Full & Final Settlement Offers - Advice please

[fredsdebt]

Hi Fred,

 

This 25% short settlement offer seems to have come very quickly, do you have written confirmation that they will not pass on the shortfall to another DCA to collect out?

 

Hope you don't mind me asking but have you stopped paying? If so, how long ago?

 

I stopped in July with 2 MBNA accounts and currently deciding how to proceed as the one has not responded to my CCA request from the end of April and the other (Virgin) has produced a signed tear off slip!

 

D50

 

Hi, I have email from them confirming that they will NOT seek to recover the difference between the short settlement and the outstanding balance. I wont quote the exact wording or who it is from as I am still waiting to see that my account has been closed off. I am not quite sure how my credit file will look and I suppose I am hoping that they will honour what they have said. But I am happy that the email is good enough.

 

In your case the "tear offf slip" sounds a bit flimsy for them to enforce (asuming its dated before April 2007). Why not copy it and put up here (blank out personal details) and see what comments you get.

 

I had been paying a nominal amount since Jul 09 of £5 and could prove that I am on Jobseekers Allowance and my wife on part-time earnings. That seemed to swing it for them to grab the cash a family member had put on the table.

 

Thanks,

[fredsdebt]

fred have you been making token payments to all your creditors for some time before this offer?

 

Yes, I have ben paying £5 per month token payment (family money help) to each credit card. Only problem is that they (I think) taking the view that yes whilst you are on Jobseekers Allowance and seeking work this is ok. I think they assume that when I do find work I will then (seing as I managed it before) start paying each of the credit cards the hundreds of pounds £££ minimum payments each month again (basically hardly making any dent into what I owe because of the extortionate interest charges).

 

My view is that I CANNOT do that any more. I have family cash on the table and those that take it then great - I will do a deal. Those that dont then I will not pay any more (even the nominal £5) and let the account go to DCA etc.. then try and negotiate with them instead.

 

I do have a couple of cards where it does look like the agreements are unenforceable. I have informed them of this and am awaiting replies. In the meantime they are not getting a penny more from me.

 

Thanks,

[Dotty50]

Hi Fred,

 

Thanks for that info, I am planning to write and offer an amount, yet to be decided.

 

My alleged CCA is on this thread (post 16). I am pretty sure it was an online application.

 

http://www.consumeractiongroup.co.uk/forum/mbna/201852-mbna-virgin-cca.html

[bobdauilda]

Yes, I have ben paying £5 per month token payment (family money help) to each credit card. Only problem is that they (I think) taking the view that yes whilst you are on Jobseekers Allowance and seeking work this is ok. I think they assume that when I do find work I will then (seing as I managed it before) start paying each of the credit cards the hundreds of pounds £££ minimum payments each month again (basically hardly making any dent into what I owe because of the extortionate interest charges).

 

My view is that I CANNOT do that any more. I have family cash on the table and those that take it then great - I will do a deal. Those that dont then I will not pay any more (even the nominal £5) and let the account go to DCA etc.. then try and negotiate with them instead.

 

I do have a couple of cards where it does look like the agreements are unenforceable. I have informed them of this and am awaiting replies. In the meantime they are not getting a penny more from me.

 

Thanks,

 

cheers Fred- had you also sent CCA requests to them? What address do you have to send the 25% settlement figure to? Is it the Bolton payment centre or direct to them in Chester?

[beetle1234]

Sorry if this sounds naive but I have read of many cases where short settlements have been offered.I myself am dealing with a couple at present..one DCA and one direct with credit card company..so far only the DCA has made me an offer which I have considered as no more than a place to start negotiating...they have offered 40% of a 10k "debt"...the only reason I would even consider it would be to try to salvage what is left of my credit worthiness (though may already be too late and if so what is the point in settling this...if I go for a mortgage for example is it likely they will view me as a better risk if my defaults are all satisfied?)

 

My main question is this..has anyone seen a credit file (theirs or anyone elses) with a default showing as settled but not in full ? Surely it is either settled/satisfied or it is not ? Is there another code Experian/Equifax use other than satisfied ?

 

Thanks

[benboy]

Hi Fredsdebt, I had £8,000+ on a MBNA credit card two years back. I was struggling with the full monthly payments at the time (now reduced and interest frozen) they made an unprompted offer that I could pay them £2,500 in short settlement. I had done some research and asked them if the debt would be written off my credit file. They said no. I have been told by National debtline and CCCS I must stipulate that the agreement is "full and final settlement" and that an entry be made on my credit file as "satisfied". National debtline have a template letter in their leaflet on F+FS offers which states "an entry made on credit file as "satisfied" I still have the debt, it is now at £5,700 and am in proccess of writing back to them as I now have a lump sum. I am starting as low as just over 10%. I am also requesting a CCA as I hope the result of this will help as a bargaining tool. I am sticking to my guns on Full and Final Settlement and not short settlement. I hope you do too. Like you, I do not want further credit but I feel MBNA were all too quick to offer me what seemed to be a good offer 2 years ago, so I guess they would have something up their sleeve.

Good luck!

[Bigdebtor]

It is well known MBNA disposed of loads of original signed CCA's around 2005/2006. That is why lots of unsolicited short settlements at 35% were offered. I settled £34k worth of MBNA and A& L cards for £11k in 2007 - but now through CAG I suspect I could even have saved the £11k!

 

I would not pay another penny to them until you get your CCA. The only thing is if its unenforceable then your remeinaing unenforceable debt will still show with the CRA's - and the courts won't change this.

 

BD

[benboy]

Hi BD, It seems unfair that an unenforceable debt stays on file with the CRA's. Just goes to show that those companies claiming to be able to write your debt off are a [problem] in most cases I'm sure.

 

Have cancelled my Direct Debit to MBNA

Edited December 18, 2009 by benboy

[bobdauilda]

Hi Fred, hope you find the following useful;

 

 

 

 

Amount disputed:

When a cheque is sent in 'full and final settlement' in a situation where the actual amount claimed is in dispute, it is in the interests of both sides to compromise their respective positions or, in legal parlance, achieve accord and satisfaction.

An example is Stour Valley Builders v Stuart (1992). Stour Valley Builders carried out work for Mr & Mrs Stuart. The builders sent a revised account of £10,163 after the Stuarts had disputed some of the items. Eventually the Stuarts sent a cheque for £8,471 in 'full and final settlement'. Two days after the cheque had been cleared the builders informed the Stuarts that the cheque was not accepted in full and final settlement. The builders sued to recover the outstanding balance.

It was argued in the Court of Appeal that the court should adopt the American rule that the banking of a cheque in these circumstances amounted to an acceptance that it was tendered in 'full and final settlement'. The Court refused to go along with this. Instead, it relied upon the Victorian case of Day v McLea: whether there is an agreement to accept a cheque in full and final settlement is dependent upon the creditor's conduct.

Did the creditor cause the debtor to believe that the money was taken in full satisfaction? In this case the builders had made clear, shortly after the cheque had been cleared, that it was not accepted in 'full and final settlement'. The outcome would have been different if there had been significant delay in informing the debtor. Therefore A must inform B, either at the time the cheque is presented (or shortly thereafter) that he does not accept it in 'full and final settlement'. If he fails to do this he will be regarded as having accepted the amount stated on the cheque.

Summary:

The circumstances in which you will be bound by a cheque made out in 'full and final settlement' are as follows:

• The cheque is offered in circumstances where there is a dispute about the amount owed.
  
• The offer in 'full and final settlement' of the dispute is made at the time the cheque is presented.
  
• You present the cheque in payment and it is duly honoured.
  
• At the time of presenting the cheque or within a short time thereafter you fail to inform the payer that the cheque is not accepted in 'full and final settlement'
  
• Number 4 in the above list is critical.
  

Otherwise, as the Court of Appeal explained in another case, Ferguson v Davis; '...paying in and clearance of the cheque [is] a clear and unequivocal acceptance...'

Furthermore, if you bank a cheque from a third party (as in the Bracken case) in "full and final settlement' of a sum (whether or not disputed) owed by your debtor you will have signified acceptance of it as discharge of the debt.

 

 

 

The entry on the credit file should be made in compliance with points 49, 50 and 51 of the ICO Data Protection Technical Guidance 02/08/2007, Version 3. I don't think there is a template letter as the f & f offer would include a clause stating that "the creditor agrees to mark the borrowers credit file as settled or satisfied in compliance with (insert appropriate section from the guidance)"

Here is a direct link-

http://www.ico.gov.uk/upload/documents/library/data_protection/detailed_specialist_guides/default_tgn_version_v3%20%20doc.pdf

 

Hope this helps you out.

 

Bill

 

 

Bill can you please clarify the position of where a cheque is sent from a third party to a creditor stating clearly that it is in full & final settlement of a debtors account? ? A certain bank has stated tat the law does not support attempts to impose a unilateral agreement by either party outside of those stated in a legally binding credit agreement.

[bobdauilda]

Hi bob - don't worry I don't mind the questions.

 

The first one I did they sent 2 letters asking for further payments - this is the one that admitted they had not read the letter before banking the cheque but after I think 2 letters of reply they then closed the account.

 

The second one wrote back on receipt of my cheque confirming acceptance and that the account was closed and my credit file would be updated within 28 days.

 

 

Andie_303 - I tried your approach and I have had a letter back where the bank have taken the money from the third party and not closed the account in full & final settlement. They state that they can do this and that the law does not support such third party offers. Absolutely gutted.

[Josie8]

That's different

[middenmess]

Nowadays I wouldn't believe a single thing that any bank told me.

 

I'd seek qualified legal advice as to the legal position before reacting to the bank's letter.

[Bill Shidding]

Hi Bob,

 

please clarify the position of where a cheque is sent from a third party to a creditor stating clearly that it is in full & final settlement of a debtors account?

 

As I understand it, if a third party offers a payment in F&F and the creditor accepts the payment (by cashing it etc). Then the creditor has accepted that F&F offer.

The creditor has the option to return the cheque if it is not in agreement with the F&F offer.

Disputed amounts/accounts are easier to settle by F&F, because by definition, there is a continuing disagreement in the amount owing. The creditor may therefore be unwilling to prove the balance before a court.

The case you mention may be a non-disputed case.

 

A certain bank has stated tat the law does not support attempts to impose a unilateral agreement by either party outside of those stated in a legally binding credit agreement.

]

 

Amount disputed:

When a cheque is sent in 'full and final settlement' in a situation where the actual amount claimed is in dispute, it is in the interests of both sides to compromise their respective positions or, in legal parlance, achieve accord and satisfaction.

 

An F&F offer is not an imposition. It is the opening offer in a round of negotiation, with an ultimate goal of setting a mutually agreed settlement. Only upon reaching an agreed written settlement, should any payment be sent.

 

 

I recently had reason to consult counsel about an unrelated issue, and had a spare moment to ask whether a payment clearly made in F&F and banked by the creditor, may be refused as F&F and merely be considered a "part payment". He said that if a payment is clearly made to a creditor in F&F, but the creditor considers it to be a part-payment, then the debtor should demand the return of the payment.

Your guess is as good as mine whether a cash-strapped bank would return a rescinded F&F payment, without court action:).

 

 

Bill

Edited December 24, 2009 by Bill Shidding

[bobdauilda]

Thanks Bill- what do you mean may be a non-disputed case? How would that affect things?

 

The letter accompanying the offer was from my mother and clearly stated (both in th eletter and on the cheque) that it was in F&F else the cheque should be returned. As far as I see it they banked it and took the money yet have not cleared my account so are therefore in the wrong.

Edited December 24, 2009 by bobdauilda

[bobdauilda]

That's different

That's helpful

[Bill Shidding]

Hi Bob,

 

what do you mean may be a non-disputed case? How would that affect things?

 

If there is no dispute about the sum owed, why would a creditor (on firm legal grounds) accept a lower payment?

 

The letter accompanying the offer was from my mother and clearly stated (both in th eletter and on the cheque) that it was in F&F else the cheque should be returned.

 

Hirachand Punanchand and others v. Temple (1911).

 

Fletcher Moulton LJ at page 340 said:

 

"In the present case you are dealing with the question in respect of money paid by a third person. In such a case there is no difference between payment of the total amount and payment of a proportion of it only, so long as it is paid in settlement of the debt. If a third person steps in and gives consideration for the discharge of the debtor, it does not matter whether he does it in meal or in malt, or what proportion the amount given bears to the amount of the debt. Here the money was paid by a third person, and I have no doubt that, upon acceptance of that money by the claimants the full knowledge of the terms on which it was offered, the debt was absolutely extinguished"

 

(merry xmas!)

Bill

[bobdauilda]

The amount owed has been in dispute in my case and they were about to sell my debt to a DCA. That gives me some relief, thanks Bill and Merry Christmas to you too!

[MandM]

Subbing

[bobdauilda]

Subbing

Please explain?

[Dotty50]

Subscribing to this thread, so that you are emailed when any new posts are added.

 

Merry Xmas!

[bobdauilda]

Thanks Dotty. Does anyone else know where I stand legally with this dispute now that the bank has taken this payment from my third party offeror and not fulfilled the terms with which it was offered?

[Saint2K]

Hi Fred, hope you find the following useful;

 

 

 

Amount disputed:

When a cheque is sent in 'full and final settlement' in a situation where the actual amount claimed is in dispute, it is in the interests of both sides to compromise their respective positions or, in legal parlance, achieve accord and satisfaction.

An example is Stour Valley Builders v Stuart (1992). Stour Valley Builders carried out work for Mr & Mrs Stuart. The builders sent a revised account of £10,163 after the Stuarts had disputed some of the items. Eventually the Stuarts sent a cheque for £8,471 in 'full and final settlement'. Two days after the cheque had been cleared the builders informed the Stuarts that the cheque was not accepted in full and final settlement. The builders sued to recover the outstanding balance.

It was argued in the Court of Appeal that the court should adopt the American rule that the banking of a cheque in these circumstances amounted to an acceptance that it was tendered in 'full and final settlement'. The Court refused to go along with this. Instead, it relied upon the Victorian case of Day v McLea: whether there is an agreement to accept a cheque in full and final settlement is dependent upon the creditor's conduct.

Did the creditor cause the debtor to believe that the money was taken in full satisfaction? In this case the builders had made clear, shortly after the cheque had been cleared, that it was not accepted in 'full and final settlement'. The outcome would have been different if there had been significant delay in informing the debtor. Therefore A must inform B, either at the time the cheque is presented (or shortly thereafter) that he does not accept it in 'full and final settlement'. If he fails to do this he will be regarded as having accepted the amount stated on the cheque.

Summary:

The circumstances in which you will be bound by a cheque made out in 'full and final settlement' are as follows:

• The cheque is offered in circumstances where there is a dispute about the amount owed.
  
• The offer in 'full and final settlement' of the dispute is made at the time the cheque is presented.
  
• You present the cheque in payment and it is duly honoured.
  
• At the time of presenting the cheque or within a short time thereafter you fail to inform the payer that the cheque is not accepted in 'full and final settlement'
  
• Number 4 in the above list is critical.
  

Otherwise, as the Court of Appeal explained in another case, Ferguson v Davis; '...paying in and clearance of the cheque [is] a clear and unequivocal acceptance...'

Furthermore, if you bank a cheque from a third party (as in the Bracken case) in "full and final settlement' of a sum (whether or not disputed) owed by your debtor you will have signified acceptance of it as discharge of the debt.

 

 

 

The entry on the credit file should be made in compliance with points 49, 50 and 51 of the ICO Data Protection Technical Guidance 02/08/2007, Version 3. I don't think there is a template letter as the f & f offer would include a clause stating that "the creditor agrees to mark the borrowers credit file as settled or satisfied in compliance with (insert appropriate section from the guidance)"

Here is a direct link-

http://www.ico.gov.uk/upload/documents/library/data_protection/detailed_specialist_guides/default_tgn_version_v3%20%20doc.pdf

 

Hope this helps you out.

 

Bill

 

Hi Bill.

 

I've got a question for you.

 

If I was to offer a F&FS, and have my partner pay the creditor by cheque, then this of course would be the best course of action, as the payment will have been made by a third party.

 

However, would this still be the case if I transfer the funds to my partners account, and then my partner then issues the cheque to the creditor?

 

Wasn't sure whether this was a potential issue or not?

[Bill Shidding]

Hi sgx.saint, please see my post #37 in this thread for the case law quotation on 3rd party payments. As to the query on the source of the funds for the settlement - as I see it, it makes no difference whatsoever as to the original source. The fact that payment is facilitated through a third party should be enough for the creditor to realise its meaning (in law).

 

I would recommend that you satisfy yourself that any advice given is true and enforceable in court.

 

All the best,

 

Bill

[Saint2K]

Hi Bill,

 

Thanks for the reply, appreciate the advice.

 

I'm toying around with drafting my own F&FS letter, if I do, and post it here, would welcome opinions!

[Hugh Jeffort]

I have been offered a partial settlement with a well known M type bank of 37%! Have till tommorrow to decide what to do.

If I dont pay them tommorrow I will be defaulted tommorrow so i'm completely up in the air about what to do!

 

I do not have the time or ability (Due to bank rules) to get the money into a third party account to pay it from so I would be paying them without written confirmation that it is a settlement payment!

 

Does anyone think it would be a good idea to request email confirmation from the account manager prior to paying? Would that surfice as proof they accepted it as Partial? (Tried for ages to get F&F but they would not budge)