Full and final settlement options

david_m4

One of my relatives might be able to give me cash for full and final settlements of my debts (yay!) but what can I do if only some of my creditors accept? Assuming they all get an equal share, I could only offer them about 40%. Logically they should take it because my next best option is a DRO, where they get nothing, but I assume some will try to refuse.

Would I get in trouble for paying the holdouts in full over the next two years? Or if most of them refuse my offer, could I still have a DRO after some debts were settled?

Does it change anything if I put in my overtime savings as well, so not all the money would come directly from a third party?

Gimpsdad

Depending on the level of your debt, it may be worth investigating a one off IVA. Creditors almost never reject them in my experience.

david_m4

Is an IVA really more likely to be accepted than something negotiated through National Debtline? Given that intermediary fees would be taken out of it, and I'm not able to offer very much to start with.

Gimpsdad wrote: »

Depending on the level of your debt, it may be worth investigating a one off IVA. Creditors almost never reject them in my experience.

Gimpsdad

Absolutely.

Informal settlements are generally negotiated with the holder of the debt who naturally will want the best return. IVA's are voted on by creditor representatives, eg Grant Thornton, KPMG, TIX etc who will look at the bottom line, and if it is a good deal will be happy to accept, irrespective of fees, as long as it is put in such a way as it is a take it or leave it scenario.

You do need to appoint an IP that will be happy to work on a no win no fee basis though. In the unlikely event that is rejected then at least you have lost nothing.

david_m4

Can you recommend any?

Gimpsdad wrote: »

You do need to appoint an IP that will be happy to work on a no win no fee basis though. In the unlikely event that is rejected then at least you have lost nothing.

fatbelly

david_m4 wrote: »

One of my relatives might be able to give me cash for full and final settlements of my debts (yay!) but what can I do if only some of my creditors accept? Assuming they all get an equal share, I could only offer them about 40%. Logically they should take it because my next best option is a DRO, where they get nothing, but I assume some will try to refuse.

Would I get in trouble for paying the holdouts in full over the next two years? Or if most of them refuse my offer, could I still have a DRO after some debts were settled?

Does it change anything if I put in my overtime savings as well, so not all the money would come directly from a third party?

To cut a long answer short, if you qualify for a DRO, do a DRO.

No point doing an IVA if you've got no surplus income, no assets, in rented accommodation, running a car worth less than £1000 and the only other way of dealing with your debts is to take money from a relative.

david_m4

I was never considering a normal 7 year IVA, cause like you said I'm in rented accomodation. But isn't a one-off arrangement like Gimpsdad suggested worth a punt? If it works, I'd be debt free immediately and I could start paying my relative back. If it doesn't, I could still get a DRO - but that takes 12 months.

Once I was debt free, it would make sense to look for a better job and raise my income. At the moment it would be pointless, because a small surplus would stop me getting a DRO but would still take ten years or more to clear my debts.

fatbelly wrote: »

To cut a long answer short, if you qualify for a DRO, do a DRO.

No point doing an IVA if you've got no surplus income, no assets, in rented accommodation, running a car worth less than £1000 and the only other way of dealing with your debts is to take money from a relative.

fatbelly

Well, I haven't got full details of your situation, I guess that if it is likely that you will breach the DRO criteria during the moratorium then it's a waste of £90.

Most (maybe more than 90%) of the people I get DROs for are on means-tested benefits. Because the benefits are withdrawn pretty drastically if there is any increase in income, they would have to have a huge increase to get above the £50surplus level.

You would have to get one through a qualified debt adviser and the theory is, if you were more suited to a IVA, or bankruptcy, or a dmp, you should be referred through to that. If you've got a lump sum of cash available over £300 then that would disqualify you for a DRO anyway.

david_m4

That's what I'm worried about, that something might change during the 12 months. When my overtime comes to an end this summer, as far as I can see I'll be in DRO territory, with about a £30 surplus. I certainly won't be able to make my minimum payments. But I can't be sure how long that will last, and I'd hate to turn down any opportunities just to save my DRO.

The settlement money would come from a relative, and I'd owe it to them until I was debt free and had a genuine monthly surplus. Which might be almost immediately if I can get a settlement accepted, no?

I only have £300 of my own money saved so far, but if I keep making minimum payments, I'd be able to save a bit more from now til my overtime ends. If that's going to complicate things, I'll just use the extra to overpay my debts. Or can I buy clothes with it that I'll need for next year?

fatbelly wrote: »

Well, I haven't got full details of your situation, I guess that if it is likely that you will breach the DRO criteria during the moratorium then it's a waste of £90.

Most (maybe more than 90%) of the people I get DROs for are on means-tested benefits. Because the benefits are withdrawn pretty drastically if there is any increase in income, they would have to have a huge increase to get above the £50surplus level.

You would have to get one through a qualified debt adviser and the theory is, if you were more suited to a IVA, or bankruptcy, or a dmp, you should be referred through to that. If you've got a lump sum of cash available over £300 then that would disqualify you for a DRO anyway.

Gimpsdad

The main point for you is that, at this moment in time, you don't qualify for a DRO, and therefore cannot do one. You may do eventually of course, but do you want this hanging over for you longer than is necessary on a promise of possible "jam tomorrow"?

david_m4

No, of course I'd like it all gone tomorrow! But should I wait til my overtime ends before trying to set up an IVA, on the basis that my relative could make a low offer with the immediate threat of a DRO if it was refused? Because at the moment (with my overtime) I can manage my minimum payments, so the creditors have no incentive to make a deal.

If I did that, do you think my relative could get a 20% offer accepted? I don't want to take any more of their money than I have to, but how low is too low?

Maybe this makes me a Bad Person, but I'm quite looking forward to offering the banks a take it or leave it deal for a change :-)

Gimpsdad wrote: »

The main point for you is that, at this moment in time, you don't qualify for a DRO, and therefore cannot do one. You may do eventually of course, but do you want this hanging over for you longer than is necessary on a promise of possible "jam tomorrow"?