Currently on a DMP with opportunity to clear debts – Help Needed!

[samdon1988]

Hi all I am after some advice.

 

I am currently on a DMP through Step Change and I have been paying £422 a month for about 3 months now.

 

I am due to inherit some money so I want advice on paying the debts or ‘settling them’ as I have seen in previous posts. Full and final is what I have seen crop up a lot.

 

The balances are as follows;

 

£27,814.00 – Sainsburys Loan showing as ‘1 month late’ on my credit report

£2,265.00 – Halifax Overdraft

£2,028.13 – Halifax Credit Card

£3,826.00 – MBNA Credit Card showing as ‘1 month late’ on my credit report

 

I have seen posts about offering 20% to each firm, can someone point me in the right direction for templates ect. or advise what I they recommend I should do.

 

If I can get them all settled and get myself off the DMP how long will my credit file be effected for?

 

Thanks, Sam

[dx100uk]

are they still owned by the original creditors

or are they sold to DCA's.

and are any of the debts defeulted

[samdon1988]

They are all owned by the creditors and I haven't seen a default - just the 'late payment' showing at the min... the DMP is young though only 3/4 months old

[dx100uk]

well I don't think the late payment will hurt you much

 

 

if theres no PPI or anything like £12 penalty fees to reclaim

there are letters in the debt collection library section.

 

 

original creditors don't usually give much of a discount for F&F's.

[samdon1988]

hi thanks for your reply, I have looked in the debt collection library but nothing jumps out at me.

 

Do I need to write to each lender a letter asking for F&F and is there a template for this?

[Bazooka Boo]

They are all aware that you're in a DMP, and have stopped all interest?

[samdon1988]

They are all aware that you're in a DMP, and have stopped all interest?

 

Yes i believe so all letters and emails have stopped etc. And my plan is live

[Bazooka Boo]

When did you take the credit cards out?

 

The Halifax overdraft, how much of it is fees/penalties?

Have you reclaimed these?

[samdon1988]

none of it, the limit is £2,500.00 and it is reducing by £65 per month

 

the Halifax card is around 4 years old but the MBNA one is less than a year old (has 4 years interest free)

[Bazooka Boo]

OK,

 

Well IMO negotiating a F&F figure is going to be difficult, your CRF will be marked for the next six years anyway, and unless they are going to mark your files as settled offering a F&F then I'd be mindful of putting the money to a better use.

[dx100uk]

http://www.consumeractiongroup.co.uk/forum/showthread.php?387498-Mortgage-shortfalls-Full-and-final-settlement-letter-**Correct-as-at-October-2013*

 

 

you want the debts marked as settle NOT partial settlement

or the account removed completely.

 

 

PS is as good as a default.

[rennuz]

I referred samdon1988 to this forum as it helped me out no end in the past when I had similar debt amounts and sorted them all out.

 

So from chatting I mentioned to Sam that the debt management plan will go on forever and a day and lenders could add defaults in the meantime anyway and that may be in 2 yrs time. So either way he is going to have a bad credit file for a while.

 

Why not just use the inheritance to clear the file and pay off as much as possible so he can start a fresh. The inheritance will clear 20% of debt in total so my suggestion was to offer full and final, yes be mindful that it will not be great on credit file but its the debts gone.

 

Is this a suitable plan? When you say mindful of putting money to better use, what other options do we think he has?

 

I can see the Sainsburys loan is the big issue here, any experience with them accepting a full and final at all?

 

Thanks

[dx100uk]

when they are with the oc's you get very little leeway on F&F

but always worth a try

[rennuz]

OK, all mine were with the original lender and I got between 15 and 20% F+F. This was back in 2010, have things changed alot since?

 

I am not a fan of the debt mgmt, as far as I can see they can go on forever and once at the end of them then there is still another 6 yrs after that to sort out a credit file. Also with risk of default etc and debts being sold on in the meant time.

 

What other options are on offer here to clear things? Does he have to wait for debts to be sold on for it to be a better F&F.

[dx100uk]

15-20% is better that awaiting DCA's to buy them

and by then typically they are defaulted.

did your get marked settled

or partial settled?

[Bazooka Boo]

I am not a fan of the debt mgmt, as far as I can see they can go on forever and once at the end of them then there is still another 6 yrs after that to sort out a credit file..

 

The file should be defaulted already, they can't enter into a DMP, then at the end of it simply 'default' the credit file.

 

If flogged onto a DCA then the offer of a F&F payment is advantageous to them, as they will have paid as little as six pence in the pound for them.

 

When it is with the OC, you're more likely to be able to agree a token payment with them until things either improve, or they get bored and flog it on as a toxic debt.

 

All debt mgmt does is reset the limitation period with each payment.

[rennuz]

I asked for my own to be full and final and settled. Now all dropped of credit file. Barclays wouldnt play ball so that defaulted, now gone from file but I pay them £1 a month and have done for 8 yrs, I just get statements every 12 mths with another £12 off the balance. Not been sold on, perhaps it will in the future.

 

When you say reset the limitation period, what does that mean specifically?

[dx100uk]

can never become statute barred

[rennuz]

So if thats the case then is it better to go into default hide away for a few years then offer some money to clear it later down the line, or perhaps just take the hit and move on....

 

Thats why I dont love the debt management scheme, bad credit anyway and paying them all off.

 

I must add at this point though, not paying debts is not a good thing but if its too much to handle then a happy medium should be found, i.e. full and final settlement, at least both lender and borrower have agreed.