Help Needed Please! CC Debts - DMP versus default for F&F

newbiehelpneeded

Hi All,

I would be very grateful for some help. I owe two CC companies. Capital 1 around £14k and Virgin MBNA arounnd £13k on a basic of circa 34k gross.

I have previously met all my monthly payments, mortgage etc, but have reached the point that the interest on the former is unaffordable and my 0% on the Virgin ends very shortly. My fixed rate mortgage is up in November 2010. I have no equity in my property and a family member would also perhaps technically be able to claim 50% of any future equity.

CCCS budget works out that I have about £395/ month to pay towards my cards, though this is very restrictive and would leave me sat in my house doing nothing. I have had the offer of £8.6k from a family member to pay off in full and final. I have sent this proposal within the last few weeks to the companies who both claim the letters are not on file despite them signing for them. On the phone Capital 1 rejected said I should just do a payment plan per month. They are keeping my account open with 3k still left on my credit limit and telling me that because I still have credit I cant speak to anyone but cust services. They won't remove my remaining credit limit. Virgin said full and final too low and they would be talking about closer to 95% at this stage due to my good credit history.

I have narrowed my best options to: 1)Start at DMP with CCCS 2) Stop paying my monthly payments and offer any debt collection agency the same full and final.

My concerns are that with the former my debt would take tooo long to pay off and with the latter how long would this process take and what is likelihood of success. Also what would be the difference impact on credit score for both options, given that I may need to look at re-mortgage option for my property in November.

Can anyone offer advice please?

Thanks

Faye449

newbiehelpneeded wrote: »

CCCS budget works out that I have about £395/ month to pay towards my cards, though this is very restrictive and would leave me sat in my house doing nothing.

yes thats kind of the idea, every 'spare' penny should go towards paying off the debts in this situation. Is there something specific that you will need extra money for that isn't included in the budget or is it just going out/entertainment?

All I can suggest is that if you want a bit extra to 'live' you could get a 2nd job.

Sorry I don't know squat about F&Fs- what have CCCS said about it?
Only thing would be that if you are going to borrow this money from a family member you'll have to pay it back somehow so would probably find yourself in the same situation as above but probably for a shorter time?

WRT to remortgaging, I asked the same question as I will need to remortgage in a couple of years and will have the DMP on my credit file, apparently you can still remortgage, you just wont be offered as good rates as someone with a squeaky clean score. I saw that on the 'ask a CCCS adviser a question' thread.

newbiehelpneeded

Hi Faye,

Really kind of you to reply. I understand about the debt repayment as far as the best course of action for my creditors but really the question I am asking is one related to my best interest in terms of DMP versus defaulting and the likelihood of debts being passed to debt collection agency who will accept my reduced full and final settlement of the 8.5k against the 27 owed.

Obviously this makes clear the main benefit. 1) Reduced amount owed 2) No interest on my family loan.

Thanks!!

Tixy

Hi

Both options will have a big impact on your credit report as both will mean defaults on your file for all (or most) of your debts.

If you just stop paying the creditors may chase you for a bit, they will default you, they may then pass to there internal debt collectors and it could be say a year before its passed to an external debt collector.
In the meantime the creditor might take you to court to obtain a CCJ as you are making no attempt to repay.

I have to say it doesn't seem like a good option.

DMPs don't allow for a lot of luxuries, unfortunately that is the reality when you have run up debts that you cannot afford to service. Most people get used to living on a budget and get good at cutting back on groceries and other expenditure to allow themselves a little extra (either for savings or for some to increase their entertainment budget).

Also people often find other ways to increase their income, be that overtime, a second job, mystery shopping, selling posessions or other means.

30% settlements do happen but usually after you have struggled on for a year or 2, and the DCA can see it will take a very long time to collect the cash in installments. At this stage you have no chance of getting them accepted.

How long is the 'too long' the CCCS DMP is forecast to take to repay? There are people on here on DMPs that will take 15-20years, I suspect your is much less than that.

Good luck whatever you decide.

newbiehelpneeded

Tixy,

Many thanks. I do appreciate your time. You are correct in some of your assumptions in that it would probably take me a few years to clear assuming interest was frozen. CCCS thought seemed to think that given I had a substantial F&F to offer it maybe worth a go though admittedly I have not had a good response to the offer at this stage.

The option I was considering is to just pay my debtors say £10/ month each and hope they then take the F&F perhaps over the next few months once they cannot get anywhere with their constant telephone hounding and perhaps pass to DCA. You don't think this likely? I could perhaps secure slightly more money for the F&F.

I was just thinking that many posts here talk of people on DMP's who then try to offer F&F, so if I am in a position to offer F&F that I should go down that path now rather than after 2 years of DMP - ethical issues aside.

How easy is it for them the get a CCJ? Couldn't I always agree to the monthly DMP before their CCJ attempt was successful if they go down that route and therefore it may be more sensible to risk it at this stage?

Marc