Debt Management Plan - paying off creditors?

PaulSmenis

I have a debt management plan across five creditors ranging from £1500 to £4200, and totalling £14,700 and managed through payplan.

I've been paying back £250 a month, with the initial balance being £23,000, so i'm a couple of years into it.

I've my own sole employee limited company and my accountant is telling me there is a bit of cash that i can extract from the business that i plan on using to try and pay off my creditors.

This could amount to around £7,500.

It was my understanding that creditors would consider an "offer" for an amount of money to resolve the debt now and then write off the remaining balance. I've seen an read that creditors will often accept 30p-50p on the pound for a cash sum now - or at least accept a lesser amount.

I spoke to Payplan yesterday and frankly the advisor i spoke to tried to pour cold water on the idea of trying to settle with creditors. She said that it was "best for my credit rating" (which is shot to pieces anyway) to clear the debt in full, and to use the £7,500 to pay towards all the debts and then keep paying the £250 a month - presumably for another 2.5+ years.

Now, one of their "specialists" is ringing me next week to discuss and she said they may well have a different view, but certainly after having this initial chat i am concerned about their impartiality about whats best for me

So basically several questions :-

• Is it reasonable to think i can settle these creditors for a discounted amount?
• Has anyone any experience of discounted rates that are accepted?
• Is it "better" to try to pay the amount in full?

Thanks in advance

sourcrates

Hi,


Don't expect any help from the debt charities to make full and final offers to your creditors, its not within there remit to do so.


You are best doing this your self, although you will be mighty lucky settling 23k for 7.5k, although its very much worthwhile trying, but don't expect too much success, you will certainly be able to reduce what you owe conciderablely, but its a tough call to clear the lot for that amount.


However, its all about negotiation, start low, you can always up your offers, make a good case for them to accept what your offering, and who knows !!


Usual procedure is to CCA all relevant accounts first, make sure they can produce the necessary paperwork, because if they cant, the debt is unenforceable until they do, so check out that angle first off.


When you do make your offers, National Debtline have a great template letter to use on there website, you should do everything in writing during this process, never on the phone, its so you have a record of whats been agreed, as its more difficult to dispute something when its on paper.


Good luck !!

PaulSmenis

i think you might have misread, or i might not have explained properly.

I currently owe £14,700, down from an initial balance of £23,000 by paying £250 a month.

I'll have a look at those template letters.

Thanks for your time so far.

glentoran99

start at 10% and work up, mine ranged from 10% - 80%

PaulSmenis

Did you just use the templated letters or how did you approach them?

sourcrates

PaulSmenis wrote: »

i think you might have misread, or i might not have explained properly.

I currently owe £14,700, down from an initial balance of £23,000 by paying £250 a month.

I'll have a look at those template letters.

Thanks for your time so far.

Sorry, read it too quickly !!!

In that case the odds are much more in your favour.

Carefully done, it should be doable yes !!!

glentoran99

PaulSmenis wrote: »

Did you just use the templated letters or how did you approach them?

I wrote them letters outlining how much I was offering and that he cash was a gift to help pay of debts , and how it would benefit them as they would be getting paid sooner, template letters around pretty much cover it

PaulSmenis

Ok cool. Thank you. I'll have a go.

I'll update with how i get on. It might be useful to others.

PaulSmenis

What way does the negotiating process work?

You write and make an offer, they make a counter offer and you accept?

Or car it bounce back and forth several times?

sourcrates

PaulSmenis wrote: »

What way does the negotiating process work?

You write and make an offer, they make a counter offer and you accept?

Or car it bounce back and forth several times?

Start low, very rarely will your first offer be accepted.

They will come back and say yea or nay, if nay, they usually give you a figure they will accept.
Then it's up to you either try and negotiate further, or accept there offer.

If they won't accept a figure your happy with, then wait 6 months and try again, it's all about perseverance.

https://www.nationaldebtline.org/EW/sampleletters/Pages/Full-and-final-settlement-offers-%28sole-name%29.aspx

dancingfairy

I suspect the advert you saw was for an iva company ie get your debts written off, pay between 30 and 50p in the pound etc. Perhaps that's what the debt adviser thought you were referring to? I don't think stepchange and payplan are really geared up to offering full and final settlements so perhaps it is beyond their remit/ beyond the scope of what they can help with.
Have a look on the national debtline website as they have a full fact sheet and sample letter.
Df