DMP partial settlement F&F

Maroisme

Soooo my partner has been on a DMP since 2020, total of 8 creditors and a total of just under £12k still owing. I’ve just sold my house and we have brought together, so am gifting an amount to clear the debts. 

Ive been reading up on offering less than the full amount to settle the debt as it’s my understanding some will take a percentage of what’s owed and call it settled.
She has called stepchange and advised she has £8k lump and that will be full a final. How likely is it that they will accept that amount? 

I understand there may be a longer process to approach each creditor individually and make separate offers, after asking for CCA etc, but I’ll be honest, the hassle of going back and forth and it dragging out over months and months just to save a couple thousands seems an unnecessary stress. We just want it over and done with asap. Not worried about credit score impact as we have already have got our joint mortgage and won’t be moving again any time soon, don’t have any other debts and we are financially comfortable so not looking to save every penny, just want it done. 

Has anyone else gone through step change to do similar and how long does it take (ballpark figure is fine).

thanks for taking the time to read and respond 😁

RAS

Probably not a good idea to involve Stepchange at this juncture. They will just split the £12k between the creditors.

You can just self manage and pay off the debts if you want.

But you do realise that if the debts have been sold, the new creditor paid maybe 10-30p to buy £1 debt and you represent and huge profit?

ManyWays

I would hope most will accept that offer. I think you are likely to get responses back over the next couple of months, but this is all quite individual depending on the current creditor, so other people's experience may not be much of a guide. 

You are right that you may have saved money by asking for the CCAs individually. but it's your choice if you prefered a simpler route. If any creditors reject the offer I suggest immediately asking for the CCA though, don't offer more.

sourcrates

Bad idea giving an 8k lump sum to stepchange, there is no guarantee that money will be accepted in settlement, and once you pay them, that cash is gone, you could still end up owing money.

I understand your need for closure, but stopping the DMP payments, keeping the 8k in the bank, and settling each debt individually on receipt of creditor offers would have been a better strategy.

Stepchange are creditor funded, and so the clients wishes are not always at the top of their agenda, I would not go down that road if it were me.

Rob5342

Don't involve Stepchange, they will just split that money between all the creditors without any attempt to make a settlement offer and you could end up with momey owing on all of them. 

Its up to you how you handle it but I would strongly urge that you make CCA requests and try negotiating with each one. They would only hsve paid £1200 for debts, so do you really want your money making them 560% profit without any sort of fight? Say for example half of them are unable to produce the cca and you agree a 50% discount on the others, you would saved £9000, would you really want to shell out amd exta £9000 for the same of writing a few letters and emails? What's the rush if they have been on a DMP for 5 years already? 

Maroisme

Rob5342 said:

Don't involve Stepchange, they will just split that money between all the creditors without any attempt to make a settlement offer and you could end up with momey owing on all of them. 

Its up to you how you handle it but I would strongly urge that you make CCA requests and try negotiating with each one. They would only hsve paid £1200 for debts, so do you really want your money making them 560% profit without any sort of fight? Say for example half of them are unable to produce the cca and you agree a 50% discount on the others, you would saved £9000, would you really want to shell out amd exta £9000 for the same of writing a few letters and emails? What's the rush if they have been on a DMP for 5 years already? 

sourcrates said:

Bad idea giving an 8k lump sum to stepchange, there is no guarantee that money will be accepted in settlement, and once you pay them, that cash is gone, you could still end up owing money.

I understand your need for closure, but stopping the DMP payments, keeping the 8k in the bank, and settling each debt individually on receipt of creditor offers would have been a better strategy.

Stepchange are creditor funded, and so the clients wishes are not always at the top of their agenda, I would not go down that road if it were me.

RAS said:

Probably not a good idea to involve Stepchange at this juncture. They will just split the £12k between the creditors.

You can just self manage and pay off the debts if you want.

But you do realise that if the debts have been sold, the new creditor paid maybe 10-30p to buy £1 debt and you represent and huge profit?

so the process isn't that stepchange negotiate first before paying any money over to the creditors? From the conversation we had with them in the week, that was what was implied, obviously we wouldn’t hand over any cash until the settlement agreements had been made. Maybe I'm getting the process wrong but not may people would hand over that much cash without a guarantee the payment would settle the debt. 

sourcrates

Stepchange are funded by voluntary contributions, these come mainly from creditors, under what`s known as the "fair share contribution".

Now, don`t get me wrong, they do an excellent job for those folk who find dealing with bad debts difficult, that`s not in dispute, but they have to follow certain guidelines agreed in their charter, and one of them is to treat all creditors fairly, so they cannot prioritise one creditor over another.

Now, normally that would present few problems, but when it comes to making settlement offers, it means all of them get the same or similar deal, so there will not be much room for any negotiation here.

This is a thread from 2022 asking a very similar question to you, my advice was the same then as it is now:

StepChange Settlement Offers to Creditors — MoneySavingExpert Forum

You will get a much better result, by doing this yourself, over a longer period of time, as these things are more of a marathon than a sprint, but its up to you how you play it.

ManyWays

I thought that Stepchange send the offer letters off and then tell you which ones have been accepted. Why not ask StepChange if this is how it works or if you have to hand over the 12k now?

You know what the other options is, its up to you what you want to do. 

sourcrates

The lump sum is 8k.

The OP wishes to settle 12k of debt for the lump sum of 8k.

Maroisme

ManyWays said:

I thought that Stepchange send the offer letters off and then tell you which ones have been accepted. Why not ask StepChange if this is how it works or if you have to hand over the 12k now?

You know what the other options is, it’s up to you what you want to do. 

To clarify the debt amount outstanding is £12k and we will have a lump of £8k to settle.

my partner confirmed when she spoke to SC on friday they said once we have the funds readily available then call them back and they take all details over the phone and also send a form to be completed, they then offer the settlements to creditors on her behalf, stating they are confident that amount would be accepted and it should only take up to 3 days for confirmation. They didnt clarify if we send the available funds immediately or once the negotiations have happened. Of course i wont be transferring anything until we have acceptance in writing. 

Just for additional information, of the remaining 8 creditors, all but one have been sold on to third parties, link, pca and moorcroft. The remaining debt is with nationwide whom I’ve read can be hard to negotiate with, some stating they have been told they will only do it through SC. 

All that in mind we are going to proceed with the SC route after confirming we will not be sending any money until we have settlements confirmed in writing. 

Will keep the post updated as we go through. 

Rob5342

I think you are making a massive mistake doing it that way and will seriously regret it later, you could get a much better outcome managing it yourself. I'll leave it there but I feel morally obliged to say something when someone is proposing spending £5000 to save themselves writing a few letters.