Retirement looms

lankeela

I have a DMP and currently owe approximately £6,700 between five creditors, four lowest being just over £1,000 and one at just over £2,000.  I recently started to receive my state pension and cut my working hours by half, but want to think about retiring altogether.  I currently pay £70 a month to Step Change - what is a likely settlement figure I could offer to the five creditors bearing in mind it is going to be 2029 before I am debt free at my current rate of income, which is going to halve should I retire fully?  I would like to clear the debts but if they don't accept should I just continue monthly payments which will have to reduce if I finish work? 

fatbelly

50% is a good target.

Alternatively you could  consider a DRO if you meet the criteria:

• not a homeowner
• not had one in past 6 years
• car (if you have one) worth under £1000
• surplus under £50 per month
• assets under £1000
• debts under £20k

stepchange can do them, and the rules may be getting more flexible in May

lankeela

I own half my house in a shared ownership - no assets apart from a couple of grand in the bank accrued during lockdown and earmarked for home improvements, but happy to use some to clear some if not all the debts.  I've got debts with Lowell, PRA, Arrow, (one more I can't remember) and Nationwide - would it be best to try to clear one or two totally or a bit off each if they won't all agree?

lankeela

After typing this I received a statement from Lowell, so have written to them today to see what they would accept.  Ideally would like to pay off one a month and get rid of the whole lot but don't want to leave myself totally skint.

Karonher

Its been suggested that 50% may be possible. That means you will have to pay £3,350. If you can only manage £70 a month it is not going to be paid off in a few months. If you used the couple of grand you have saved you could do it but that would mean no home improvements and you could leave yourself totally skint.

fatbelly

Don't ask them what they want - tell them what you're offering. Do it in writing using the national debtline letter as a template. Obviously start low. If 50% is your aim, start at 25%

CCA them first if they are cca debts - so credit cards,  loans, catalogues, not phones, overdrafts, utilities.

Letters here

https://www.nationaldebtline.org/sample-letters/information-about-your-agreement-under-consumer-credit-act/

https://www.nationaldebtline.org/sample-letters/full-and-final-settlement-offer/

lankeela

Got an offer from Lowell to pay 40% so took it and that is the biggest of the five now cleared.  Makes the balance/debt free date look a lot better and will try to clear the others one by one.

sammyjammy

Follow fatbelly's advice above for the rest of the debt, no need to rush, if you do get to the stage where you still need to make settlement offers make sure you point out that you are retiring and will be on a limited fixed income and therefore payments will reduce