IVA lump sum payment

whitefuschia

My husband and I are helping his parents with their debts. We think we will be able to come up with a lump sum payment to their creditors which will be approx. half the debt. Is this likely to be accepted as full and final payment?

Useless_with_wonga

Hi,
Firstly if this is your plan then do you realise that you can pursue this avenue by yourselves without having to enter into an IVA.
There are template letters that you can use/copy to offer Full and Final settlements to your creditors.
There are certain criterea that you need to be aware of but mainly don't pay anything until you have your offer accepted in writing and written confirmation that the payment is in FULL settlement and that they nor any third party will pursue the debt and they release the debtor from any liability. You also need to ask them to mark any records/credit file in relation to the debt to be marked settled.
Make them aware that the offer is for a limited time and that the money will not be available ad infinitum.
You can of course enter into an IVA and go for the option of a lump sum offer however i know little about this tactic and it seems illogical to pay an Insolvency Practice to do this for you when you can attempt it yourselves.
If you try and fail then that might be the time to reconsider an IVA.
As to what they will accept who knows really. Sometimes it can be very little sometimes as much as 85%.
From experience if the Debt is with a DCA they tend to be easier to deal with and more likely to accept an offer as they have only paid as little as 10% for the debt from the original creditor in the first place so they still turn over a profit.

insider66

whitefuschia wrote: »

My husband and I are helping his parents with their debts. We think we will be able to come up with a lump sum payment to their creditors which will be approx. half the debt. Is this likely to be accepted as full and final payment?

Hi there

it would help if you gave some more details

are his parents homeowners?
are they in an iva or dmp?
any other assets?

whitefuschia

useless with wonga - where can I find the templates for those letters?

insider66 - they are homeowners with some equity in their house. They have only just come to the raelisation that they can't afford their debts so are not as yet on a dmp or iva - we are trying to sort them out before their creditors come after them.

insider66

http://www.insolvencyhelpline.co.uk/debt_factsheets/full_and_final_settlement_offers.php

just as with any other bartering, as that is what you are doing! go in low.
try offering them 475 split between all the creditors, as that is the cost to make yourself bankrupt, and let them know that bankruptcy is the next step if the offer is not accepted.
please don''t show any signs of weakness or try to appeal to their better nature etc. they will only make you pay more

good luck

insider66

obviously bankruptcy is not the next step, but do they need to know that?

whitefuschia

if we decide to go this route what's the protocol for making payments until the settlement is agreed? Can we tell each creditor they (the in-laws) can only pay £50 pm (for example)?

Also, we probably can't get the cash together until March next year - can we send final settlement offers now, but tell them they won't be settled for another 5 months?

Deep_In_Debt

Hi
There is a standard letter on the National Debtline website that you can use to negotiate a monthly payment. You may need to send off an income and expenditure details so that they can see that it is all they can afford.

I'd hold off sending the F&F letters until March if that is when they are getting the money. Creditors are unlikely to accept your proposals unless they know the money is there to pay it. Also if creditors see that they have been struggling to pay for a few months by way of reduced payments, they may be more open to negotiating a F&F.

Useless_with_wonga

Deep_In_Debt wrote: »

Hi
There is a standard letter on the National Debtline website that you can use to negotiate a monthly payment. You may need to send off an income and expenditure details so that they can see that it is all they can afford.

I'd hold off sending the F&F letters until March if that is when they are getting the money. Creditors are unlikely to accept your proposals unless they know the money is there to pay it. Also if creditors see that they have been struggling to pay for a few months by way of reduced payments, they may be more open to negotiating a F&F.

Yep, What Deep in Debt said exactly the way i see it too. Good Luck