On a DMP with StepChange

A question about : On a DMP with StepChange

Hi all

Hope you can help.

I've been in a DMP for 3 months and things are going well.

There is a chance that at Xmas I may get a bonus at work of maybe 1500-2000.

Am I allowed if on a DMP to write to one or two of my smaller credit cards and offer this in a full and final settlement? Is it better to try to negotiate a couple of early settlements to get them gone or just to carry on paying the agreed instalments so they are all paid off in full?

Best answers:

• Hello there,
  The general rule is that all creditors should be treated in the same way - that means any lump-sum should be offered to all on a pro-rata basis. That said, any arrangement which reduces your overall debt is a good thing - and some folks have successfully offered full & final settlements to some of their smaller creditors.
  Stepchange may be able to help you with the negotiations. As an alternative you may wish to negotiate yourself. Here's our full & final settlements guide:
  https://www.nationaldebtline.org/EW/...s/Default.aspx
  Best wishes,
  David @ National Debtline.
• Thank you David
  I get what you're saying but I think psychologically I will feel
  Like I've done something positive by getting rid of one debt early!
• Hi TTDI,
  It's very early days and it's unlikely that any creditor will accept an F&F if the debt is still with them anyway...
  Personally, for the time being I'd maybe make an overpayment to SC for distribution and keep some (maybe Ј500 to SC and the rest keep) as an emergency fund which you can access if you need it or add to and maybe consider using for F&F's in a year or so time?
  MB
• 3 months in is early days, but by December it will be six months which is more possible for F&Fs.
• I'm a few months further on than you and just waiting for a PPI claim refund to land so I can try this. It's almost 7 months since my creditors had a "full" minimum payment so I'll post up when it happens.
  For more inspiration check posts by Moohound who did this after 10 months of a DMP. I found her posts a great help to me as I plotted to get the debt down.
  Kate x
• I wouldn't make an over payment, it will only lessen your chance of getting good settlements later. Why not make some low offers and if they don't accept, stick the cash in a high interest account and wait.
• Hi all and thank you for your responses.
  Maybe if I get some extra money I will try in the new year and see what happens!
• Thank you
  I guess the tricky thing is figuring out who is being preferred - the one that gets half now, or the one that gets paid in full over the next four years....!
• The common theme throughout these posts is that Stepchange will always want to redistribute equally, however in passing I happened to mention that one of my smaller creditors bout 690 offered fnf for 500 and that my brother might be up to paying this (not really!) The person I was talking to seemed impressed and said go for it! Did not accept as I believe when the time is right can get it for much less, but interesting resoponse from SC?
• If it helps, I've been able to get a few F&F's for some small/mid size debts although I was about a year into my plan (give or take a month or two).
  When I contacted SC for advice they advised that if a "friend or relative" gave you some money to help out then it can be used however you like but keep them informed and keep your plan updated so they know that a "friend or relative" have given you the money to repay the debt and that you have not incurred additional debt in obtaining the funds...
  They also went on to tell me that in some cases where the loss of a debt has been noticed, explaining that their monthly payment has gone up tends to smooth out any 'wrinkles'
  MB
• Thanks guys for your advice. I guess the only other thing on my mind is which looks worse - payment in full over time, or early settlement at a discount?
  I guess at some point in the future I will want a mortgage or something - is this something to think of?
  Or are both options so trashing one credit score anyway that that's like asking if you'd rather have a slap in the face or a kick in the ****?
• If you are on a DMP you want early defaults and they're kind of inevitable. They'll drop off your credit file 6 years after registered regardless of what the settled/partial status is.
  If you have A (arrangement to pay) markers these are more difficult as I believe they drop off 6 years after you have paid.
  If you are on a DMP your credit file is likely to be pretty rubbish anyway. Plus, if you have the kind of debt problem that requires a DMP I think it's safe to say you don't have a deposit saved either.
  Using myself as an example the plan is:
  1. Get the debt paid as fast as possible (using F&F's if poss)
  2. Save a deposit (circa Ј10-15k)
  The DMP route is necessary for me because I don't currently have the means to service the debt. Credit file has floated off up the Creek for the next 6 years (I have 2 defaulted accounts) so a mortgage isn't going to happen before 2020. BUT (and it's a happy "but") if I can get the debt cleared sooner I can use the time waiting for the credit file to heal to save that deposit.
  Not nearly as doom and gloom as it sounds. My DFD has already dropped from 20 YEARS to 79 months and when my PPI refund comes through another 24ish months will come off without considering the added "bonus" of F&F's being accepted. There's also the potential to increase income and further reduce remaining debt. So whilst I won't be buying a house this decade the potential to bring the "property purchase date" forward is a great incentive and getting closer all the time.
  Personally I try not to look that far ahead. I focus on the here and now, having my focus on the future too much got me into this mess - I didn't take care of the present. Tackle one issue at a time, from your posts it seems you have 3 goals; debt freedom, credit file health, home purchase. Realistically that's the order they'll happen in too.
  Kate x