Help Please, so much to sort out!

monday_blues

Hi Everyone, I hope you can help me.

Me and OH have a business which we have decided to wind up, (long story), but WANT and need to do this. Unfortunately we have unsecured debt to the tune of £30k.

When we sell the business we should have around 16-18k hopefully which we can put towards the debt. Thats only half of what we owe.

Although we have no arrears on any of the unsecured loans/credit cards, it is always a struggle to pay and pay the min on the credit cards every month. Until the job situation is sorted out, we definitely wont have enough money every month to make these repayments, so need to use the 16-18k wisely, in order to stay in our house and keep on top of the bills.

So my question is, will our creditors look at full and final offers when we have no arrears (only the odd late payment)? Do I contact them and say that although there have been no missed payments, when the business wraps up, there definitely will be and instead of that happening, would they accept £x as a full and final settlement.

What we have credit wise is this:

Abbey Loan, 5.9% - £16,000 outstanding - £320 pm (due to finish June 2014)
M&S Loan 7.9% - £7,786 outstanding - £135.97 (due to finish July 2013)
IF Credit Card, lifetime rate of 7.9% or something - £3971, min pay £40 pm
Morgan Stanley credit card, £2934 - 20% or more (not sure)? - min pay £58

Total, £30,691

What should we do.

If we cannot bring our monthly expenditure down, then we will have to sell our house, and now isnt the best time to be doing that. Any advice would be most appreciated, i dont know what to do, or how to broach the subject with my creditors.

Thanks,

halight

Hi im sure somone will be on tonoght that will be able to offer you some help.

I will bump you up for now

All the best and good luck

mischiefmaker

bumping this up

skintandscared_2

I am by no means an expert, but I doubt that any of the creditors will be willing to talk F&F settlements yet, when there have been no defaults or missed payments.

What they will ask is what will your income be after you have wound up the business?

I'd recommend working out a Statement of Affairs based on what your income will be. Put down all essential bills and expenses and see what is left in the pot each month. If there is enough to make reduced payments to your creditors then a DMP or IVA may be the best route.

Is there equity in your property that you need to protect? If you take out a DMP there is a chance that creditors MAY try and put a charge on your property (I've read of cases where it's happened on here) but they often are happy to accept the reduced payments and often reduce or freeze interest. If you do an IVA there is also a chance that creditors will expect you to re-mortgage in the final year to release equity to pay off your debts in full.

It would be well worth talking to someone at the CAB, or one of the free debt charities CCCS or PayPlan. Do NOT speak to the fee-charging debt managers - they are a complete rip off!

monday_blues

thanks for the advice, I will do an updated SOA once I know more about the income once the business winds up. we do have equity in the property, probably around 40k even given the drop in value.

the loan of £16,000 is with the same lender as the mortgage. Does that make a difference, would they do a F&F to save defaults on mortgage/loan. Or do I start letting it get into arrears to try and get a F&F (although I know that isnt good solution).

skintandscared_2

monday_blues wrote: »

thanks for the advice, I will do an updated SOA once I know more about the income once the business winds up. we do have equity in the property, probably around 40k even given the drop in value.

the loan of £16,000 is with the same lender as the mortgage. Does that make a difference, would they do a F&F to save defaults on mortgage/loan. Or do I start letting it get into arrears to try and get a F&F (although I know that isnt good solution).

I think if you tried to negotiate an F&F settlement now they would refuse. What incentive is there to accept? They could simply convert your unsecured loan into a secured one and sit and wait for their money if they have to. I have read about an alarming amount of creditors trying to turn unsecured debt into secured debt by applying for charging orders.

Have you thought about using the money you have to settle all but the Abbey loan? Then try and negotiate lower payments on the Abbey loan? If you go down the DMP or IVA route, all creditors will be sent a notification of your budget and will become aware of each other. At the moment, Abbey don't know what other debt(s) you have. Or maybe, if the other debts are gone, you could overpay the Abbey loan (if they allow this) and get rid of it quicker?

monday_blues

thanks skintandscared. i kind of agree with you, just dont know which way the lenders think. best case scenario, we have 18k, then could pay most of the abbey loan off (less £1,000) and the high interest m/stanley c/c which would mean lesser payments per month. this may help us avoid a DMP or IVA. If we still have the big abbey loan to pay every month on top of the other stuff, dont think the income will stretch that far and we'll start defaulting or need to go DMP/IVA/sell house. I think?

This is all so confusing and I've got so much to sort out, how did our finances get in such a mess??