is a full and final settlement an IVA ?

rae2820

hello all
not sure if this should be in the mortgage section as this is the context....So my partner and I are hoping to try and get a mortgage together. I have debts defaulted in Oct 2018 to the sad sum of £26000 following marriage breakdown and have been in DMP since this time paying a small amount each month.
My partner has suggested paying off my debt as a full and final (partial) settlement if that would enable us to achieve a better rate of interest on the mortgage as he has the funds to do so. the broker is suggesting that this would then become an IVA so a bad idea ? Can anyone advise ? Thanks.

Grumpelstiltskin

Who is your DMP with? A debt charity I hope, and you are sure it is a DMP and not an IVA?
If it is a genuine DMP then it can't just morph into an IVA.

fatbelly

The broker clearly doesn't know what he's talking about. An IVA is a formal insolvency solution. Tell the broker to think of it as bankruptcy for those with an asset to protect.

Your partner on the other hand may be on to something.

Your credit file is showing defaults that will stay until 2024. The entry will also show the amounts owing. As things stand your dmp will continue until the full balances are paid.

As these have been defaulted the lenders should be open to a deal - more so if they have been sold to debt buyers like Lowell or Cabot.

If a lump sum is available this is a cost-effective way to change the marker to partially settled and the balances to zero. We recommend making the initial offer in writing and starting low - maybe 20p in the £. See what comes back. You can adapt this.

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

rae2820

hello grumpelstiltskin,
thanks for your reply. I have the DMP through Step-change and pay a total of £100 per month.  I was puzzled when the mortgage broker replied to me and said she thinks paying off as F&F constitutes an IVA and is not advised as it is close to bankruptcy and will have a really negative impact and getting a mortgage would be impossible.At the moment we have had a DIP with but not with a high St lender due to DMP and therefore interest rate is higher than we would want.My partner has £40000 in savings and £120000 equity in the house he is selling.
Thanks

rae2820

fatbelly said:

The broker clearly doesn't know what he's talking about. An IVA is a formal insolvency solution. Tell the broker to think of it as bankruptcy for those with an asset to protect.

Your partner on the other hand may be on to something.

Your credit file is showing defaults that will stay until 2024. The entry will also show the amounts owing. As things stand your dmp will continue until the full balances are paid.

As these have been defaulted the lenders should be open to a deal - more so if they have been sold to debt buyers like Lowell or Cabot.

If a lump sum is available this is a cost-effective way to change the marker to partially settled and the balances to zero. We recommend making the initial offer in writing and starting low - maybe 20p in the £. See what comes back. You can adapt this.

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

Thanks for the advice fatbelly-really helful.
The debts were sold to PRA  and Intrum, still unsure that it will help increase our chances of getting a better mortgate rate as the defaults will stay on file until 2024 but I guess if the debts were satisfied it might be helpful from an affordability calculation.

sourcrates

I really hope she is a better at brokering, than debt advice.......

rae2820

yes - me too !

RAS

PRA are noted for being difficult. You might settle for 70% if you are lucky based on other threads. But try lower.

rae2820

Thanks RAS…:) its a slow job I hear but will make a start ,its worth a try