lump sum offer or bankruptcy?

mr_affable

Can anyone advise me?

Have been paying nominal payments of £1 to my 6 creditors (total owed approx £36,500. across credit cards, personal loans and store card - largest single amount is £14,000. smallest is £850) for past 4 years. They write to me every 6/12 months and ask for an update when I confirm that I have no assets and little/no surplus income over expenditure each month.

I had assumed that one of them would have made me bankrupt by now but no one has. I had been intending to make myself bankrupt once I had the fees available which hopefully I soon will have.

However a family member has now offered to raise a lump sum if this would be accepted in full and final settlement. It strikes me that my creditors might be prepared to accept a lump sum (even if small in relation to what I owe) on the basis that the alternative is bankruptcy when they are likely to get even less and most of what I can pay (if anything) will go towards payment of the Official Receivers fees first.

Am I being naive or is this a possible option?

sch3ll

In my limited experience I would imagine they would prefer to receive something rather than nothing. Your only difficulty though would be that you have 6 creditors and would need to make them each an offer to clear everything? I know I've been offered very discounted settlement amounts personally from creditors in the hope that I'll settle my accounts but unfortunately never had the funds available to do so. Its definitely worth asking, the worst that can happen is that they say no x

kepar

The loan sounds a good idea if the creditors accept a lower settlement figure.

But my concern is under what terms are you borrowing the money or is it a free gift.

I ask only that if you can only make minimum payments to your creditors, you are never going to be able to repay the lender.

So they may say it is a gift now but things may change in their life and they may come after the money a few years down the line. In which case you will end up going br, owing a family member and not the banks.

IF

mr affable if you are going down the F&F settlements route do post on the DFW board as they will be able to help you more.

The Debt-Free Wannabe Board - Click here

Best wishes
If...x

Ineedaname

I agree with Kepar, if you go down this route then be absolutely sure of the terms of the loan/gift and any future impact before you proceed.

Your creditors are more likely to accept full and final settlement offers if they come via one of the free debt advice agencies, like the CAB or CCCS. Well worth a chat with one of them anyway if they're not already managing your DMP for you.

mr_affable

Thanks for your replies so far. The lump sum will be a free gift so shouldnt be a problem there.

What sort of percentage/amount should I be offering?

Ineedaname

That's where someone at the CAB can really be of use. They will work out whether it's likely any offer(s) are worth making and pro rata the gift across all your debts as appropriate.

A lot depends on how long since you defaulted on each debt, whether it has already been sold on to a Debt Collection Agency or not and probably a few other factors. So do call the CAB and take some free professional advice based on someone being able to look at all the facts and figures.