Bankruptcy or reduced final settlement?

Flame7

I have my appointment with the insolvency clerk next thursday where I'm presenting my bankruptcy papers/fee and starting proceedings. However, my mother has just offered me £5000 lump sum to pay off some of my debts.
I currently owe £11,000.

Would it be worth me contacting my 5 creditors with a pro rata offer of a full and final settlement, or continue with my bankruptcy proceedings?
I have no property/large assets to lose if I become insolvent but I'd rather not have to go through the whole interrogation process.

Do I have a chance of writing off my debts with £5000? should I postpone my bankruptcy petition until I've at least tried?

Advice appreciated.

xx

lifesuckssometimes

Flame7 wrote: »

I have my appointment with the insolvency clerk next thursday where I'm presenting my bankruptcy papers/fee and starting proceedings. However, my mother has just offered me £5000 lump sum to pay off some of my debts.
I currently owe £11,000.

Would it be worth me contacting my 5 creditors with a pro rata offer of a full and final settlement, or continue with my bankruptcy proceedings?
I have no property/large assets to lose if I become insolvent but I'd rather not have to go through the whole interrogation process.

Do I have a chance of writing off my debts with £5000? should I postpone my bankruptcy petition until I've at least tried?

Advice appreciated.

---

For £11000 debt i would find another way. First are you working or on benifits
i would try DMP. For that debt you owe you could pay around £75 a month or more to clear it quick. Dont rush in to quick contact www.cccs.co.uk plus if you clear £5000 your mum gives you.. You could increase your payment each week but you would clear the rest of the amount in no time...

GeorgeUK

There's no harm in contacting your creditors and asking if they will accept 30% F&F sttlement. This should give you a bit of room to negotiate.

There are a few threads where people have managed to negotiate F&F for these amounts and less. If it's the only way a creditor will get any money, then it's in their interest to do a deal.

I take it none of the debts are statute barred?
If they are not with the original lender, have you requested CCA's and done all that?

chevalier

I agree with the other posters, I am surprised that you insolvency practitioner hasn't suggested something other than bankruptcy. If you could do some extra shifts at your current job, or get a second one, you could probably clear the remaining 6k of debt even if you don't offer them full and final settlements.

Don't be panicked into the wrong move. Call cccs or payplan and ask them for advice. Their advice is free.
chev

Flame7

Thanks for your replies.

I've been on a DMP for 2 years with the CCCS. I've been unemployed due to illness for a year but have now found work on a self employed basis but my income only just covers my expenditure. I'm hoping to get more work in future but its not guaranteed.

My 11k does sound a small amount to go bankrupt for compared to some, but I felt like I had no other option (before the 5k was offered).

I'll give it some more consideration

x

Flame7

GeorgeUK wrote: »

I take it none of the debts are statute barred?
If they are not with the original lender, have you requested CCA's and done all that?

I've never heard of either of those but I'm guessing (after having a search on the boards) that a CCA is a consumer credit agreement. Can someone point me in the right direction of further information about this? I'm sure its on the forum somewhere but I can't find it. Am I right in thinking that if the debt is sold on a CCA isnt always legally binding and therefore the debt isnt enforcable?

Bismarck

in case no one mentions it...get any reduced & final settlement offers in writing and if need be, ask on her for some advice as some of the creditors will sense blood if there's a £5000 lump sum to be had....they'll take what they can and try and enforce a balance if you don't watch them.

sorry if I'm labouring the point but there have been instances of this recently and I'd hate to hear of it happening if it could be avoided.

Agreed, £11K isn't a lot to be pushing you towards BR...especially if you're having to pay for it! If the amounts you owe are evenly spread between the creditors, I can't see that any one in particular is going to want to make you BR as they'll get the costs and not much to show for it.

rog2

Certainly, flame, with debts of around £11,000, I would reccomend looking at all other solutions befre opting for bankruptcy, and £5,000 would certainly go a long way towards getting rid of your debts.

'Full and Final Settlements' are an excellent way of getting rid of debt, but it is not, by any means, an easy way. There is no guarantee that all of your creditors are going to accept your offer and most will try to hold out for more than the 45% that this sum would allow you to offer. However, it is most definitely worth a try, but before you make any offers, you should read the National Debtline factsheet on 'Full and Final Settlemen Offers':

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

Better still, talk to them on 0808 808 4000, or CCCS - 0800 138 1111 or your local CAB.

A couple of hints:

Be prepared to negociate - never make your best offer first.

Tell your creditors that these fuds are only available for a limited period, and, unless they accept your offer within 14 days the funds will no longer be available to you, and the offer can no longer be made.

In the event of any creditor agreeing to your offer, make sure that they accept your offer 'in Full and Final Settlement' before you pay them. Accept no other wording, such as 'partial settlement' or 'settlement' and keep copies of all correspondence.

Good Luck

GeorgeUK

Really wish it was that simple Flame. This is an older post but Rog2 and Weller covered just about everything to do with CCA's in it.
http://forums.moneysavingexpert.com/showthread.html?t=578486

Basically if a Debt collector (not usually the original creditor) can't produce a VALID copy of the customer credit agreement within 12+2 working days, then the debt is not enforcable outside of court. At this time payments need not be made to the debt as they have not proven that the debt is yours. After a further 30 days, if they are still chasing the debt, then they are committing a criminal offence and you need to write to them, Trading Standards and Office of Fair Trading about this criminal offence.

It's slightly different for agreements signed after 5th April 2007 as there was a change to the legislation, but it doesn't sound like any of your debts are that new.

A debt is statute barred after 6 years in England (5 in Scotland), if you have not made any payments towards the debt in that time and have not acknowledged the debt in writing. If this is the case, then the debt is unenforcable. You just neeed to make sure you communicate this with the DCA.

Please note though that it is advised that you never provide your signature to a DCA either on a letter or cheque as in the past there have been cases of "manipulation" using graphics software to transpose signatures from one letter to another.