Smaller or larger debt?

needtosortmylife

Hi. 

So I have now been defaulted on 4/5 creditors. I plan to pay off with a DMP sorted by myself. Is it best to pay the smaller debts first so clear quicker or does it not really make a difference? 

Thank you. 

fatbelly

Traditionally payments are made pro-rata.

If you're uncomfortable with the maths, I think there's a calculator on

https://nedcab.cabmoney.org.uk/dmp.asp

Rob5342

You need to try and minimise the overall amount you pay to clesr them. I'd pay less than you can afford and pay the difference into a final settlement fund, and then use that to try settlement offers with them when you have enough. When you have cleared one then save the payments for that towards the next etc. 

needtosortmylife

fatbelly said:

Traditionally payments are made pro-rata.

If you're uncomfortable with the maths, I think there's a calculator on

https://nedcab.cabmoney.org.uk/dmp.asp

Thank you. I can’t seem to find the calculation? Can you help roughly with working it out at all please? 

agentblackcat

Calculation is total amount of single debt divided by total amount of debt multiplied by amount you can repay per month. 

So for example if you owe a total of £5000 across 3 debts
Debt 1. £1500
Debt 2. £ 2300
Debt 3. £ 1200

And can repay £400 per month

So 1500 / 5000 = 0.3 x 400 = £120 
Debt 1 repay £120 per month
Debt 2 repay £184 per month
Debt 3 repay £ 96 per month

needtosortmylife

agentblackcat said:

Calculation is total amount of single debt divided by total amount of debt multiplied by amount you can repay per month. 

So for example if you owe a total of £5000 across 3 debts
Debt 1. £1500
Debt 2. £ 2300
Debt 3. £ 1200

And can repay £400 per month

So 1500 / 5000 = 0.3 x 400 = £120 
Debt 1 repay £120 per month
Debt 2 repay £184 per month
Debt 3 repay £ 96 per month

That’s very helpful, thank you ☺️