Failed IVA to DMP

KateMc1989

Morning all, 

I recently failed an IVA, it wasn’t suited to me anyway, worst decision of my life. I did receive a gift payment from my dad totalling £4k, so with that money I planned to offer full and final settlement offers to the lowest debt of £1400 (catalogue), and planned to set up DMP to pay the rest as well as saving to offer f+fs for each debt. 

I have spoke with stepchange who advised a DMP, I mentioned my plan to squash the lowest debt with the gift payment, she advised against this stating they may refuse the DMP as I am favouring a debt over the others

Amount owed - 
HSBC - £15507
HSBC - £7638
Barclays CC - £8481
Catalogue - £1400

no assets 
rented home 

Could someone offer some advise please x 

Thank you 

Kate

fatbelly

I would say to hang on until the creditors write to you. You may well find that debts have been sold to new debt buyers during the insolvency process and these may be more receptive to full & final settlement.

4k isn't likely to clear 30k but it would be interesting to see how much it would clear. Possibly half of that figure with a bit of work

dmps are informal solutions so there are no fixed rules. Make sure stepchange act in your best interest. Otherwise go d-i-y

SusieT

I would also hang on, let stepchange get the DMP set up and run it through them for at least this winter, with a view to going self managed later next year. That way you will have the benefit of creditors working with an established DMP charity, and the flexibility to take it over yourself later if you want to. 
Put the 4000 into a savings account where you will not touch it so that you have a good emergency fund - not for christmas, birthdays or "ooh I want that nice shiny something"  
IF it is bad this winter and you have problems with work or paying the new energy costs you would have that to fall back on, and later you may find the creditors more likely to accept a low offer on the debts, but run things past the more experienced people on here first so that you are in a position to get the best possible deals

KateMc1989

Thank you so much for your replies this is really helpful, I have already had a letter today from Cabot insolvency. I have rang them today and discussed options and told them I am considering a DMP. They also offered me the option of full and final settlement offer of £1056 which is great, although I wouldn’t want the other creditors to feel I am prioritising any of the other debts potentially jeopardising the debt management plan. 

fatbelly

So did Cabot take over the £1400 catalogue?

I don't want to say I told you but...

The offer of £1056 to settle is their opening offer. They bought it for a lot less than that.

Don't worry about the debt management plan - as I said, it's an informal solution.

Equally don't throw away your precious cash without a good deal - you want to get them below 50%, ideally down to 25%

I agree with Susie's strategy. Maybe even get a bit of interest on your cash now rates are moving up.

peteuk

Do debts default on an IVA?  If so the interest would be frozen.  If not when you enter the DMP the will be at some point.

Either way they will remain on a credit file for six years (England) from the default date. The knock on is the £4K will not pay the whole debt so you’ll enter a DMP for the other two/three.  With zero interest you’ll in theory pay the same amount if you pay them off in 6,12,24 months.  

As mentioned once sold on, you may be able to get a better early repayment settlement figure. 

I would look at it again once the DMP is up and running, especially as given the COL is increasing.

sourcrates

Once you start dealing with companies such as Cabot and the like, your no longer dealing with creditors, as such, your dealing with debt purchasing companies.

As previously mentioned, a DMP is an informal approach to repaying your debts, the debt charities will tell you to treat creditors fairly etc etc, but in reality, you do what you have to do.

Cabot and the like won`t have any interest in what you pay to another company, like wise they won`t turn down whatever you choose to pay to them, my money would be on choosing the self managed route, pay them a minimal monthly amount, whilst saving up for full and final settlements.

That way you can save a hell of a lot of money, because if you are persistent enough, you can get settlement at almost what it cost Cabot and their friends to buy your debts originally.

KateMc1989

Morning all, took your advise and gone with a DMP sent the agreement back to step change. 

Had called from Carbot and PRA (i think they’re called - Barclays). Advised them of them plan and they offered me 28 days breathing space why a plan is put in place 🤞🏽 

Thank you all for the advice. As always