Full and Final Settlement, IVA or Bankruptcy?!

seanybomb

Hi all,

Currently in a slight predicament. To cut a long story short, I owe £44,548 of unsecured debt across (originally) 13 different creditors. This debt was predominately accrued through an abusive relationship – Action Fraud are looking into it but I have little confidence of getting any resolution because what ‘Can I prove beyond reasonable doubt?’. I have not made payments for the last 2 years as it has become impossible to do so.

I am looking for advice on a potential solution.
Please see below my SOA:

Debt Type Outstanding Balance Contractual Payment Ownership of Debt
Apex (RBS) Credit Card £ 2,621
Argos Store Card £ 452
Barclaycard Credit Card £ 7,524
Cabot (HSBC) Personal Loan £ 8,665
Cabot (HSBC) Credit Card £ 1,628
Capquest Investments (MBNA) Credit Card £ 3,113
Frederickson (Capital One) Credit Card £ 1,310
Link Financial (Newday) Store Card £ 428
Lowell Financial (Very) Catalogue £ 5,903
Lowell Financial (ISME) Catalogue £ 2,823
Lowell Financial (Aqua/Newday) Credit Card £ 536
Moorcroft (Vanquis) Credit Card £ 2,559
Tesco Credit Card £ 2,237
Westcott (Natwest) Credit Card £ 4,749
Total £44,548
Income £1,532
Rent £520
Water £36
Council tax £85
Gas £25
Electricity £25
Telephone/mobile/internet £55
TV licence £14
Spares/servicing £20
Road tax £14
Insurance £38
Breakdown cover £9
Fuel/parking £200
Public transport £10
Food, toiletries, cleaning £220
School meals/meals at work £15
Pets/pet foods/insurance £50
Tobacco £40
uMedicine/prescriptions £10
Hairdressing £15
Laundry/cleaning £10
Clothing/footwear £30
Sports/hobbies/entertainment £20
Sundries/emergencies £10

Total Income £ 1,532
Total Expenditure £ 1,471
Surplus (Deficit) £61

My disposable income can vary (usually less than £61) due to a multitude of reasons (Birthdays etc.). I do not live a lavish lifestyle. I work full time (60-mile round trip to work), come home and bury my head in the sand. I’m currently on anti-depressants because of this mess. Fortunately, my father has offered to help. He can provide funds of around £9000 as a lump sum.

What solution would be best?

• Full and Final settlement offers to all creditors at approx. 20% each? (£8909.60)
• IVA Lump Sum offer?
• Bankruptcy?

Thanks for reading, any further info will be provided should need be.

Sean

sourcrates

Hi,

It is unlikely creditors would settle for 20%, unless you can persuade them your only other option is Bankrupcy, and that represents the best deal for them, for the same reasons I would disregard a lump sum IVA.

Getting all creditors to agree to one option or the other would be difficult to say the least.

Get your dad to pay the Bankruptcy costs and fees instead, In England and Wales: the application fee is £130 and. the bankruptcy deposit is £550.

Double check your options with National Debtline or stepchange, but I would say from the above figures, Bankrupcy would be the sensible option for you.

seanybomb

Thanks soucrates for your reply.
As the situation stands, the creditors will get 20% or nothing - would it appear that I could be blackmailing them though? Nonetheless, the facts and figures speak for themselves.

It'll be best to attempt writing full and final offer letters and gauge the reactions?

Also could anyone help with the wording in these letters? As the 9000 is only available upon acceptance of the final offer.

Thanks

fatbelly

I agree with Sourcrates. Bankruptcy is your best option and your dad gets to keep £8320. There is the possibility of a small income payment arrangement and your car may be an issue depending on its value. But the debts will be definitely dealt with and it draws a line in the sand that will mean a clean credit file in 6 years.

You don't have enough surplus income for an IVA or a dmp, you don't have sufficient capital for F&F, and you don't meet the criteria for a DRO.

The only other strategy that is worth considering is the one you have currently chosen - ignore everyone and see if they go statute barred in 4 years. But that has more chance of not working than bankruptcy.

BaldEagle

Hi Sean,

I was in a very similar position a few years back. Looking at some of the names of your creditors bring back some bad memories.

I considered the F&F payment route but after discussing with CCCS (now StepChange), went with the BR option. It's a big step to take and you need to go into it with your eyes open but it's also not as daunting as you may think it is.

As sourcrates suggests, give StepChange a call to discuss your options and maybe have a read through some of the posts on the Bankruptcy board.

All the best.