Final settlement figure?

[dcs1407]

Hello

 

I found out this week that my brother has got a debt problem. He built up a lot of debt at univerisity, worked out a repayment scheme with his bank, but failed to make some of the payments, and now he has Fairfax Solicitors writing to him.

 

First of all I would like to thank you all for this website, and your very useful posts, it has helped us a lot and made it seem much less daunting knowing that others have been through exactly the same.

 

My brother is prepared to go bankrupt, he owes £9,000 and has no savings or assets. But I am able to lend him some money, and I'm prepared to do that so that he doesn't have to go down that route.

 

We realise that it is possible to offer a smaller amount to write off the debt. We have a template letter which we can use to offer this.

 

I can only afford to lend him £4,000, but I would rather it be less. Am I right in thinking that if he goes bankrupt, they get almost nothing? (I believe they can get some of the tax he pays on his earnings.)

 

If I offered £2,000 - would they be inclined to accept that, rather than force him to go bankrupt? Does anyone have any experience of making offers? Is there a danger of going too low? I am guessing if you make the offer too low, it would be difficult to increase it.

 

I would very much appreciate any advice on this.

 

Dan.

[cerberusalert]

For that amount of money your brother doesn't need to go bankrupt, for debts of £15K or less he could consider a Debt Relief Order see;

Debt Relief Order - Wikipedia, the free encyclopedia

and

Debt Relief Order UK Information Site

 

others will be along soon to advise on making offers.

[rory32]

What are the debts in relation too e.g. a loan, overdraft?

 

Are there a lot of charges on the account?

 

Has he sat down and created a statement of affairs showing his income and outgoings and his disposable income (if there is any)?

 

In terms of how much to offer it will really depend on whether he has disposable income and how much this is. Generally, personally, I would start at about 10% (don't expect them to accept this though - or any initial offer for that matter as they will want to maximise their income) and put a timescale for them to respond by. Also emphasise the fact that he has looked at bankruptcy but would feel that this would benefit both parties more.

 

The reason I say start at about 10% is that this leaves a lot of room for negotiating. You can always negotiate up but you have absolutely no chance of negotiating down the way.

[dcs1407]

Thank you for your quick responses!

 

Cerberusalert, he actually has a meeting with a solicitor to discuss the debt relief order, but doesn't think his monthly disposable income will meet the required level - he has been told that it has to be £50 or less?

 

Rory32, the debt is in relation to credit card. I see what you are saying regarding starting low, and it's interesting that you say they will not accept the starting bid. I was thinking that if you wrote to them and said we can only pay £2000, and they say no, and you then say well how about £3000? They are going to see that you have more money, and try to push you further. I was thinking it would be better to pick a price and say that is literally all we can pay, or go bankrupt. Have you heard of any cases where lower amounts were accepted? And does negotiating on the price useally happen then?

 

And does anyone have any idea generally how much these loans are bought for? How much would a DCA generally pay for a £10,000 debt for example?

 

Many thanks.

[harrassed senior]

Pennies in the pound, literally as low as 10%, so starting at 10% gets them their money back;)

[Bazooka Boo]

Is this just one debt on the CC, or a few here and there?

 

As Cerbs said, there is no need to go to the extreme of Bankruptcy. It is a good lever mind, to show the creditors that if they won't accept a lesser amount in F&F settlement, then the only other alternative is BR, and they get nowt!

[Bazooka Boo]

Pennies in the pound, literally as low as 10%, so starting at 10% gets them their money back;)

 

Yep, it has been said that one DCA bought a debt for 6P in the pound!

[Fred Bassett]

Pennies in the pound, literally as low as 10%, so starting at 10% gets them their money back;)

 

I'm sure it would be even less than that if they thought he was going to go bankrupt. There is a thread on here where someone has offered 5% and had it accepted.

 

Regards.

 

Fred

[Pinky69]

I think the 5% was Dotty. They are so desperate just now that they will probably accept washers!

[Fred Bassett]

I think the 5% was Dotty. They are so desperate just now that they will probably accept washers!

 

Sod it, I've probably offered too much then.

[dcs1407]

Is this just one debt on the CC, or a few here and there?

 

Bazooka Boo, it is just one debt.

 

Thank you for comments.

 

Is it true that if the DCA takes this to court, before my brother can file for bankrupcy, he then has to wait for the court hearing? And so is making an offer and threatening bankrupcy, risking that they may immeadiatley take this to court, to prevent him going bankrupt?

[spamheed]

Bazooka Boo, it is just one debt.

 

Thank you for comments.

 

Is it true that if the DCA takes this to court, before my brother can file for bankrupcy, he then has to wait for the court hearing? And so is making an offer and threatening bankrupcy, risking that they may immeadiatley take this to court, to prevent him going bankrupt?

 

This isn't the case, if a debtor declares themselves bankrupt and includes the debt before it goes to court, then the case is effectively discontinued - with all of its liabilities.

 

How can the courts enforce a debt that is included in a BR? and neither can a court cannot dismiss BR as an option before the case is actually brought before a judge. it would just make the plaintiff look a little stupid when the judge tells them they cannot continue

 

However, it is quite true that a lot of financial institutions will attempt to get the debt tquickly through the courts and ramp up the costs etc once they get wind of an intended BR - so that if there is any financial payout by the OR then they may get a larger share

[UnmoderatetheNet]

5% is nice and go for it, what do have to lose

 

Personally, and if there is NO CCA, I would wade in at 10%.

 

when they refuse this go to 15-20 tell them this really is my last offer and offer a £1 a month based on my monthly outgoings as an alternative

 

Faced with £1 a month for next 100 years or a 15- 20% they will bite your hand off and if they are really desperate they will take your first offer

 

.....oh and going bankrupt is dumb. I would never advise anyone to go bankrupt, not when there is such a thing as a CCA

[impecunious]

Does your brother still have an outstanding student loan?

 

I believe that Student Loans (amongst other debts) will be left extant after bankruptcy and will still have to be paid. In my case, when I considered the option of bankruptcy, my outstanding student loan an £15K+ and CCJ against me for damages claim (personal injuries) for £26K would still have to be paid - so I dismissed the BR option.

 

Just something to bear in mind.

 

In the great scheme of things, £9K debt doesn't seem so much - especially when most debt repayments can be "managed".

 

Perhaps not the best idea helping him out financially - but that's only my opinion.

 

Wish you luck!

 

Impecunious!

[julia21r]

Sorry to ask this on your post. I'm new to the website.

Does anyone know if I apply for a Debt Relief Order I will have to meet with an approved intermediary advisor face to face to make the aplication and show my documents or everything will be dealt with by phone, email and post?

[dx_]

I think the 5% was Dotty. They are so desperate just now that they will probably accept washers!

I wonder if I can get away with offering 5%. I'm close in closing one account (750 left not even close on the other 5) how much can I get away offering on the 750 one?

[Bazooka Boo]

Sorry to ask this on your post. I'm new to the website.

Does anyone know if I apply for a Debt Relief Order I will have to meet with an approved intermediary advisor face to face to make the aplication and show my documents or everything will be dealt with by phone, email and post?

 

If you click on this link;Formal Solutions: Bankruptcy, Administration Orders and IVAs - The Consumer Forums

It should take you to the formal solution threads, scroll down to the bottom of the page and you'll see a blue button with the words 'new thread' in it, click on that and you can start your own thread.

[julia21r]

Thank you