DMP. Full & final settlement

Calum555

Hello,

So I started a dmp about a year ago. Total debt was 58800 spread across 9 creditors. It's been good, no harassment and hardly any letters.

I'm now down to 47k. And my monthly payment is 968 pounds. Anyway, one debt has now been sold to debt collection agency who are happy to continue with the planned payments. But it has got me thinking that maybe I can speed up the paying off of this debt by offering a full and final settlement.

I have been saving extra money in premium bonds and now have 1200 quid for this purpose. I will continue to add to this. But still an extra 4 years of paying out this amount of money is stressful and something I'm struggling to come to terms with. I just want this debt paid asap so that I can start rebuilding my life.

Problem is that I never miss a payment, so I can't see any other debts being sold to Dcas. Should I purposefully miss a few, while putting the cash into bonds, to send alarm bells ringing with creditors in the hope that they will sell the debts to Dcas and I can make a few full and final settlement payments. Or is this just playing with fire?

What could the consequences or benefits be? Does anyone have any advice of what they would do in my shoes?

Many thanks for reading.

sourcrates

Hi,

Stopping all your unsecured debt repayments for say 6 months will bring you two benefits.

(1) all your accounts should default, so you have an end date credit file wise.

(2) as you say, hopefully most creditors will sell on the debts and you will be able to make good settlement offers.

Debt collection can take a very long time, and original creditors don't often (virtually never) take you to court, so if you can take the hassle of the letters and calls, I would recommend this course of action.

January2015

I wholeheartedly agree with Sourcrates. Stop paying your DMP payments now. Let the accounts go to default status and get sold on to debt collection agencies.

Original creditors very rarely take legal action. The don't want the hassle. They will pass the debt to DCAs. Sometimes it's just passed for the DCA to manage and other times the debts are sold on to DCAs for pence in the pound. Once your debts are with DCAs you can start negotiating F&Fs.

redux

I'm not convinced it's necessary to engineer the debt being sold. Surely sometimes it's possible to offer a reduced settlement to the original company or its agent, or they might themselves make such a suggestion?

sourcrates

redux wrote: »

I'm not convinced it's necessary to engineer the debt being sold. Surely sometimes it's possible to offer a reduced settlement to the original company or its agent, or they might themselves make such a suggestion?

Its true some creditors will offer say 20% reduction to settle, in order to avoid the account going to a DCA.

But your not likely to get much more than that, wear as Lowell, for example, regularly offer up to 60% reduction, and the ability to repay the reduced amount over time, so it does have its benefits.

henrryyyy

would missing 6 months of payments then get 6 months of interest added on. ie when you break the original dmp agreement would the creditor then begin adding interest again?

sourcrates

henrryyyy wrote: »

would missing 6 months of payments then get 6 months of interest added on. ie when you break the original dmp agreement would the creditor then begin adding interest again?

It's possible yes, but once defaulted that will stop.

The idea being you get your account defaulted, and any added interest is counter balanced by the higher percentage discount you obtain from the debts new owner.

Calum555

Thanks for all the input folks.

So bearing in mind that these are unsecured I am worried that I might get a ccj and then bailiffs if I go 6 months without paying. Would making small token payments avoid this?

I am now thinking I may wait until I owe less than 40k as this will weigh less heavy on my mind. So continue with the dmp until then. By that point I would have around 3500 saved in bonds. If I go 6 months not paying then I will have around 10k in bonds and a 40 k debt. I might be able to get the debt down to about 20k with some f&f's.

Then I could make an arrangement to pay, say 400 a month whilst squirelling away 900 per month. After a year I'd have 11k saved against a debt of 15k which should be enough to clear it.

If all that went to plan I could be debt free in 25 months which would be amazing.

Tonight I will try and find out if all accounts are defaulted yet. This is a stepchange dmp if that helps.

Calum555

To sump up. I can afford 1300 a month towards my debts. Just trying to work out the quickest way to be free.

sourcrates

Calum555 wrote: »

Thanks for all the input folks.

So bearing in mind that these are unsecured I am worried that I might get a ccj and then bailiffs if I go 6 months without paying. Would making small token payments avoid this?

I am now thinking I may wait until I owe less than 40k as this will weigh less heavy on my mind. So continue with the dmp until then. By that point I would have around 3500 saved in bonds. If I go 6 months not paying then I will have around 10k in bonds and a 40 k debt. I might be able to get the debt down to about 20k with some f&f's.

Then I could make an arrangement to pay, say 400 a month whilst squirelling away 900 per month. After a year I'd have 11k saved against a debt of 15k which should be enough to clear it.

If all that went to plan I could be debt free in 25 months which would be amazing.

Tonight I will try and find out if all accounts are defaulted yet. This is a stepchange dmp if that helps.

Calum,

This is how the system normally works, you stop paying your creditors, they will go a couple of months or more just adding late payment charges, at around the 3 month mark, the account will be passed to there own internal collections dept.

They will try to contact you, and if there not successful, at about the 6-8 month mark, they will pass it to an external DCA to attempt collection.

It's important to remember that at this stage the debt is still with the OC.

If you ignore the DCA, it may get passed to various others for some months, even years sometimes, eventually your debt will be sold to a specialist debt purchaser, who will then go through a similar process to contact you.

It's at this point, if you continue to ignore, that legal action may ensue, this is a generalisation obviously, some creditors sell debts sooner than others, but missing six months payments will not end up with you in court.

A CCJ has to be granted before county court bayliffs can be used, and they cannot enter private property unless invited or through an unlocked door.

redux

sourcrates wrote: »

Its true some creditors will offer say 20% reduction to settle, in order to avoid the account going to a DCA.

But your not likely to get much more than that, wear as Lowell, for example, regularly offer up to 60% reduction, and the ability to repay the reduced amount over time, so it does have its benefits.

OK, but I'm aware of for instance Barclaycard offering by letter to settle at 45% (edit: 5 or 6 years ago).

The debtor couldn't do that then, but 2 or 3 years later asked for a new offer, 75%, complained, 60%, waited a couple of months, offered 50%, typing mistake in BC confirmation letter saved about 3% more.

Not all DCA's own the debt; some are still agents to the original firm, and a 40 or 50% offer might work here too, though perhaps this is usually only after default.

So as the OP suggests, it is worth discovering which accounts are already defaulted.