying the extra to the DMP when I get it, I would like to settle the accounts with each creditor as I can afford to, snowballing the next creditor on the list and offering a full and final settlement figure on a lowest balance first basis instead of largest interest payments - most of my creditors are about the same rate and most have been helpful).

I do not want to undermine the DMP (I also managed to double my DMP monthly payments last year through cheaper utilities, insurance and just better moneysavingexpertise!) but when I get extra, I just want to see that list of creditors go down 10-9-8-7-6 fashion as well as the monthly balance as fast as I can afford to!

Is this possible, advisable or not the best approach. Thank you!

System

There's nothing preventing you making an offer to your creditors, but I'd imagine you'd have to make the offer to each creditor in the DMP. (That's a guess - please check it out with whoever runs your DMP!)

Why not phone each creditor and say "I've got X amount that I've been given to help towards my debts and want to know if you'd accept £x, which is a pro rat'd offer figure based on my total debt. Obviously, if you don't accept this, I'll be including the amount I've offered you as part of the offer I'll be making my other creditors..."

They can only say "NO!"

What may really go against you though is that you're making regular payments (and it sounds like you're throwing every last penny at your debts) so although it's taking a while, you'll eventually repay most or all of your existing debt. So your creditors have the option of accepting a reduced settlement for a lump-sum now or playing the long game and getting virtually the lot back in the end.

Best wishes
Dave

Xbigman

You should really put any extra through CCCS so they can divide it up. But you say your creditors are all about the same rate, so I assume they have not frozen the interest? If not you have more moral leeway to pay a few off. You should let CCCS know you are going to try and !!!!!! some smaller debts before you do it.
Regards



X

sallyjo_2

Thanks Dave. I don't anticipate having enough to make a reasonable amount for them all - it would end up being 10% offers to the largest ones! It may be worth a try, and I'll ask the CCCS counsellor.

Earlier this year I did pay one creditor off (smallest balance) on a full and final offer, and prior to doing this consulted with my CCCS counsellor. The response was that they preferred over payment to go into the DMP to make that go down faster, instead of making one offer at a time, but she appreciated my wanting to reduce the number of creditors down. I appreciate their position too. The CCCS DMP works so well for me, they are great!

In the case of that first creditor, they didn't freeze interest, nor did the amount the DMP paid them cover the whole of the interest payment, and the principal went up and up. It made sense to get rid of that company quicker, plus I had enough money to make them a decent 70-80% offer. They accepted it quickly, though they have yet to send me a letter saying the account is cancelled and paid off as requested.

Psychologically it really feels as if I'm making progress if I 'knock them off the list' one by one. Throwing extra money at the DMP has a lesser effect, though I have done that as well with 3 increases as I've made more money last year.

sallyjo_2

Most of my creditors froze the rate, for a year. The year is coming up in a month or so. Already the amount of phone calls I am getting from them ( I don't take their calls, I always write letters) is increasing. Must be Christmas!

The FFSing of the smaller debts is what I want to do. I did one this year, and may be able to knock down the next two before this time next year. That will leave me with 5, and 2/3 of the remaining debt. If I am not mistaken of those 5, four froze the interest. That smallest debtor did not freeze any interest, but that is not why I offered a settlement, only because I could afford to.

It might make more sense to settle the ones who haven't frozen the interest faster, but then I am loathe to keep paying at a lower rate the ones who have been helpful to me and hurry to pay off the ones who have not been helpful. It makes financial sense but seems perverse. I'd much rather just try to pay them off, one at a time, lowest balance first, as and when I have enough to make an offer at 70% That seems fair, even to the ones who have not been particular helpful to me.

In any event, I would always discuss with CCCS before I tried.