Redundancy and debt

yorkshireman41

Hi. I'm in debt to the tune of around 20k. I expect to get around 11k redundancy. I'll have no income at all. 
Do I enter an iva and pay what I can monthly. 
Or do I try negotiate with creditors to see if they will take a lump sum each then write a percentage off? (not sure if they would do that). 
I am currently trying to find a job and hopefully won't be out of work for too long. I suffer from anxiety and would rather have them cleared but using all redundancy to pay off creditors would leave me with nothing at all. 🙄

mwarby

I'd focus on getting a new job, making minimum repayments if you can. Once you get a new job reevaluate what's best

It's likely that a DMP would be the better option as hopefully  you'd only have around £10k of debt

A monthly IVA would be a bad idea, your debt is on low side and you have no income. You could look at a full and final IVA but I think you'll need some of the redundancy to see you to next job, depending on your normal wage £10k may be a good offer or not so good

liggerz87

Mw wouldn't a dro be ok I could see 11k money dro wouldn't work tho as you'd need no money at all 

mwarby

There's an asset limit for DRO, the £11k would be above that. Of course you could use £11k to repay debt then go for  BRO, but going broke and wrecking credit history for £10k of debt doesn't seem wise to me

liggerz87

True least they have options your plan better 

sourcrates

yorkshireman41 said:

Hi. I'm in debt to the tune of around 20k. I expect to get around 11k redundancy. I'll have no income at all. 
Do I enter an iva and pay what I can monthly. 
Or do I try negotiate with creditors to see if they will take a lump sum each then write a percentage off? (not sure if they would do that). 
I am currently trying to find a job and hopefully won't be out of work for too long. I suffer from anxiety and would rather have them cleared but using all redundancy to pay off creditors would leave me with nothing at all. 🙄

IVA out of the question, you don`t owe enough money, and you have no income to make payments with, so forget that option.
You MUST have an income for any debt solution that involves monthly repayments.

In all honesty, you don`t need to do anything, debt collection takes forever, write and tell your creditors you are currently jobless, (don`t mention the redundancy money) and you will be in touch when you have found work, during that time, your debts will all be defaulted (most likely) and then sold on, a year or so down the line the new owners may start writing to you, they will run through their list of standard collection letters with you, this may take 6-9 months or so, only if you continue to ignore would legal action become a possibility.

So you have plenty of time to let the accounts default, and get sold, then you will find discounts of between 20 and 50% become the norm, so settlement of all accounts should be achievable with the money you have available.

yorkshireman41

Would the not stick loads of charges and interest? It does sound like it would work although I’d probably lose my nerve at the first nasty letter lol

mwarby

They would still be able to add charges and interest (but no more than original credit agreement allows for). However if you've purchased debt for 50p in £ and you get nowhere and debtor is out of work what can you do ?

- court action - what have you got to seize income wise ?

- bankruptcy - they'd get 0p in £

- sell debt on - they wouldn't get 50p in £ maybe would only get 25p in £

- wait and hope things improve and you can repay in full - could be a long time

- offer you a deal where they lose nothing and you both move on - say 60p in £ (they'll have incurred some costs)

- offer you a deal where they lose, but not as much as going down any other route - say 40p in £

They will of course be hoping that a few letters in you're able to find the money and repay in full, and of course they will be experienced in writing letters and collection calls which have maximum impact