Payplan DMP - what to do with potential sum of money

bumblebutt

Hi there,

I've been on a Payplan DMP for the past 9 months.
I pay £530 a month to the plan.
Total debt stands at approx. £51000.
Estimated length of DMP 8-9 years.


OWE:
M&S - £663
Cabot Financial (ex-Egg) - £8100
Barclayloan - £19,100
Blair, Oliver and Scott for HBOS Halifax - £19,693
Bank of Ireland personal finance - £4400 (CCJ set at £100 pm. About to attend court to dispute and ask to re-instate accepted £43)

Some are in the process of having interest removed...the rest have had that done already.

Sadly a close relative recently died. A family member (who is totally unaware of my situation) has told me that they would like to pass all inheritance to me. It is likely to be around £20,000.

My question is this, what is the best thing to do? I could pay off a lump sum...perhaps have it placed in trust until I've got all of this under control myself...or talk about F&F with Payplan.

Such a touching gift is giving me sleepless nights.

Any help would be really appreciated.

seanparkin

It depends on how honest you want to be to your debts, I guess! If you declare it, my bet is that should you pay it towards your debts, your monthly payments will go down...

Then your creditors will notice you'll have spare income and will commence adding interest on them again.

Potentially, saving you nothing.

I would personally put the money in a trust fund safe somewhere (or give it to somebody else to put into a savings account in their name). Leave it till you have 20k of debts (in five years ish) left to pay off then pay the whole lot off in one go.

Perhaps the national savings scheme would be good for you. Leave it in 5 years and you'll potentially get 7% back per year, which would mean your £20k could possibly be worth about 27k at the end of those five years?

bumblebutt

That sounds quite a good idea. I'm hoping my wages will improve so there's the possibility of paying the DMP off in a shorter time.

Has anyone else been in this situation? What did you do? Is a full and final offer off the cards/unethical/stupid or am I daft not to think about it?

seanparkin

Honestly, I've seen similar situations - if you make a 'full and final offer', they know you have the money, and have it spare. And are more than capable of paying off their debt plus interest.

Payment plans are all about paying back how much you can realistically afford to pay back. If they believe you're capable of paying the full amount back (including the interest), thats what they will ask you to do!

As I said though, its all about how honest you want to be. Handing the money to somebody trusted to put in a savings accounts for you is by far the best option i can think of, for your own good.

Settling your highest interest debt(s) immediately then redoing your payment plan with the existing creditors (or probably sacking the payment plan off and just pay the debts normally now you could afford them especially considering your hopeful pay raise) would be the morally (and probably legally) correct thing to do.

Those as I see them, are your options! I'd personally just screw the creditors, but its up to you!

seanparkin

Finally, you could probably just ask Payplan for their advice. They are very good for advice.

Although if you want to be safe, I'd word it something like 'a wealthy relative has offered to help me out with my debts by paying a chunk of money off for me, what would happen if they did so?'...!

Dave70

it's nice to have that lump sum to fall back on, but if it's paid to you then it will leave a paper trail, but whay don't you use it to clear your smaller bedts and the rest off one of your higher ones. this will then leave you only one or two companies chasing you rather than all of them. possibly not the answer you might want to hear but the money wouldn't be there if the person hadn't passed away.

seanparkin

Dave70 wrote: »

it's nice to have that lump sum to fall back on, but if it's paid to you then it will leave a paper trail, but whay don't you use it to clear your smaller bedts and the rest off one of your higher ones. this will then leave you only one or two companies chasing you rather than all of them. possibly not the answer you might want to hear but the money wouldn't be there if the person hadn't passed away.

There is no paper trail - the inheritance was left to his relative, not him.

As I said, best options are either to ask them to put it into a savings account for a few years then transfer it you, or pay off your highest interest debts straight off.

bumblebutt

Hmm. You talk about a paper trail. My relative wants to pay the money to me. That'd be a cheque...sooooo, that'd have to be put into an account in my name. Can I put it in a savings account and continue to hack away at my debt? I just want it to mean something. I know that sounds odd but I don't want it lost. I know, I know, that sounds dumb.

pure_dead_dopey

Bumblebutt

I hope to be in your situation in the future and my plan is to do as many f&fs as possible at the lowest possible amount to get the total down. I will therefore tackle the guys who have sold to DCAs as they apparently accept a lower offer then hang on to anything if I can't a reasonable deal with any of the creditors. I have already been offered a 40% reduction by Amex, so it can be done. I understand that you should always do it in writing, say the money is coming from a friend or relative (true in your case) and only offer the money for a limited time, also make sure it is a full and final offer and not a partial settlement, as you don't want them chasing you for the remainder.

Good luck, with a bit of planning you could pay off the bulk of your debt with this money!!!

bumblebutt

Pure Dead Dopey....wow, now that would be a gift and a half. The past 6 years have been hard and heartbreaking and wonderful too - as I met and married my partner. I just want to stop messing it up. We've had such an awful run of luck.

Does anyone know how the creditors I've listed react to F&F offers? I've Cabot (name is mud with many it seems) and the others appear to be in-house. The post office has a CCJ attached so I assume that's done and dusted in the eyes of the law?

Blair Oliver and Scott told me that they 'always accept offers from Payplan' when talking about monthly payments...not sure if that bodes well or not.

pure_dead_dopey

Hi

I honestly can't say and I think it depends on loads of different factors like how long are you going to take to pay off the debt, ie if its 10 years would they not rather have half now and get it off their books??? Its one of the things that keeps my hopes up of getting rid of this debt, knowing that some time I will be able to get rid. We're with CCCS so I don't know how Payplan react to a bit of self full and finalling but if you hang on I'm sure someone will be along to help out. Just stick with the basics, in writing, time limit it and make sure it is full and final, it can't hurt and it could speed you on your way to being free of debt. Keep posting and let us know how you get on.

PDDxx