Debts sold to Paragon Finance and others

[chrissiej]

Hi, I have had a DMP running since June 2011 and during that period, due to reduced income and inflation etc, my payments have reduced quite a lot from the initial level - from £600+ per month to under £200.

I can see from looking at the payment history for each debt, that there seems to be a "tipping point" for the original lender to give up and sell the debt on to outfits such as Paragon Finance. I am now starting to get "limited time" offers for settling the outstanding amount - sometimes as much as 10% off!! :-)

I have two questions really -

Firstly - does anyone know how much the debts are sold for - I would imagine they go for pretty small percentages.

Leading on from this, secondly - if I respond to their "limited time" offers, how much should I be counter-offering as full and final settlement?

Hope someone can give me some guidance, I would really like to clear these if at all possible and I am hoping that two years in and a dwindling monthly payment would encourage some of them to settle, but need a steer as to how much I should be offering.

(I realise that if I get a good figure and want to pay, I need to get a third party to do it on my behalf to keep it watertight!)

Thanks in advance to anyone who can help

CJ xx

[labman]

Re: Debts sold to Paragon Finance and others

They buy portfolios of debts en masse, so it's impossible to place a specific figure on it. Some debts turn out well, some badly for the buyer. Usually it is between 10 and 20% of the overall value of debt I think.

In terms of offering F&F's on your debts, just as you worked everything out pro rata for your DMP, so you do the same for F&F's following a formula.

The Formula

Lump sum available x Each debt

÷ The total amount you owe

= Offer to the Creditor


Example

You may have £10,000 owing to 4 creditors. You can raise a lump sum of £4,000.

- You owe: £2,300 to visa

- £1,200 to a catalogue company

- £4,500 to a loan company

- £2,000 to the bank.


Use the formula: £4,000 (lump sum available) x £2,300 (debt to visa)

÷ £10,000 (the total amount you owe)

= £920 (offer to visa)

Your offer to visa is £920. You then do the same calculation for each creditor, using each individual debt in the calculation.

(With thanks to Flaming Parrot from whom I 'borrowed' this from a previous post))