Urgent help re: settlement figures

[worriedsick]

You may have seen my other post about my nightmare debt!

 

Anyway today I have taken some advise from CCCS and also spoke to my mortgage company. I feel a bit better now!

 

They have offered me a loan that is basically an extension of my mortgage - it is secured on the house, but am just adding to the mortgage, but I can do it for 5 years only, rather than the mortgage term.

 

They've offered me a deal at 6.39% because unbelievably my credit rating was good, so I am going to put 70K onto the mortgage and pay it off over 5 years - we have done our calculations and it works out well for us.

 

Now for the question and help I need from you guys.......when I get the money I will need to sort out what cards to pay. I was wondering if I could pay a settlement on any of them and if they would accept it. None of them are with DCA's and I have maintained the monthly payments, and do still have equity in the house, so they may well think I can afford to pay the full amount outstanding. But, because I have paid them horrendous amounts of interest of the years I wondered if there was any way of doing this - I have seen that people have done it before and settled for 70% of what they owe etc, but did they have to prove they were struggling to pay them? On paper I can afford it, but just want some back of what they have fleeced me!

 

How would I go about asking for a settlement figure - do I tell them I am about to pay it off in full? And do I suggest a figure, or do I just pay the whole amounts? It has to be quick as if i write to them and await a reply it will be at least another month before it is sorted and I was hoping that I could call them and ask them and just pay it then if they gave me a settlement. I want to get these debts paid off within the next couple of weeks if possible and move on with my life after years of misery.

 

Sorry again for the ramble, I just need some quick advise if any of you can help.

[sequenci]

CCA the creditors, see what comes back. If they cannot prove the debts are enforceable they may accept a very low settlement figure. I must also add that for the vast majority of people turning unsecured debt to secured is a very, very bad thing to do. I've lost count of the amount of clients that have done this and then had a massive change of circumstances which has led them to losing their property completely. Please be careful.

[worriedsick]

thanks for the response.

I have looked in depth at this, and if you read my other post will see that it is the only viable action for me. It will reduce my payments from 3K a month to £1300.

Yes the debt is unsecured at the moment, but if I cant continue to pay it then they also have a right to make a charge on your property, so whichever way it needs to be paid. I have also reduced the risk of having to find 3K a month to finding 1300 by doing this, should the worse happen.

I think the response you gave is quite scarey and could put people off doing things - there isnt a blanket case that suits all. In my case this is a very very good thing to do rather than a very very bad thing.

I have not gone into this in a rash way, I've spent months looking into things and deciding. I am very unlikely to lose my house even if the worst happened. It is also not a secured loan I have taken out, it is an extension on my mortgage really. Basically I am borrowing money that is already mine anyway from the equity in my house to pay off debts that have crippling interest rates. How can that be a bad thing?

[sequenci]

I'm really glad you have done your homework, you are quite correct that there isn't a blanket solution for all and I would agree that for certain situations a secured loan *may* be the best option. I have, however, had clients who have lost their homes due to them not being able to keep up with the repayments on their secured borrowing, you seem to have investigated all possible options and not made a rash decision so I'm sure things will be all good for you.

 

An extension on your mortgage is surely secured against your home, no? A secured loan is no different to a mortgage as they are subject to a charge against the house.

[worriedsick]

yes, it is secured on my home, but even with the additional amount added to it, the bank only own 36% of the house - i.e the mortgage outstanding is only 36% of the house value.

 

Feel so relieved now that I have sorted something out.

Thanks again

[tagal]

Hi, from what I understand from reading through this site and others, the only way creditors are likely to accept a reduced full and final settlement is if you have defaulted and have been paying a reduced amount ie. on a DMP.

 

I was in a DMP for 12 months, by this time all cc debts had been passed to debt collection agencies who at first accepted payments on a DMP, but then out of the blue started to threaten charging orders, which Egg successfully obtained.

 

Further on, I was able to offer all creditors an equal percentage (in my case 65%) to settle the account and all but one accepted. The thing I understood is that all creditors have to be offered the same percentage. There are template letters on the National Debtline website. I have been told by various people that the longer you have been paying a reduced amount the more likely a full and final settlement will be accepted. I would add that Egg told me they never accept full and final settlements unless the debtor has a terminal illness, very nice people I don't think.

 

Hope this helps a little.