Full and final offer?

Badone

Hi guys, I've been on a DMP with Payplan since 2009. Started with a total debt of £113K (!) and is now down to £62K. I have an opportunity to take a large tax free pension related lump sum in the near future which will clear my debt in full (plus will still leave me with a healthy sum to live on in the shortish-term). I would be grateful for your thoughts on whether 1) this is a good idea and 2) if so, should I engage with my creditors for a full & final through Payplan or direct please? I am also considering taking a further large pension lump sum from next April (which I know will be subject to tax) to help fund the purchase of a property going forward. I am currently a high earner but will be looking for a lower paid, less stressful job in the future.

sourcrates

Yes I think that's a good idea, I would not involve payplan in the discussions at all, do it independent of them.
113k quiet a large amount of debt, congrats on getting it down to 62k.
I would write to each creditor in turn, obviously you need to know how much is outstanding to each one, then make an offer, usually start around 30% of what's outstanding, then you can always negotiate upwards.
The final figure will more likely be around the 65-75% mark, dependant on age and amount.
Make sure any offer you have accepted is followed up by the creditor stating, in writing, that the offer is accepted in full and final settlement and that you will not be chased for the reminder of the debt.

longtermplanner

If you want a mortgage, then you have to get rid of this DMP as otherwise it will make it very hard to get one.

You are clearly not making token payments to your debts, so it is unlikely that your creditors will accept 30% or anything similar. You are therefore going to have to make rather a difficult decision: whether it is better to settle the debts at say 75% which would leave you with an extra 15k in cash but have the debts marked as 'partially satisfied' on your credit file or pay them off in full.

A lot is going to depend on how much you want to borrow in relation to the house value and your future reduced income. If yiou are going to have over 50% equity and will be borrowing only say twice your annual income, then the state of your credit file won't matter much. But if you want to borrow more, it may be better to have the debts marked as fully satisfied.

Westminster

I just settled the last of my Payplan DMP directly last night.

It was originally 72k in mid 2006 and I settled the remaining 28k of it for an average of 41% in the last week (Santander / Cahoot, Barclays, Cabot all at 30%, Moorcroft @ 50%, Barclaycard @ 65% and Capital One @ 55%). I had to Previously I settled MBNA in 2010 for 40%.

I don't recall the settlements figures for the other earlier accounts. But the headline is to do this all directly and don't involve Payplan (helpful & well-meaning though they are)

Badone

Cheers guys, really appreciate the feedback; thank you. Yes, I'm guessing around 70% plus to clear based on my DMP payment record over the past 5 years. Can I make contact with all my creditors to see what they come back with as a full & final before I actually make a decision i.e. to leave my current job,take my tax free lump sum & settle all my debts?

sourcrates

Badone wrote: »

Cheers guys, really appreciate the feedback; thank you. Yes, I'm guessing around 70% plus to clear based on my DMP payment record over the past 5 years. Can I make contact with all my creditors to see what they come back with as a full & final before I actually make a decision i.e. to leave my current job,take my tax free lump sum & settle all my debts?

You can ask them anytime you like, but before you do, have you checked the age and enforceability of your debts ?.
I assume the debt consists of loans, credit cards etc yes ?
If the accounts were opened many years ago, more than 6 or 7 years, then it may be worth putting in CCA requests to each one first.
This is a request for a copy of your original credit agreement, if the creditor cant produce it, or an acceptable re-constituted copy, (age dependant) then the debt may not be enforceable in court.
Debts that have paperwork issues mean the creditor will settle for much less than they normally would, it could save you a lot of money, so is always worth doing.

Badone

sourcrates wrote: »

You can ask them anytime you like, but before you do, have you checked the age and enforceability of your debts ?.
I assume the debt consists of loans, credit cards etc yes ?
If the accounts were opened many years ago, more than 6 or 7 years, then it may be worth putting in CCA requests to each one first.
This is a request for a copy of your original credit agreement, if the creditor cant produce it, or an acceptable re-constituted copy, (age dependant) then the debt may not be enforceable in court.
Debts that have paperwork issues mean the creditor will settle for much less than they normally would, it could save you a lot of money, so is always worth doing.

Hi, all are probably at least 8 years old so hadn't thought of that. I guess I should put in CCA requests at the same time as making the offers? Yes, debts are for personal loans and credit cards (one overdraft). Cheers.

sourcrates

Badone wrote: »

Hi, all are probably at least 8 years old so hadn't thought of that. I guess I should put in CCA requests at the same time as making the offers? Yes, debts are for personal loans and credit cards (one overdraft). Cheers.

CCA request first, then, dependant on what they send you, then you can make offers

Badone

sourcrates wrote: »

CCA request first, then, dependant on what they send you, then you can make offers

Thank you.

Badone

Another question please. Providing my creditors haven't added loads of interest (I get statements from most and no interest is being added that I can see), is it okay to make offers for less than is actually owed even though I will be able to clear all my debts in full?

double_mummy

yup you can offer them whatever you like it doesnt mean they will accept it though although most will go for settlements you have had great advice here CCA them once over the time limit (12 days if memory serves me correctly) then stop making payments until they produce one and then go for the settlements