lump sum iva or 5 years

[james.a]

i have debts of about 40k and was about to arrange an iva but my parents are willing to give me 25k as a gift ( will pay them back over years)

if i offer a lump sum of 25k for debts of 40k would this be the best advice.

i was told that with my current income / outgoings i would be paying 400 a month for 5 years which equals 24k

has anyone any ideas

also worked out this equals 0.63p to the pound

[MelanieGiles]

Hi james and welcome to the forum

If you have this sort of money readily available to you, I am sure an IVA based on a full and final settlement would work. How many creditors do you have in total? If there are only a few, you might also like to try negotiating with them directly, and thus avoiding the fees of an insolvency practitioner which could then be directly passed to the creditors. Once you get past four or five individual creditors, this can be more difficult - but worth a try nevertheless.

[james.a]

i have the following criditors:

credit cards:

hsbc gold card - 9k
mbna gold card - 4k
barclay card - small amount
aa card - £200

loans

hsbc bank loan 10k non secure
britania bank loan 5k non secure

secure loans and 2 mortgages - i guess these cannot be sorted but i count them as part of the debt

do you know if any of these would be able to take a lum sum?

[MelanieGiles]

Your secured loans and mortgages would not be taken into account in any settlement - and do you have equity in these properties?

As the majority of your debt is with HSBC, you might wish to try and offer them a settlement based on a pro-rata proportion of your father's loan to test the water. You have nothing to lose!

[james.a]

can you explain settlement based on a pro-rata proportion please. also what i di to achive this.do i offer them the full amount? as i would aslo like to try it with the others.

hsbc have the major amount of a total 23k

my houses are a sad state of affairs, both rented out but one not meeting the full mortgage. one has about 20k profit if sold but very hard to sell these days and the other would leave 10k negative equity if sold, my plan is to keepthem untill they both are in profit.

[MelanieGiles]

If you have £25,000 available and debts of £40,000, then each creditor should be offered 62% of their balance in full and final settlement.

[abc]

I have recently tried to do something similar for someone and to this day not received a response from HSBC. They will not give you a number for someone to speak to in the UK.

As Melanie sugguested it is worth a go but do not be surprised if ou do not receive a response.

[MelanieGiles]

That's the trouble with this type of deal, and I have had the same experience as Alan reports. I once tried to broker a settlement with two creditors for a client and it took over 18 months to get sensible responses.

[james.a]

would a dmp be worth looking at

[Viki.W]

James, how much disposable income do you think you would have each month after ALL of your secured lending, household costs, utility bills etc?

[MelanieGiles]

A DMP is for ongoing payments to creditors and not full and final settlements, although a DMP company might be able to help you broker a settlement with your creditors.

[Soulgrowth]

Paul Johns who posts as "Reviva" was mentioning something to me at the "Frugal Friends" meeting on Saturday about doing 'negotiations' with creditors. It might be worth contacting him through the experts page James ... I always think it's good to have someone who knows what they are doing on your side [:)]

Good luck.

Debbie

[MelanieGiles]

Yes - Paul and his team have very successfully negotiated a settlement with one of my former client's whose IVA was rejected by a certain bank. I would not hesitate to recommend them if you feel that you need some help.

[james.a]

yes i will contact him thanks. from talking to other people i would be able to afford a dmp of 850 a month for 4 years, then negotiate a lump sum after it set up

[MelanieGiles]

Why do that if you have £25k available now?