Been thrown a lifeline!

tasha999

We have been advised bankruptcy due to a drop in wages, but my OH Mum has offered to lend us £15000 to try and sort us out great news!

But we owe £32000. I've been reading about full and final settlements, if we were to offer a fair amount to each creditor, what would happen if only a few creditors accepted, can we pay the Accepted creditors their amount?

If not how could we make this work?

[Deleted User]

non of them will accept a f&f unless you are in arrears(usually serious arrears)those that do accept you pay off those that dont you continue to pay (plus oh mum)
if you offer a f&f do so in writing around 40% is a good starting point and if they agree make sure they do so in writing

tasha999

Thank you for replying Woodbine we've been in a dmp for just over 5 years so well into arrears I imagine. we've already paid back about 22000 over the dmp. My oh has just taken a big pay cut that leaves us at risk of bankruptcy. I'd rather borrow the 15000 to pay f&f than risk bankruptcy etc

tasha999

I've spoken to step change who have advised us to pay the most we can this month (which is really not much!) they'll send us a pack out regarding f&f and they will write to our creditors when we know how much we will be able to offer, or we can do it ourselves.

£15000 will be about 50%.

Does anyone have any experience of how their creditors reacted in this kind of situation? My creditors are NRAM, Marlin Financial, BLS, Blair Oliver and Scott, TSB and M&S (I think this one has just been passed to another company, as they rung my husband the other day, but he didn't get the name!!)

[Deleted User]

At least with a bankruptcy you can draw a line under all the debt. Borrowing money from your mother-in-law and still struggling with F&F settlement doesn't seem the best decision to me.

ciderwithrosie_2

Deleted User wrote: »

At least with a bankruptcy you can draw a line under all the debt. Borrowing money from your mother-in-law and still struggling with F&F settlement doesn't seem the best decision to me.

Or me. How will you afford to pay MIL back if you can't manage now? That's a lot of money to borrow. At least if you owe money to a bank it's business and fairly impersonal.

tallyhoh

agree with the above. Borrowing money off friends or relatives is a recipe for disaster.

fatbelly

What is the downside to bankruptcy that concerns you?

How does the £32k split between the two of you? Joint debt applies in full to both so if 6k of that is joint, it might be a 26/12 split.

I'm wondering if either of you might be under 15k.

mrcow

I agree, this has got all the signs of going horrendously wrong.

Borrowing such large sums off relatives when you're already in such a mess is a nightmare. She does realise that she may well never see her money again?

I know it's tempting to take her money. And she's a wonderful person for offering to lend it, but you need to be honest with yourselves. You are not good with money. You have got yourselves into a right mess. You need to get yourselves out of it and not drag her (and her savings) down into this.

tasha999

Thanks all for your replies.

The debts are mainly joint, so probably a 55/45 split. (% if that makes sense)

My mother in law is managing director of her own company so she is not concerned about how long it takes to pay back, this really isn't a problem.

In bankruptcy we will probably end up paying 150 a month into an IPA anyway, and we really don't want to lose the house, we have 12 years left on the mortgage, we worry that in the 3 years we will have more equity that will need to be released or we loose the house.

All in all, we've made a list of pros and cons for every possible outcome. The one we can make work with the least risk would be the f&f.

DS4215

When you are making your F&F offer, play hard ball. Tell them that you are considering bankruptcy (and have been advised to do so) due to a forthcoming cut in wages, but a 3rd party is offering an amount to settle your debts of 20% of the balance. Worst case they will negotiate upwards and you might not need to pay out as much...