Opinions on my plan to clear my debt

elliechoc

Hi,

I am currently in a dmp with Payplan, with a balance of approx £15000. At the moment it is going to take many more years to clear this.

My parents can gift me approx £5000, with the view of offering a final settlement at approx 60-70%, my partner will take out a loan for the remainder of what they would be willing to accept, in doing this the balance will be reduced and the debt will be gone much quicker, with the loan taking 3 years to pay off and the interest on that loan is about £250 over the 3 years, so it still works out a lot less than paying to the end of the dmp.

My thoughts are that it will be cleared a lot quicker at less than the total balance, am interested in others thoughts though, I am aware that taking out debt to pay off debt is frowned upon but this is only on the condition of a reduced full and final being accepted.

Thanks

sanfrancisco

When did you start the dmp?

I wouldn't do it. I would never get any debt again. I would knuckle down get a second job etc and pay back the debt. Then I would start saving and adding to the £5k and put that down as a deposit on a house.

Do you want to post a statement of affairs?

elliechoc

The dmp has been going for five years. Statement of affairs is ok, I am trying to save to offer final settlement to the lowest of my creditors at the moment anyway, if I carry on as I am it will take about 7 years if I keep on with the dmp so understand i wouldn't be offered any mortgage with that situation , buying a house isn't something that we are considering at the moment. But taking this option the debt would move over, not an additional debt, and take less time?

Kate_fixing_it

With F&Fs you should really be treating all your creditors the same, it's up to them if they accept the offers. With the £5k I'd be offering each a pro rata amount of that and forget the loan. Unlikely they'll go for a settlement of a third but as you're 5 years in with 7 years to go it's not unheard of. Some may come back with counter offers, some will be high others will be low and any discount is good.

That said, You sound pretty set on your partner taking the loan to pay the debts off and I'm not sure anything said here will change your mind.

Personally I'd avoid further credit like the plague! Equally I would (and have) refuse financial help from anyone of this nature. I'm not saying it would get brought up every time there's a disagreement but I point blank refuse to hand over amunition. The thing is none of us know what will happen tomorrow, either of you could want to end the relationship, income can go down and up and for me there are just too many variables.

My own DMP has gone from 20 years to 4 years 9 months since starting in May 2014. You just never know what the future holds.

Kate x

Movingon5464

If I was you i would write to all your creditors and offer them 25%. They will probably refuse and come back saying they would accept a lot higher. Then you could respond saying 33% is the most you can manage and see what they say. If they accept then just use the 5k to pay and you are done. If they are not budging you will at least know how much extra you need and make a decision on the loan then. I can understand that if you get a decent discount on f&f offers it would more than cover the interest on the loan but wouldn't rush into taking out the loan before establishing how much they will settle for first. Good luck.

DorisTrousers

You may be able to consider a single premium IVA. As creditors who do not vote, or vote against, can be over-ridden by the others if there are enough votes in favour, thereby tying them in legally even if they don't like it, lesser amounts are statistically far more likely to be accepted when compared to making them informal offers, i.e. you get a bigger discount. There are downsides to this approach, e.g, IVA on your credit file, but in my experience single premium IVA's are extremely successful, and I doubt your creditors would reject the £5k that is there on the table. You can then start again without any further debt being incurred.

Worth a thought at least.

When_the_going_gets_tough

How about considering a DRO?

elliechoc

Thanks for the replies, there's a lot to think about there. I don't want to do an iva due to it showing on my credit as my defaults are due to end in 2017. I think I will do as suggested and offer 25% and at least I have an idea of what may be accepted and will be able to make a clearer decision. Thanks.

elliechoc

I sent off very small offers, about 25%, to my creditors. Paragon have said they would take 75%, capital one have said no so far, however Moorgate have written saying they need my statement of affairs, to know where the money is coming from and how much I am offering - which was made clear in the letter I sent them, the standard template letter. Is this correct, do they need to have my statement of affairs, Payplan have all of this already, I am just wary about them trying to get more info and trying to up my payments?

Movingon5464

Just bumping it up as hoping to make offers myself.soon so interested in how to handle this.

bruce1478

how did you get on with moorgate? I have been trying to get moorgate to agree to an F&F, have offered them 8000 then 9000 against a debt of 13000 and they have refused both offers, they won't tell me what they will accept as an F&F, i have to keep offering and wait for them to agree or refuse.
Thanks Bruce