Hi mikyla,
If you have an overdraft it would most likely make sense for you to include it in the debt management plan. That would involve changing bank accounts. However I think if there was disclosure in your DMP about the overdraft it could fairly be excluded. If amongst your creditors you owe money to an organisation connected to your current account (for example a Natwest current account & a Natwest credit card) you will need to change accounts. The reason for this is that often in the small-print the organisation will have the ability to move funds between accounts where payments are behind.
Debbie is referring to a Full and Final settlement. That might mean raising a £10000 lump sum and trying to negotiate with your creditors (owed for example £15000) to accept the lower amount and write off the remainder. This can work really well for all concerned but to get agreement from all creditors can be a very time-consuming affair.
You've mentioned that you recently remortgaged and so a remortgage isn't possible. There are likely to be penalties from your existing lender for the first two years (though not always - worth checking) which might make this a very expensive option. Perhaps for you a DMP with a view to remortgaging to clear the debt when your existing mortgage ends might make sense?
Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk
