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 .

Is this a possibility or am I being naive?

Tixy

It is a possibility yes, given the length of time you have been paying reduced payments and ythe real possibility of bankruptcy.

Its impossible to say if they will agree or how much they might accept but you should be in a reasonable position to get fairly low offers accepted. The issue that might cause problems is if some accept and others don't and you might need to phrase your letters somehow to take this into account - this offer is only available if all my creditors agree or something.

National debtline website has a useful factsheet on full & final settlements, it might also be worth a call to them for advice (which is free).

neverbefore2011

mr_affable wrote: »

Have been paying nominal payments of £1 to my 6 creditors for past 4 years

It strikes me that my creditors might be prepared to accept a lump sum on the basis that the alternative is bankruptcy when they are likely to get even less

Even less than what?

£6 a month, and 6 postage stamps a year, seems a very good way to deal with a £36k debt!

Why offer them more?

mr_affable

Have only been making nominal payments as a way of acknowledging debt but want to be able to draw a line under it at some point - otherwise assume it never goes away?

neverbefore2011

Have you sufferred in any way during the last 4 years from your poor credit history?

mr_affable

No - not so far

neverbefore2011

mr_affable wrote: »

No - not so far

No bank accounts closed?

No phone contracts declined?

No credit applications refused?

mr_affable

No to the first two and I havent applied for any new credit although I pay my car insurance monthly through credit via the insurer (this is just renewed each year through same insurer and has continued to be agreed)

neverbefore2011

You are clearly a reformed character - how did you run up debts of £36.5k in the first place?

Unless you can foresee a future need for a good credit rating, then I would pay the £6 a month, and let sleeping dogs lie

mr_affable

Its a long story - involving my ex wife and I living beyond our means and her realising the debts were in my sole name when she decided she wanted a divorce (even though built up jointly). She then washed her hands of any responsibility for them.

Surely if I keep on paying the nominal amount if I ever came into any money in the future (I am thinking of a lump sum from my pension in 10 years time) my creditors could then claim all of that?

neverbefore2011

10 years? 2022?

at £6 a month, that's £720

next time they write, say you can only afford 50p - it costs them more than that to write to you!