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chiram2015 wrote: »
I need some guidance as to what to do with my son's debts.
The total debt is around 4K with 5 providers and arose 2 years ago. As I had bailed him out previously, I decided not to do so for these debts to try and make him more responsible with his money
Instead of bailing him out we sat down together and arranged DMPs with the 5 providers but in 2015 he lost his job and unknown to me he stopped the DMP payments and they have never been reinstated (I only found this out last week).
He is now doing well in a new job and earns 24K p.a.
My big Q is
1. I could clear all the debts in full and arrange a payment plan to me from my son - this will clear his debt record quicker but my concern is that I am just going back to what I did years ago
2. We re-contact the providers and try and reinstate the DMPs
Any guidance would be very helpful.
lbahrani wrote: »
Good Morning, as title suggest im looking for some advice on how quickly to reduce debt and whether debt is managable or shall i sell a car that i need to reduce debt faster and make potential savings greater?
I'll try and be as clear as possible (but please ask if confused)
One Account Debt = £-12415.47 (Facility is £40,000) based against valuation of home at £165k.. Home is paid for through the legacy of my Dad.Option A - KEEP CAR Period: 16 Dec 16 - 16 Apr 21
Debt repayment @£257.59 p/month
53 payments @£257.59 = £13,652.27 (Interest = £1,236.80)Savings generated in Period (if keep car) = 53 x £627.84 = £33,275.52Option B. - SELL CARSell Car (have 2 cars in household required for both my partner and i to get to work) valued at £11,000 and reduce debt by £6000 and use £5000 to buy an alternative car.
Debt repayment @£257.59 p/month
27 payments @£257.59 = £6,954.93 (Interest = £539.46)
Savings generated in Period (16 Dec 16 - 16 Apr 21)
= 53 payments x £490.24 = £25.982.72 (A)
27 payments x £137.60 (whilst debt period is in effect) = £3715.20 (B)
26 payments x £395.19 (£490.24 - £137.60) (once debt is reduced to nil) = £10,274.94 (C)
53 payments x £490.24 (money available for savings) = £25,982.72 (C)Savings generated in period (if sell car)
(A) + (B) + (C) = 25,982.72 + £3715.20 + £10,274.94 = £39,972.86
To conclude the difference in savings generated is i keep the car is :-
£39,972.86 - £33,275.52 = £6,697.34 missed savings potential if i keep the car.Some help and advice would be greatly appreciated, please ask ANY questions for clarification,
krazykaz64 wrote: »
hi, I am currently on a DMP and due to an inheritance I am in a position to clear my debt (yay!)
my question is... is it better to let the company (Payplan) negotiate a settlement figure on my behalf or for me to contact my creditors directly?
It seems I have 2 choices ... pay in full or offer a lump sum
StepChange_Kirsty wrote: »
Thanks for your post.
It sounds as though you are in a good position at the moment as you’re able to meet the contractual payments to your debt and pay a contribution into savings.
I’m a little bit confused by the figures in option B but based on your summary it suggests that you would be able to save £6,697.34 more if you sell the car.
It all really depends what you are saving for and if the extra savings will make a difference to your overall plans. It certainly doesn’t look like it is essential for you to sell your car in order to be able to manage your debt but it would make you debt free more quickly.
A third option, if you want to clear the debts quicker, is to pay a little more each month to the debt and a little less into your savings. Again this really depends on what your future plans are.
Overall, as we specialise in problem debt, I think it might be better for you to speak to an Independent Financial Advisor who will be able to look at your situation in more detail. The can help with you choose a Financial Advisor who would suit your situation.
lbahrani wrote: »
Thanks for your reply. Really helpful. You're correct, effectively i'd be able to save approximately £7k more if i were to sell the car. This said, i'd have to source a cheaper car than at present, perhaps not as reliable as current car and go through the hassles of selling my current car for market value. Could actually do without that hassle having had time to reflect on your reply.
Saving, not particularly saving for anything specifically, just thinking about the future of our children, now 7 and 5. Would like to be able to take them on nice holidays and be able to afford nice things for them, but hey 'you cut your own coat....'
Which brings me onto my next question, if i may, how much should we save as a family? is there a general rule of thumb? what percentage of our our net income and other credits should we put aside for a rainy day? unplanned expenditure? the future? This is where i have trouble in making accurate decisions.
Currently, my salary pays for Living plue ALL bills over a 4 weekly rolling period. My wife's salary and other benefits goes to reducing our debt and into savings as mentioned above.
Your further suggestions and advice would be greatly appreciated and again, thank you for your reply to my original post.
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