Nearing the end of my DMP – advice on full and final settlement offers

Philallen84

Hello,

I would appreciate advice from anyone who has been in a similar position or has successfully negotiated full and final settlements.

I have been on a debt management plan since May 2022 approx arranged through PayPlan & now have approximately 6 months left on the plan

My current position is:

- Total original debt: approximately £40k

- Current total balance: approximately £3915

- Number of creditors: 14

- Current monthly DMP payment: £775.02 per month

- Amount paid into the DMP so far: approximately £36k

- Expected remaining payments: approximately 5.5 ish

- Possible full and final settlement fund: approximately between £1.5k - £2k

The debts are currently owed to original creditors x 2 and the rest are debt collection agencies which have had Interest and charges frozen, and all payments have been maintained as agreed. Most of the creditors have also defaulted as far as I’m aware.

Because there is only a relatively short time left on the DMP, I am unsure whether making full and final offers would be worthwhile, particularly given the remaining balances. I would be grateful for experiences and guidance on:

1. Whether it is sensible to approach creditors at this stage.

2. Whether offers should be made pro rata according to each outstanding balance.

3. What percentage of the balances people have managed to settle for.

4. Whether creditors are generally more likely to accept offers when the money is available as a lump sum.

5. Whether I should make offers through my DMP provider or contact creditors directly.

6. What wording or written confirmation I should obtain before making any payment.

7. Whether settling the accounts early could have any disadvantages compared with simply continuing the DMP.

I understand that everyone’s circumstances are different, and I am not expecting anyone to predict what my creditors will accept. I am mainly interested in hearing what has worked for others in a similar situation and anything I should avoid.

Thank you for any advice and help you could provide me 🙂

Rob5342

I'm not sure how open they would be to offers given that you have already paid 90% of the debt, but you might as well give it a try as you have nothing to lose. Approach the creditors yourself as Payplan will probably want you to just split whatever you have between all your creditors as an extra payment.

gwynlas

I would be wary as your credit score could be affected by partial settlement markers which would last another six years whereas if you allowed debt to default prior to DMP then current markers would fall off in 2028

ManyWays

https://forums.moneysavingexpert.com/discussion/comment/82131226#Comment_82131226

A partial settlement marker does not affect your credit score.

If there is already a default on there, then the debt will drop off after 6 years, settled in full, settled partially or still being paid.

If a debt has a payment arrangement Then
1) you should ask for a backdated default date to be added
2) settling the debt partially will at least stop the current problem a few months sooner.

ManyWays

I think very few lenders will accept and then probably they will want 90-95%. No one will take a low offer. I am not sure i could be bothered to do this.