Overpay or save for F&F payments?

Magi74

If good budgeting means that someone on a DMP is saving money, what's the best method to bring down the debt quickly?

- Overpay something each month?
- Save up each week/month, then take a lump sum and get the best F&F offer you can?

Obviously circumstances are different for everyone, but I'm wondering what's the best general advice

(...and I'm fed up of MSE posts disappearing because I don't want Google tracking my every move!!!)

Bettingmad

Magi74 wrote: »

If good budgeting means that someone on a DMP is saving money, what's the best method to bring down the debt quickly?

- Overpay something each month?
- Save up each week/month, then take a lump sum and get the best F&F offer you can?

Obviously circumstances are different for everyone, but I'm wondering what's the best general advice

(...and I'm fed up of MSE posts disappearing because I don't want Google tracking my every move!!!)

There are many variables to answer this, obviously overpaying will bring forward the debt free day. I have seen F&F's as low as 25% although admittedly this is rare to be as low as this. I have seen far more in the 40%-70% region. How much discount you get on F&F's depends on the size of the debt compared to the level of monthly payments.i.e under the current payments how long it will take to pay it all off. Also to be factored in would include whether the debt has been passed on from the original creditor to a DCA and whether there is likely to be a valid CCA in place.
If it was me only on the basic facts provided I am firmly in the corner for saving any surplus with a view to making F&F's further down the road. If life throws up a little financial emergency you would also have access to amount of money to fall back on.

Magi74

That was my original thinking as well - then I got thinking:

- If someone gets a 50% reduction for a F&F settlement then it makes a significant difference to the amount of overall debt. Plus it saves you a lot of money.
- But preventing just one default could be significant to someone intending to apply for a mortgage/HP on a car or other "essential" debt at the end of their DMP woes.
- However that can be turned on it's head. If you can clear some debts, the money that went to those debts get's spread out over the remaining debt. That could mean that you end up paying the "normal" minimal amount...thus preventing a default.

It's an interesting dilemma. In a way getting a F&F settlement on the debt that you pay the most amount of money to each month could have a massive impact on the way your credit file looks - even if that settlement figure is not the best deal at first glance.

Really curious what other people think about this - but I'm painfully aware that some people out there have real difficulties to overcome so this will just seem like wasteful thinking.

Sparklyfairy

Save for a F&F - completely!

[Deleted User]

What is an F&F?

Sparklyfairy

Full & Final offer