im new here, best way to pay off debts please 😃

wanabedebtfree

Hi i wonder if anyone can help.
This is the background to my situation.
About 7 years ago i got into trouble with money. We moved area and i ended up taking a self employed position which paid badly at first. Basically i got into a bit if a debt spiral. I paid my rent bills etc with credit cards and loans and ended up borrowing more to make the payments. Anyway 5 years ago i couldnt take it all building up so i set up a debt management plan.(not a free one) I didnt seek out good advice at the time!😕 so they froze interest closed me down credit wise, which at the time i welcomed i owed about £8000 at the time and fixed up a payment of £100 a month. I have been paying this ever since. Never ever missed a payment.
My credit rating is understandably very poor at the mo.
All the while myself and my partner just desperately want to buy a house. Renting is so expensive and not secure. Always the chance of being moved etc.
My partners credit is very good. We thought it wise to make sure at least one of us had a good rating. However our situation has changed somewhat tgankfully over the passed few months. My income increased due to pay rise and my other half got a better job. I have now come into some inheritance which we can use for a deposit as well as paying off the debts. These are my main questions to anyone that can help:


Although our wages have increased it is likely that the bank will lend us just enough to buy locally. Thats if i can even get a mortgage once my debts are gone.

With inheritance of 32,000 and debts of 5772 i can easily pay them off. Would i be unwise to do this? I have been reading posts that you should always offer a fnf. Can i even do that with the amount of money i have come into and the change in income?
Would i get in trouble if i offered them less than what i owe? Will they just refuse it anyway? I ask because the more deposit we have obviously the more chance of managing to buy something and getting anykind of decent mortgage.
I dont want to waste this very precious money. Please dont shout at me if this is just so morally wrong etc i should pay what i owe etc. Im just trying to be as wise with this as poss. Also does anyone know how likely it is that i will get a better score to get a mortgage? N how long it could take. Im going to put the remaining inheritance in a notice account for the next year or so if we cant use it so i cant touch it in the mean time. Any help very welcome. Tia

bargainbetty

The first thing to do is obtain a full list of your creditors and start writing to them directly - cancel the fee-paying DMP immediately. You are referring to 'precious money' while wasting it!

Once you have full details of your accounts, you can start communicating with your creditors properly and sort out your debt. Check your credit files to see who has defaulted you, and who has put you on Arrangement to Pay markers. These are continuous and don't fall off for six years after completion, whearas defaults fall off six years after application - so many may be several years old now.

Personally, I'd settle the AP markers in full asap, and offer full and fnals on older defaults. But do it yourself and do it quickly.

It will six years from the date of the last marker for it all to fall off your history. You do have the right to ask anyone who put AP markers on your file to change them to defaults at the time of the original problems, but they don't have to do it. You may have to wait a while, so look for the best fixed ISA rates/locked in accounts that may be available to you, as the money could be sitting there for a little while.

Best of luck

wanabedebtfree

Thanks. I know i have been wasting loads 😕 ah well done now. On my file there arent any arrangement to oay markers that i can see. It seems that the boxes show green when i was paying sufficiently. Then set up debt management and they defaulted like 4 or 5 times max. Red boxes. Then nothhing the dates on these are all 2010 or before. Will creditors see things i cant?i checked through equifax. Is it worth doing experian to see what that shows? I will just pay them off in full i think to be on the safe side afterall i want to make myself appear as honest as poss to mortgage companies. I dont want an fnf to bite me in the bum further down the line. Thanks for reply.

Kittycat1981

Pop over to the mortgage board, one of the mortgage advisers on there may be able to point you in the right direction with which lenders to approach for mortgage x

solentsusie

wanabedebtfree wrote: »

Thanks. I know i have been wasting loads �� ah well done now. On my file there arent any arrangement to oay markers that i can see. It seems that the boxes show green when i was paying sufficiently. Then set up debt management and they defaulted like 4 or 5 times max. Red boxes. Then nothhing the dates on these are all 2010 or before. Will creditors see things i cant?i checked through equifax. Is it worth doing experian to see what that shows? I will just pay them off in full i think to be on the safe side afterall i want to make myself appear as honest as poss to mortgage companies. I dont want an fnf to bite me in the bum further down the line. Thanks for reply.

Hi

Firstly you should get your files from all three credit reference agencies. Not all companies report to all agencies so you need to make sure you have all of your information. Noddle (Callcredit) is free online and you only need to get your £2 statutory reports from the others.

Once you have a clear picture of the situation with all of your outstanding creditors you will be able to make a sensible decision as to the way forward.

I definitely agree with cancelling the DMP. You should be making payments yourself and avoiding these fees at all costs. You don't need to keep wasting money.

Good luck.

wanabedebtfree

I have already got the inheritance. Should i just phone them all and just pay it all off tho or speak to them personally to arrange a fnf?? One that i phoned a while ago said i would need to provide proof of income and savings anyway to get a reduced amount. Seems a bit of a faf if realistically they will all say i can more than afford to pay them off completely. Saying that if there is a chance then im happy to try it??

Kittycat1981

If you can afford it, pay it off in full, you owe it after all. Just my opinion.

The rest of the inheritance stick in an ISA and a couple of high interest paying current accounts, its going to be a while before your credit file will look favourable- (when the defaults fall off) you will earn interest on your savings that will help towards the deposit you want to put down on a house.

wanabedebtfree

Yep thats what im thinking to be honest. And that was the plan i had so at least i know im doing the right things. Cheers

wanabedebtfree

Thanks everyone

On_my_way

wanabedebtfree wrote: »

I have already got the inheritance. Should i just phone them all and just pay it all off tho or speak to them personally to arrange a fnf?? One that i phoned a while ago said i would need to provide proof of income and savings anyway to get a reduced amount. Seems a bit of a faf if realistically they will all say i can more than afford to pay them off completely. Saying that if there is a chance then im happy to try it??

If you are going to pay in full you can do it in the normal way but if you are offering a settlement you MUST do it in writing with them to agree a figure and provide you with evidence for the future.

Don't send any money until they agree the figure in writing.

Vikipollard

wanabedebtfree wrote: »

Anyway 5 years ago i couldnt take it all building up so i set up a debt management plan.(not a free one) I didnt seek out good advice at the time!😕 so they froze interest closed me down credit wise, which at the time i welcomed i owed about £8000 at the time and fixed up a payment of £100 a month. I have been paying this ever since. Never ever missed a payment.

With inheritance of 32,000 and debts of 5772 i can easily pay them off. Would i be unwise to do this?

This makes little sense. You say they froze interest on £8,000 of debt to which you have been paying £100/month for five years. So 100 x 60 = £6,000. How on earth do you still owe £5772 even with a fee paying company?


You need a complete breakdown of all incoming/outgoings from your provider.