Multiple debts, full and final?

Stewart_78

I have a DMP with payplan and it's all going well apart from the end date being 2024! Still, we are heading in the right direction and all interest is frozen etc.

I have had an offer from a relative of a lump some to 'clear the slate'. Unfortunately they are not aware of the size of the debt and have offered about 25% of what I owe. This is very kind of them but puts me in an awkward situation. I don't really want to say 'no way, it's far more than that!'. Also, I don't want to accept it and find I can only pay off one lender. I don't really want them to know what the total debt is either as it might blow their mind!

I am also concerned that one lender will accept and the rest won't (I doubt any will at 25%). That will mean I have only paid off one debt and I now have a chunk of cash which is supposed to clear the rest but won't. Or should I pay the lowest % offer first and then raise the offers to the rest until another accepts and then pay that and so on until the cash is gone? Either way, it's likely that I will have taken my relative's money and still be in significant debt.

I suppose the main question is this: If I offer all of them 25% and only one accepts, will the rest be annoyed if I pay that single debt off? Will this jeapordize the whole DMP? Or will they be pleased that there is now more money to go around the rest of them every month?

Tixy

As the money is coming from another person then you could use this money to just cherry pick who to make F&F offers to. So you could just start with low offers to one or 2 and see how you go from there - use the usual F&F template for the bits about its being F&F and marking your credit file but put in your main paragraph that a relative has offered £x (just the amount you want to offer this creditor) providing it settles a debt in full & final settlement, give them 2-3weeks to accept the offer or state that it will be offered to another creditor.

If you make offers to all and only a couple accept then you might find that the others will try to get the lump sum from you but only use it towards the balance but not settle the debt. This is why its worth being clear that this isn't your money.

If you do this and clear a couple of the debts then obviously payplan will still expect the same monthly payment from you and will just recalc how much each of the remaining creditors get a month. Will your relative realise if you are still paying off some debts (ie are still quite skint)? are they expecting you to repay the money to them and if so will they expect repayments to start striaght away.

One final thing you might want to consider is that if you managed to clear say half of your debts with F&Fs then what will that do the amount you are paying your remaining creditors. If the new pro-rata payments on the debts take you to above or near to the original minimum payment of the debt then some creditors will sometimes start charging interest again (if the debt is still with the original creditor). Not sure how well I've explained this - if it doesn't make sense I'll try again!

Stewart_78

Thanks, that does all make sense. I am slightly concered that if we start paying too much to the remaining creditors, they will want to start charging interest again. I wonder if it would be better to do this closer to my annual review so that I can just cut back on what we can afford each month so that we are still paying the same amount to the remaining creditors.

I'm very happy with the way things are going right now and for once in my life are going forward, even if I'm coming from a long way back! I just don't want to jeopordize that in any way.

Little_Miss_Uni-Debt

Hi Stewart,

I guess at this point in time you don't know the amount that your creditors would accept until you request F&F's.

It's obvious this relative wants to ease the burden, if you're honest from the start that it won't clear it all. It will avoid any tension with this relative, if they start asking - "is it all paid off now"

Hopefully someone with excellent F&F knowledge will be along soon to say what is likely to happen. Who knows, you may be able to clear more than you think!

Stewart_78

I don't even want to start thinking about being debt free yet! Don't want to get my hopes up. It would be like a different existence!