Asked for advice - so I've turned to you

Konamb212

Hello,

A good friend has asked me for some advice, and I've not really much to offer in the way of sound advice, so I hope some of you can help me help him.

For quite a while he was a money nightmare, always robbing Peter to pay Paul, finance companies chasing him for unpaid loans etc etc.

Anyway, this last 2 or 3 years he seems to have settled down a great deal.
He has 3 arrangements with finance companies for defaulted debt.
(He dosent know the initial opening balances with the finance companies i.e. the defaulted amount)

Company A Balance £2570 - currently paying £55 per month
Company B Balance £1625 - currently paying £37 per month
Company C Balance £1000 - currently paying £30 per month

Thats a total of nearly £5200, and a monthly outlay of £122

So now we come to the dilemma he faces :

his wife was recently retired under ill health and was pensioned off from her work. It is very unlikely that she will be able to work in the forseeable future, She is in receipt of disability benefits and a small pension from her work.
She also received a lump sum of £2750 as part of her pension.

the loss of her wage is a big hit to the family, but they could manage if they weren't paying the above debt.
He wants to see if he could negotiate with the companies to write off the debt if they would settle for a reduced amount.
I reckon it works out at around 50% of what they owe, so I'm not so sure if this is feasible or not.
The unfortunate thing is that if they didnt clear the debt then they would be back at square one, and not have the money to repay. To be honest, given his track record I'm amazed he's held on to the 2750 and even thinking of settling - hes usually a spur of the moment guy, and could blow it quite easily.

Does anyone know if these debt agencies work like this ?
I know 2 of them are Hillesden securities and Capquest, cant remember the other one.

Thanks for reading and all help and advice greatly appreciated

dieselv2

A Full and Final Settlement? I had a debt with Argos Card and Zinc offered me 50% off from a settlement link on their page but I'm sure someone will pop along with a link soon but there are templates you can send to these companies starting at around 20%.

Is the plan to use the lump sum to get debt free?

Konamb212

Yes I think that's the plan. I think that other than the mortgage they will be debt free. I would say it's his wife pushing this, knowing him as I do, he wouldn't give a flying !!!!!! if it was never paid.

sourcrates

Yes it's entirely possible you/he could settle those accounts with the lump sum.
He needs to negoatiate each one for as little as possible, if the accounts are with debt collection agencies, so much the better, as they are always open to deals.

fatbelly

OK, £5200 at 122 per month is a 3.5 year plan. Creditors are not going to be amenable to settlements if they think they will get paid in full in a reasonable timeframe.

If income will not sustain a plan then you should stop the plan and pay everyone £1 per month. It will cost them more than £1 to process the payment and this will focus their minds.

Give it maybe 3 months then follow this factsheet and make the offers, making it clear that the payments are coming from a 3rd party and are a once-only offer.

https://www.nationaldebtline.org/EW/factsheets/Pages/fullandfinalsettlementoffers/lumpsumoffers.aspx

20% is a bit mean - have a look at this post for some of the percentages achievable

http://forums.moneysavingexpert.com/showpost.php?p=69978335&postcount=1179

We obviously don't have full details of the situation here, and you are not in a position to tell us so I am just explaining how full & final settlement offers work, not necessarily advising them as a course of action.

He should get advice about the best way forward from an unbiased source like National Debtline

Konamb212

Great. Thank you for the replies and information