Offer of payment

tindrawers · 28 February 2011 at 7:29PM

Hi Guys

Just wondering if anyone knows the best way to approach this or if there is a template letter available anywhere, I have searched but haven't had any luck.

I have had a look at the possibility of getting an IVA to cover the debts I have have but from what I understand I am tied into this for 6 years?? Anyway, the advice I was given was that usually the people that do the IVA write to your creditors and offer them in the region of 20 pence in the pound of the total outstanding debt.

What I would like to know is can I write to my creditors and offer them this myself rather than being tied in with an IVA...is there a protocol for doing this, has anyone done this and the offer been accepted?

I don't have any cash to make a full and final settlement offer but could manage 20p/£ in monthly instalments.

I want to pay my debts but the small amount I would be able to afford would take me millions of years to pay them all off in full in monthly instalments so wondered of there was a way of putting it to my creditors so that they would accept?

Any ideas or help would be greatly appreciated

Thanks

Tixy · 28 February 2011 at 7:43PM

An IVA has to be done via an approved intermidiary. The figure of 20pence in the pound is not really accurate. What happens is the IVA company assess how much you can afford each month (after basic living costs) and work out how much this would mean you would pay back over 5 (or 6) years.
From this they deduct their (substantial) fees and they then write to the creditors offering your IVA proposal. Some people do pay back as little as 20p, others end up paying back 100% through their IVA.
Your payments will also be reassessed each year to see if you can afford more so its impossible to say at the outset how much you would end up paying as a percentage of your total debts.

If you own a property then you would also be expected to try to release any equity in that property to go towards your IVA repayment after 5years.

If you don't do an IVA and want to write to your creditors yourself this would be a self-managed DMP. This is quite different from an IVA and is not legally binding and is not a form of insolvency.
In a DMP (managed or self-managed) you calculate how much you can afford to repay a month to your creditors. If this is less than the minimum payments then you ask your creditors to accept reduced payments and to freeze interest (they don't have to though many will). But on a DMP you would continue paying until all of your debt has been paid. As a DMP is an informal agreement there is some flexibility that your payments could reduce or increase if your circumtances change, however because it is informal it also means your creditors could decide to take you to court if they wanted to.

Both a DMP and an IVA will have a serious impact on your credit file and your ability to get credit for years to come and should not be entered into without fully understanding them.
I think you need to get some advice from one of the debt charities so they can explain the implications of a DMP and whether an IVA may be suitable for your, or what else they could recommend - have a look here - IMPORTANT - Where to seek professional impartial advice about your debts.

You might also want to read http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=26_individual_voluntary_arrangements and http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=29_debt_management_plan