MBNA Offering Help Again

[northumbrian69]

Hello again[:)][:)]
We are still waiting for our IVA proposal from Grant Thornton, it's been 8 weeks now, apparently proposal is with 'proof writer' and creditors meeting will be in April, fingers crossed [:(][:(]
In the meantime trying to keep creditors fully informed, have managed to calm most of them down for the moment, they are all fully aware of the pending IVA situation.
MBNA had referred me to a debt collector, then this morning got a call from MBNA's Insolvency Department, a really nice lady who informed me my account had been transferred to her and all the hassle from the debt collectors will stop[:D][:D]
She told me there is a better solution to my predicament other than an IVA and I should really negotiate directly with all my creditors to agree a 'partial settlement', this is the second call from MBNA suggesting this solution. Well I really don't want to rub any of my creditors up the wrong way so I asked her to explain exactly how this works, basically she wants me to take out a loan (there is very little equity in the house) for the maximum amount I can raise for a payment of £720/month over a maximum of 10 years, this money would then be distributed pro rata (approximately 42p/£) to all my creditors (assuming they all agree) as full and final settlement[?]
I asked, could I not arrange to pay this amount over 10 years as a kind of watered down Debt Management Plan, she said no it had to be a cash settlement now.
Well this would be great if anyone would lend me any unsecured money, I have not paid any of my unsecured creditors, (as advised by Grant Thornton) for the last 6 weeks, so there is little chance any reputable bank would agree to lend me anything at all. [:(][:(]
I did'nt say no, I want to keep them sweet, I asked for details to be put in the post.
If I find out any new information I will post it on this forum, has anyone else had similar dealings with MBNA [?][?]

[i_a]

Hi,

I have 5 MBNA accounts and haven't paid them for 2 months now. I'm getting all the same offers/threats as you are.

I wouldn't even consider what MBNA are proposing. Even if you could get a loan to pay the same amount now to the creditors that they would get in an IVA (like you say extremely unlikey anyone would lend you the money) you are just getting yourself into debt again for 10 years.

Isn't the idea of an IVA that you are free of debt in five years and in exchange for that you have to live within a tight budget without borrowing anything else?

All MBNA's proposal would do is shackle you with big repayments for a much longer period and they are only interested in getting money for themselves.

I would also doubt you will get all your creditors to agree to this.

Well that's my rant over for today!

[go_4_broke]

Thanks for that northumbrian, very interesting and I think you are the first person to extract an almost straight answer from MBNA as to what they are proposing.

However I'm a bit puzzled by the figures. A loan for 10 years at 720 a month should give you around £60,000 now. 5 years gives around 35k. How does this relate to what you owe ?

-Best



'5 years sticking my head into the Lion's mouth of debt !'

[thebear29uk]

Hi all

I have had the same conversations with MBNA. They suggested I try to negotiate with all my (nine) creditors for "short settlement". They have now put it in writing and this is what it says

"I can confirm that a payment of £9600 would be accepted as a one off short settlement payment and the remainder would register as a short settlement. Thats a reduction of £14400 on your debt. Once the payment is received along with a breakdown of your income and expenditure, the remainder would register as a short settlement with Licensed Credit Reference Agencies, however you will not have to repay the remaining balance and MBNA will not pursue the matter further, nor would they pass the debt to external agencies to pursue."

They also say that "our external agents contractually cannot undercut our offer, therefore you will not get a better opportunity to settle this debt at such a small percentage."

They are willing to settle outside the IVA for 40p in £ and maybe this is why they are rejecting so many IVAs at the moment. If they sell the debt they are saying it cannot be settled for less than 40p.

My situation is such that a "no" vote from them would fail my IVA because they have more than 25% of my total debt. If I use the money from the endowment I am cancelling I can short settle with them and make an offer in excess of 50p in £ to my other creditors. This means I am not favouring MBNA as they are settling for less than they would get in the IVA. At least thats my understanding anyway.

But anybody who doesnt need the "yes" vote from MBNA would seem to better sticking to their guns and keeping them in the IVA.

Hope this helps some of you

Dave

[go_4_broke]

Hi Bear,

Yes sorry I think you mentioned that (or something very like it) in a previous post.

On the face of it it seems daft for MBNA to settle for 40p in the pound ex-IVA and not 50p IN an IVA.

However because of the time/cost factor the payout in the IVA could be viewed as worth as little as £4,000 up front even at 50p/£.

Also as many IVA's fail (I think it might be about 1/3 overall) they would view this a risk.

So I think there is probably some method in their madness.....

-Best


'5 years sticking my head into the Lion's mouth of debt !'

[MelanieGiles]

If you are thinking of settling directly with one creditor in isolation to all other creditors whilst insolvent, just make sure that this creditor is aware that a better offer might be available to them under formal insolvency proceedings.

If possible, get them to acknowledge this matter in writing so that no-one can claim that they were unfairly treated at a later stage. It would also be advisable to speak to other creditors to see if they would be prepared to accept a similar settlement outside of insolvency proceedings.

And ensure that your IP details any settlements effected with creditors for full transparency. Care should also be taken in using an asset to effect an early settlement with one creditor, and then offering a five year repayment programme to others. The remaining creditors may not feel that they are getting a better deal.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[neverending]

Hi
This tactic from MBNA seems a little worrying,to negotiate with one creditor is fine but when you have several it would be almost impossible to get an agreement from all.
Although Daves proposal seems to be in his best interests he is still favouring one creditor and if his subsequent IVA is not accepted then he is back to square one with only MBNA paid off.
One of the biggest pros for an IVA is the legal protection from your creditors once it has been agreed.
My advice would be to leave it to the experts

[i_a]

Couldn't agree more with Neverending.

As I have 22 creditors it would be completely impossible to negotiate with them individually anyway!!

Fielding the phone calls and letters is bad enough.

[go_4_broke]

If they sell the debt they are saying it cannot be settled for less than 40p.

That sounds like cobblers though. I would have thought any settlement terms would be entirely down to the company buying the debt, and may well be better than MBNA's.


'5 years sticking my head into the Lion's mouth of debt !'

[thebear29uk]

Hi all

I couldn't agree more with Neverending when he says leave it to the experts. Melanie is my IP and I'll be guided by what she thinks is best. I sent the post because MBNA seem to be topic of the day at the moment. They are rejecting lots of IVAs and trying to persuade their debtors into DMP. I was given an alternative to the short settlement which was reduced payments for 125 months. Like Neverending says the IVA could stil fail and I'd be back to square one. I'll let you all know how this progresses.

Dave

[go_4_broke]

125 Months = about 10.5 years. Ouch.

'5 years sticking my head into the Lion's mouth of debt !'