Advice on what to do with compensation

Jane91

I'm due to get £7300 in compensation after the death of my dad. I'm currently paying of debts with a dmp and its currently £10500 left to pay off.

I don't know what to do for the best with the compensation, do I use the money to pay my debts?

Do I save the cash in the bank?

I'd like to own my own home so this would give me a deposit.

Any advice appreciated

matttye

Work out what will earn you the most money. Do you pay more interest on your debts than you will get on savings? If so, pay off debts, otherwise put in savings.

Angry_Bear

As you're already in a DMP, you could well be able to get your creditors to agree to Full and Final settlements at a fraction of the outstanding amount (I'm sure I heard that you should start offering at about 30%). Put what you have left into savings and add the amount you were paying to your DMP every month - you'll have a clean credit file and a deposit for a house before you know it!

If you do decide to go the F&F route, ask/look around a bit as there are some careful guidelines on how to phrase your offers.

harveybobbles

Spend the inheritence/compo on something your late Father would have wanted. Not some poxy debt.

Contact your DMP and ask them for settlements (dont mention the money you have coming in)

Say you have £1000 and would like to split it on a pro rata basis for full and final settlement (not partial settlement)

ValHaller

Go for full and finals. Plenty of advice on how to negotiate - the first thing to remember is not to gush about how much money you have as HB says above.

I think your signature is either wrong or out of date,because it shows total debts of nearly £19,000. If you debt is around £10500 and you are still paying off £400/month, it will be over 2 years to become debt free, so 2 years till your DMP is lost from the file. But if you get full and finals, you will be debt free immediately. Even if you don't get F&Fs, it will only take 8 months.

I do disagree with HB about spending the money now - if you want a house, then becoming debt free is an important landmark - if you can put away £400/month towards a deposit, you will have a reasonable deposit before your file is clean enough to get a mortgage. So the sooner you can complete the DMP, the better.