Token Payment Plan (TPP)

jimmy2024

Apologies if there is already a thread on the above but I couldn't see it.

Can anyone give any advice on the above? Is there any benefit to doing this?

I feel like my situation will change for the better within the next 9-12 months (lump sum to pay back many/all debts). If I set up a TPP paying £1 a month, I'm assuming these creditors are still likely to take further action?

I have multiple creditors and debts totalling c£80k.

Thanks! 

sourcrates

Token payment plans are only good as a short term strategy.

What you suggest is a good call, by the time you get your lump sum, your debts should have all defaulted, and many should have been sold on, so yes, an ideal scenario for settlement options.

jimmy2024

Thanks for the response. Would you think this is a better option than just not paying anything or is there not much difference?

I'm still confused by all of the potential outcomes. In an ideal world, I'd like to do as little possible damage to my credit record (with the intention of paying at least the majority of my debts within a year). 

I'm just swaying between a DMP/TPP, setting up my own payment plan, or just not paying anything.....

fatbelly

This is Debt Camel's take on token payments

https://debtcamel.co.uk/token-payment-debt/

I can't really see that they have any use. They just constantly acknowledge the debt without ever paying it. I would only suggest them if every other strategy is unworkable.

sourcrates

If you can`t afford to pay anything, then feel free to share that with your lenders, they won`t expect any payment if the sums don`t add up, depends what your income/expenditure is.

Unfortunately your credit file will show the exact situation you are in, anything less than full contractual repayment will attract negative markers, there`s nothing you can do about that, so concentrate on the things you can change, which is getting debt free, rather than the ones you have no control over.

jimmy2024

fatbelly said:

This is Debt Camel's take on token payments

https://debtcamel.co.uk/token-payment-debt/

Thanks - appreciated. 

sourcrates said:

If you can`t afford to pay anything, then feel free to share that with your lenders, they won`t expect any payment if the sums don`t add up, depends what your income/expenditure is.

Unfortunately your credit file will show the exact situation you are in, anything less than full contractual repayment will attract negative markers, there`s nothing you can do about that, so concentrate on the things you can change, which is getting debt free, rather than the ones you have no control over.

Thanks - on the basis that I think I can clear (or very close to clear) my debts within 6-9 months, do you think defaulting is still the best option, or should I enter a payment plan before it gets to that? 

RAS

If you get a default, it clears from your credit record in 6 years.
If you make token payments and get AP markers, they clear 6 years after the debt is paid.

If you get your lump sum in 6-9 months, neither is going to clear sooner than the other. If it takes longer, the defaults might be better.

Rob5342

Once you get a default then you will have a fixed date when it will drop off no matter what happens further down the line. With a payment arrangement if something goes wrong, the sum isnt as big as you thought or another expense crops up for example , then the date when you have a clear credit credit report will get pushed out. Also, once you have defaults the debts will likely be sold to debt collectors who will accept a reduced settlement offer. If you play your cards rigjht you could settle the debts for a lot less than their face value. Defaults can sometimes take a while, my MBNA card took almost a year to default.