How best to use a bonus? Pay off debt, save for a larger settlement or mortgage

joeyf101

I can't find a thread which deals with my specific situation so hopefully someone will read this and have a bit more of a clue...

I have been on a DMP for 10 years and as such, I am no longer paying for the service. It keeps the wolves from the door and keeps the whole thing off my mind to a certain extent. I have noticed that aside from a large loan, the majority of my debt (credit cards) has fallen off my credit file, though my score is not really improving.

I live and work in London so buying a house seems completely unobtainable but I have recenty secured a bonus at work, which I am hoping to get next year too. My debt is around £15k and my bonus is around £6k a year. But I really don't know how to use it for the best. This feels like the only spare money I will ever have to put towards a deposit for a house.

I have successfully negotiated and settled a couple of debts myself, without paying the DM company, so I feel like I could save the money then try to negotiate a decent settlement for the loan but is that actually the best use of the money??

I know that as debt gets older, it just keeps getting sold on and that worries me that the heavies will appear one day, or I'll get hit with a CCJ... I feel the longer I keep the debt, the riskier it is, especially if I suddenly have some savings.

This bonus could make a real difference to my life... I just don't know how!

sourcrates

joeyf76 wrote: »

I have been on a DMP for 10 years and as such, I am no longer paying for the service. It keeps the wolves from the door and keeps the whole thing off my mind to a certain extent.

Hi,

If you are with a debt management company, you will be paying for the service, are you aware of free alternatives such as stepchange and payplan ?

The service is identical to one you would pay for.

joeyf101

sourcrates wrote: »

Hi,

If you are with a debt management company, you will be paying for the service, are you aware of free alternatives such as stepchange and payplan ?

The service is identical to one you would pay for.

As I said, I'm no longer paying for the service. There's a cap on how much they can take from you, not sure how much that is but I have already reached it.

sourcrates

joeyf76 wrote: »

As I said, I'm no longer paying for the service. There's a cap on how much they can take from you, not sure how much that is but I have already reached it.

Ouch,

so you have paid a fair amount in fee`s then.

As to your original question, send CCA requests to all your debts that are regulated by the consumer credit act, see what responses you get, then try and settle the enforceable ones for as little as possible, getting rid of the debt would be my priority.

While i was at it, i would send a written complaint to the debt management company, play dumb, and try and recover some of those fee`s.

joeyf101

sourcrates wrote: »

Ouch,

so you have paid a fair amount in fee`s then.

As to your original question, send CCA requests to all your debts that are regulated by the consumer credit act, see what responses you get, then try and settle the enforceable ones for as little as possible, getting rid of the debt would be my priority.

While i was at it, i would send a written complaint to the debt management company, play dumb, and try and recover some of those fee`s.

I had to look up what a CCA is (apologies!)... Will definitely do that. How will I know if the debt is enforceable or not? And if it isn't, then what, just ignore it?? Thanks so much for your responses.

sourcrates

joeyf76 wrote: »

I had to look up what a CCA is (apologies!)... Will definitely do that. How will I know if the debt is enforceable or not? And if it isn't, then what, just ignore it?? Thanks so much for your responses.

If they can't supply a copy of your credit agreement, that alone makes it unenforceable.
It also depends on how old your debts are, if they pre-date April 2007, then the "prescribed terms" must be there too.

This is only a rough guide, ultimately only a court can say if an agreement is compliant or not.

You could choose to walk away if they cannot supply what you've asked for, or make a low offer to settle.

joeyf101

Thanks sourcrates, much appreciated.