token payments before full and final

thousandyard1

im 30k i debt mainly to credit card compannies and will inherit 20k in about 6 months. im wonderring if anyone knows how to go about arranging a full and final setllement with my creditors whilst in the meantime bringing my monthly payments down to a small amount. thanks.

lvm

Have you had any late payments or defaults? Are you paying the minimum balance on each? Have they frozen interest? Are you with Debt Management Plan?

If you have no credit problems and have no defaults etc, your chances of getting full and final offers on £30k using £20k are next to none.

If you have defaults and are on reduced payments/DMP, you could write to creditors saying your circumstances have changed for the worse and need to amend your payments.

BUT...if you've been paying minimum payments and try reducing this, there is every chance you will be issued defaults which isn't really worth it...

thousandyard1

thanks. no i havent missed a payment and havent organised a dmp. im paying the minimum on normaal interst rates but wont be able to keep up with thes after february.what do you mean by ' ...if you've been paying minimum payments and try reducing this, there is every chance you will be issued defaults which isn't really worth it.' Do you have any sugestions re what i hould do ?

lvm

You've got a couple of options:

1. Try your best to maintain minimum payments for 6 months until you can pay a chunk of this off.
2. Try contacting creditors asking if there's anything they can do short-term, for 6 months only (freeze interest, reduce payments etc). Do this in writing but you need to say it's on the condition they apply no late payments/defaults to your credit file.
3. If you're determined to use the £20k to pay off debts you would need to stop paying, wait til defaults were issued and debt sold to DCA (could take years though). This would wreck your credit file for 6 years so really wouldn't advise. Because DCAs would pay a small amount for your debts, you could probably negotiate the 33% discount.
4. Contact a debt charity (non-fee paying like CCCS or Payplan) and enter an official DMP. They will aim to freeze/reduce interest and sort out what you can afford and split between creditors on pro-rata basis. Chance they would issue defaults with this, again destroying your credit status.

I would go for option 1 or 2. Have you looked at where you could possible cut costs or increase income? If you take a look at the top of the board there's a thread that gives a good link to do your Statement of Affairs. Some people on here could help you review some of the costs...

thousandyard1

thanks IVM. very helpful. gona give it some thought.