Long time debt & pension advice

Sunrise_Sunset

I have a bank debt of approximately £20k which I have been paying off at £10 a month for many years. I planned to continue doing this as there was no way I could pay it off in full, but now I am due to receive a lump sum pension and am wondering what would be the best thing to do.

The pension is approximately £30k so I could pay the whole debt off, but obviously this would leave me with much less to live on and less security for the future.

Any advice on the best way to approach the issue would be much appreciated. Could I offer a lesser amount to pay off the debt, or will the bank want the full amount once they know I have it?

Thanks in advance.

pauletruth

well you don't tell them if you want it gone make a full and final offer of about 50% it maybe worth pointing out to them that your retiring and this is a once only offer,

Tremour-88

What kind of debt is it you hold with the bank? If its a loan ask for a Full and Final settlement, you may be able to pay only 50-75% and have it settled.

poppasmurf_bewdley

Keep paying the £10 a month. It's a negligible payment and well within your ability to pay.

Why lose a large wedge of your payment to settle what is effectively an interest free loan at a peppercorn rate?

molerat

But ...... if the debt is with the same banking group that you currently bank with then make sure the £30k does not go into one of their accounts or there is a chance that they will grab the full amount they are owed.

iolanthe07

£20K at £10 a month will take 166 years to pay off, even with no interest at all. Sounds like a good deal to me - how did you manage to get them to accept that?

Sunrise_Sunset

It is a loan with Lloyds TSB, I missed some payments and managed to agree the £10 a month as I really couldn't afford much more.

The problem is the two accounts are with the same banking group. Lloyds and Halifax. I have been turned down for other bank accounts in the past due to the debt so think my only option is to pay it into the Halifax.

Are they likely to immediately take the full amount of the debt from me without giving the chance for a reduced rate settlement? This is my major concern but I am not sure how I can get round it.

pure_dead_dopey

Try the co-op with a cashminder account, just phone up and set it up. it has no chequebook or overdraft and is specifically for peeps with debts. Please take the time, don't just hand over your retirement portion to Lloyds, that would not be a wise move.