Inheritance and Debt

bobslack

Hi all,

Hope I'm posting this in the right place, if not I apologise!

The situation is as follows...

I'm currently in a DMP with Payplan paying £276 a month towards my debt (should be finished by May 2013.) I've got my credit report and that shows most of my debts as being 'satisfactory'. A few have gone into default now, unfortunately, and the Lloyds TSB ones have been showing as 6 payments late for over 12 months with no change to them.

I'm possibly about to come into approx £10,000 following an inheritance, and hopefully get some backdated pay from a payrise of £3000.
My debts are:

Lloyds credit card, loans etc - £8760
First Direct Overdraft £430
HFC Credit Card £710
HMV Card £535
Barclaycard £1580
Halifax Card £2114
Car £5200
A total of approx £19000.

My questions are as follows:

1.) How can I best use the money to get rid of my debts? Which items should I look to pay first? I'm in a DMP so would Payplan be able to get a settlement figure?

2.) Would a 'partial settlement' on my credit file go for me or against me in any future credit searches?

3.) How can I look to improve my credit score while in a DMP? I'm looking at the possibility of getting a new car as I'm paying £300 a month at the moment - while a new car would cost me half that with the difference going to my DMP.

Sorry for going on but its quite a confusing situation!!!

Thanks in advance!!

louisewh123

Hi!

I would pay off the ones with the higest interest/paying the most monthly on. We have 60k in debt and are with plans with DCAs and they are always offering settlement debts! ( like i have got £40,000 lying around! Ha! )

Let us know how you get on!! x x

Tixy

I would definately discuss it 'in theory' with Payplan. But would recommend you pay off whichever if any are stul charging you interest.

Partially settled is not as good as settled on your report (but obviously better than defaulted or gone away)

Are you planning to get a new car on finance? (sorry not sure from your post) Because as part of the DMP you will have agreed not to take on anymore credit. It would mean Payplan could terminate the agreement.

I think people usually try to get reduced full & final figures themselves outside of the DMP - not sure if this is because Payplan would suggest you have to spread the money out evenly between creditors or just because creditors tend to accept lower if dealing with you directly.

bobslack

Hi,

It would have been on credit - when I set the DMP up Payplan asked if there was any way I could reduce the amount I paid for the car each month and I advised that the only way to do it would be to set up a new finance deal which would save me quite a bit. They said to try that and get back to them.

I've worked out that I can probably afford 66% of the total balances as a full and final settlement. Should I offer this straight away, or start low and increase the offer?

Also, what is the likelihood of such an offer being accepted?

Thanks in advance!

RAS

Read up a lot first but try full and fials at about 30% as a starting point, since you are in a DMP.

rog2

bobslack wrote: »

Hi,

It would have been on credit - when I set the DMP up Payplan asked if there was any way I could reduce the amount I paid for the car each month and I advised that the only way to do it would be to set up a new finance deal which would save me quite a bit. They said to try that and get back to them.

I've worked out that I can probably afford 66% of the total balances as a full and final settlement. Should I offer this straight away, or start low and increase the offer?

Also, what is the likelihood of such an offer being accepted?

Thanks in advance!

Please do NOT consider setting up a new 'Finance Deal' otherwise known as a 'Consolidation Loan'. Whilst this 'may' reduce your monthly payments, it will, often, increase both the time that it will take you to pay off your debts, and increase the overall amount that you pay.

A 'Full and Final' settlement offer is a very good way to go, given your circumstances. However, you must be extremely careful as creditors are, by nature, a crafty breed:

As suggested, start off with a relatively low offer - 30% is a good starting point and many, but not all, creditors/dcas will accept such an offer, especially as you are already on a DMP, as this will give them a relatively 'safe' return. It is always easier to negotiate a higher settlement figure than a lower one.

Please, always ensure that the creditor/dca confirms, in writing, that the payment will be accepted in "Full and Final Settlement" of the account - accept no other wording - and that they will mark any defaults on your crf as satisfied.

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

bobslack

Hi,

Thanks for the replies.

It was my wording with the previous post - I'm not planning on taking a consolidation loan or anything, I meant simply to get a new car that costs less per month than my current one on finance rather than anything to do with the DMP.

Lloyds did make a settlement offer before I found out about the inheritance, so I think they would be prepared to accept something.

Here's hoping it all goes smoothly!

gizmo111

THis is your chance to be totally debt free!
Find out how much it is to settle the car loan - even if it means downgrading the car.
Send off to all your creditors for CCA requests, and see what they come back with, if they have no agreement or it is unenforceable then you are in a great position to settle at a low %.
For all of them I would offer around 25% of the balance and those with agreements expect to pay around 45%.
Write to them and say that a 3rd party (family member is offering the money). Whatever you do, don't pay the inheritance into a bank you owe money to.
Have you claimed back charges on these accounts? That is likely to reduce the balance quite a bit.
Make sure you keep some money back say £500 to start an emergency fund and then reasses your finances and start saving.
Apply for a card Aqua/Vanquis and pay it every month to rebuid your credit rating.

bobslack

Thanks for your replies.

I'm fairly naive when it comes to this, sadly.

Having read the forum, am I right in thinking the CCA request is a request for the original, signed credit agreement? If so, what position does that leave me in regarding the outstanding balances owed?

I haven't claimed bank charges etc back yet. I cancelled the PPI on the accounts when I set the DMP up 2 years ago.

Also, I'm in a position where on most of my debts, the debts have not yet been sold to a debt collection agency - does this make it more or less likely that they would accept full and final settlements? On one of the credit cards, my DMP payment is actually above the minimum payment required, so they are currently charging full monthly interest.

I'm paying the inheritance into my mum's bank account - then she will be writing the cheques to the companies so there's no problems there. I don't pay anything into my creditor bank accounts other than the monthly payments through Payplan.