Full & Final Settlement Offers - Advice please

[Dotty50]

LOL Yes think I got that!

 

Thankyou

 

Boo - none of mine

[bobdauilda]

andie thank you so much for your kind help, it's given me renewed hope that I have a chance of sorting the creditors out! With respect to the ones who wrote back saying you still owed did you then quote the case law at them? If so do you have the template letter that you sent?

[fredsdebt]

Quick update.

 

I sent each of the credit card companies (usual suspects) a copy of my Income & Expenditure and a list of creditors (secured and unsecured) and offered just over 10% (ie 10% of balance owing plus a bit more to give a round figure) as a Full & Final settlement. The funds for a F&F have been kindly offered by a member of the family who can raise sufficient cash to allow us to make these offers. Not suprising all have come back saying no "too little" or "not bank policy.....". Anyway got one credit card that are suggesting 25% of the balance and if agreed want half asap then give us 60 days to pay the other half.

 

They call this a "Short Settlement" rather than "Full & Final" saying my credit file would show the debt as settled but not to full amount - so I am interested to know how this would look on my credit file?

 

Also found out after various phone calls that the credit card (mentioned above) take view that after you have missed 7 monthly payments then they automatically sell on to DCA (in this case we have missed 3.

 

Dealing with the other credit card companies that we owe they are saying continue paying token payments (ie, £5) and they will freeze interest and penalty charges for 6 months. I would imagine they are hoping that within the 6 months our position will have improved and that we will go back to paying big chunks of cash again!!

 

I have read on various threads and after considering their approach above that the best bet is to try and deal with the credit card company (could be some sucess as detailed above in this posting) but if they wont accept F&F or a Short Settlement then dont pay the credit card and simply get the debt sold to a DCA and deal with them. The thinking being that the DCA will buy from the credit card company at a percentage of the debt and anything they collect from you above that percentage is basically their profit.

 

Still looking for more info on:-

 

- Full & Final settlements and how to approach?

- Short Settlements - what are implications (weigh up against F&F)?

- What percentage do DCA buy debts at from credit card companies?

 

Thanks,

[fredsdebt]

Having spoken over the last few weeks to the credit card companies that are chasing me versus the ones that have been passed over to DCA's (regarding freezing of interest and penalty charges and possibilities around doing a full & final settlement etc..) I have concluded that you are better off not paying anything and letting the credit card send your account to their DCA. Ok your credit file gets a hit but I think most here would be more concerned about the money side and how much cash one has to live on (real life stuff) rather than worring too much at this stage about not having a healthy credit file rating (if one can get out of their current debt mess does anyone fancy ever getting back into it anyway!). If you continue paying something the credit card may not be happy but are likely to let it go as they will be thinking (hoping) that if you manged to pay before that you will be (in my case) back in work and then able to pay again and make up all the arears!! No way. I want to do a deal and settle so that when work does come back I can use my wages to move my life on. Looking back these credit cards (ok I had the money and its gone) have made extortionate amounts in Interest over the years and made credit available to me so easy and so tempting plus Gordon Brown - "ive ended boom & bust" etc.. house prices rising etc... everybody has jumped on the bandwagon. the party is now over and everyone has to take a hit in the current climate. I think most of the credit cards are only just starting to see customers struggling - tip of the iceberg. So for me this is a good time to try and off load this debt once and for all. Any way most of the credit cards I have are with the banks that have been bailed out with Tax payers money (my money).

 

Anyone got any views?

 

Anyway, I think you are better off dealing with DCA as when they get the debt passed over then Interest and charges will cease - so at the very least anything you pay will clear off part of what is owed rather than being soaked up with Interest and penalty charges. They buy the debt from the credit card company and what they can get back from you greater than what they paid for it then thats thier pfofit. Just a question if you can handle the hassle, phone calls and their nonsensical computer generated reminder and threat letters - bit like the thought of being savaged by a lame sheep with no teeth! - Scary stuff!

 

Thanks,

 

ps/ are Mercers run by the Chuckle Brothers? - just asking.

Edited November 12, 2009 by fredsdebt

[iambin]

Hi,

I have around 30k of debt spead across two cards at ridiculous interest rates (around 30%) which has destroyed all of my disposable income. I have been offered by a family member to settle the lot and I can repay them once I sell my flat.

Having seen this thread I am tempted to try it but want to avoid dodgy credit ratings (i want to buy another flat at some point). Has anyone else succeeded with this approach and is the credit file at Experian definately clean? Have you actually seen yours andie? Only I found a similar thread to this one about F&F somewhere a couple of hours ago where it mentioned having marks on your credit file for years.

[middenmess]

Hi iambin

 

Best to start your own thread and then you will get good advice relevant to your own situation.

 

Have you any charges that you can claim back on these cards to reduce the balance?

[andie_303]

Hi,

I have around 30k of debt spead across two cards at ridiculous interest rates (around 30%) which has destroyed all of my disposable income. I have been offered by a family member to settle the lot and I can repay them once I sell my flat.

Having seen this thread I am tempted to try it but want to avoid dodgy credit ratings (i want to buy another flat at some point). Has anyone else succeeded with this approach and is the credit file at Experian definately clean? Have you actually seen yours andie? Only I found a similar thread to this one about F&F somewhere a couple of hours ago where it mentioned having marks on your credit file for years.

 

Hi yes my credit file is definately clear of these - I would point out though that neither had defaulted just some late payment markers placed on the account.

The first removed the late payment markers and satisfied the account the 2nd deleted the record altogether.

 

As I have not defaulted I cannot say whether it would the same in this instance or not.

[Bigdebtor]

Hi,

I have around 30k of debt spead across two cards at ridiculous interest rates (around 30%) which has destroyed all of my disposable income. I have been offered by a family member to settle the lot and I can repay them once I sell my flat.

Having seen this thread I am tempted to try it but want to avoid dodgy credit ratings (i want to buy another flat at some point). Has anyone else succeeded with this approach and is the credit file at Experian definately clean? Have you actually seen yours andie? Only I found a similar thread to this one about F&F somewhere a couple of hours ago where it mentioned having marks on your credit file for years.

 

Iambin

 

As was said just above, the key thing is to get your unfair charges and associated contractual interest refunded - to reduce the balance for a negotiated F&F.

 

If you can afford to keep the payments up - and keep your credit rating pristeen then do so in the meantime - but I would also SAR (not CCA) them to confirm they do have valid enforceable agreements. SAR will be quicker - and you want to get the interst stopped ASAP - either by the accounts being in dispute or settled.

 

If they do have the CCA's then, given you are not causing them any grief, I don't think you'll get a decent short settlement F&F - as they like you paying 30% APR and you are no thereat at present - but you may just get a small reduction. Anyone else been in this position?

 

If they don't have enforceable agreements - then a totally different ball game! They would probaly eventually agree to something like 35-45% short settlement - and if you use the right letter, this will NOT affect your credit rating at all.

 

However - first thing is to get your charges and contractual interst taken off the current balance - then negotiate based on presence or absence of enforceable CCA. If the latter, you hold all the cards - and it's just a question of how quickly and hassle free you want to settle! Th emore you arw illing to fight, the lower will be your agreed F&F - as the alternative for them is nothing.

 

THi si sjust my opinion but I hope this helps.

 

BD

[rash147]

Hi, Looks lie I've found the right place for some good advice, if somebody could spend a minute.

 

I have the following debts:

£9000 : aa loan

£5000 : mbna cc

£5000 : barclaycard

£1052 : Natwest cc

£650 : Skycard

£2800 : Amex

£1000 : Capital one cc

£2000 : Builders Merchant

£26502 total

 

Self employed tax bill £2000

£6000 : Parents

 

My wifes parents have offered us a loan of £20k to clear our debts. Firstly I have to pay back my parents loan as they really need it at the moment. Leaving me with 14k, I do not want to mess about withthe tax man and want to just clear that too.Now I have 12k. My wife works for barclays so canot mess abut with the barclaycard one, just going to pay that in full. Therefore after clearing the important debts I have £7k to play with.

MBNA sent me an offer of clearing the debt at £2270 last month, but a the time I did nothave the money.

In total there is £21502 to pay but I have £7k to offer. Is there a right or wrong way to approach this, any help would be great.

Forgot to mention that most of the cc and loan are being delt with by DCA's, except amex who have accepted an offer of £20pcm , natwest no payment for months, and builders merchant £50 pcm.

 

Thanks again.

[Bigdebtor]

Rash

 

I think the same advise applies as to Iambin - get balances reduced as much as possible by deducting unfair charges and contractual interest - then confirm if CCA's exist and if debts are actually enforceable.

 

You also need to establish how important your credit rating will be over the next 6 years (if still intact). If not required then play hard ball and get interest frozen and reduce your monthly payments further to soften them up. With good negotiation and a bit of luck £7k should just about clear £21k of debt based on my experience of short settlements - I cleared £46k with £17k. If you make big inroads in th eoutstanding balances by deducting the charges etc. and some of the debts are unenforceable then you may well have a fair bit of change left over!

 

Again this is just my unqualified (but experienced) personal view - but hope it helps.

 

BD

 

j

Edited November 13, 2009 by Bigdebtor

[middenmess]

Hi, Looks lie I've found the right place for some good advice, if somebody could spend a minute.

 

I have the following debts:

£9000 : aa loan

£5000 : mbna cc

£5000 : barclaycard

£1052 : Natwest cc

£650 : Skycard

£2800 : Amex

£1000 : Capital one cc

£2000 : Builders Merchant

£26502 total

 

Self employed tax bill £2000

£6000 : Parents

 

My wifes parents have offered us a loan of £20k to clear our debts. Firstly I have to pay back my parents loan as they really need it at the moment. Leaving me with 14k, I do not want to mess about withthe tax man and want to just clear that too.Now I have 12k. My wife works for barclays so canot mess abut with the barclaycard one, just going to pay that in full. Therefore after clearing the important debts I have £7k to play with.

MBNA sent me an offer of clearing the debt at £2270 last month, but a the time I did nothave the money.

In total there is £21502 to pay but I have £7k to offer. Is there a right or wrong way to approach this, any help would be great.

Forgot to mention that most of the cc and loan are being delt with by DCA's, except amex who have accepted an offer of £20pcm , natwest no payment for months, and builders merchant £50 pcm.

 

Thanks again.

 

MBNA sent me an offer of clearing the debt at £2270 last month, but a the time I did not have the money.

 

Shows that they have doubts as to the enforceability of the debt by the looks of it!

[Bigdebtor]

MBNA offered me £11k to settle £34k on 4 cards - 2 MBNA and 2 from A&L that they ahd taken over. Two points:

1. Middenmess may be right and they can't enforce debt - so find out with SAR.

2. I couldn't raise the money when they first floated the 35% offer - but they agreed to the same deal later when I had the money arranged - but with a sting in the tale - that if I didn't pay the 35% short F&F within 30 days then the deal with suspended interest and low monthly payments was off - so back on to punitive interst and minimum payments that were unaffordable.

 

I am not sure if they were bluffing - or if they did have enforceable agreements - but for 35% and a saving of £23k I was happy to get them off my backs once and for all.

 

Now however I know I would be able to get the unfair charges etc. refunded before doing a 35% deal on the reduced balance.

[bobdauilda]

Bigdebtor what exactly are you referring to when you say 'unfair charges' and associated contractual interest? Is that just the late payment fees etc with interest on them or does the interest refer to the entire debt? Also why do you advise asking for the SAR before a CCA? TIA

Edited November 16, 2009 by bobdauilda

[Bigdebtor]

Unfair charges are the excessive late payment and overlimit charges imposed - which are unfair since they are much more than the costs incurred in or associated with dealing with the late payment or over limit situation - so therefore a penalty - which cannot be imposed other than by a court - so illegal and unenforecable.

 

The associated contractual interest is that proportion of the total interest charged which is actually charged on the part of the balance made up of the cumulative value of the unfair charges.

 

Eg. Total balance £10k of which unfair charges total £1k. Associated Interest reclaimed is then 10% of the total interest charged - as only 90% of the new balance is actually due to your spending or loan advances and 10% is due to the total of the unfair charges imposed.

 

Hope this is clearer?

 

BD

[bobdauilda]

crystal -thanks very much. Do you still recommend sending the SAR before the CCA?

[bobdauilda]

Fred have you pointed out to them that if they don't mark as settled in full then there is really no obligation on your part to go down this route as it will still screw up your credit rating and you'd be better off just going to the dca. Where's the advantage other than for them? Why can't these companies see that some people just want a hand and to be treated fairly?

[Bigdebtor]

In my experience a cca rearely gets you anything useful - and you either then need to do the full SAR or the other one (the name of which I have forgotten) where you ask for the documents they would rely upon in court. You always need the SAR if you have incomplete records for reclaiming unfair charges - so I feel you might as well save the £1 and stamp cost of the CCA in the first place if you have charges to reclaim.

 

BD

[bobdauilda]

Thanks again -so the SAR should include a copy of the original CCA as standard?

[fredsdebt]

Fred have you pointed out to them that if they don't mark as settled in full then there is really no obligation on your part to go down this route as it will still screw up your credit rating and you'd be better off just going to the dca. Where's the advantage other than for them? Why can't these companies see that some people just want a hand and to be treated fairly?

 

 

Hi thanks for your input. I do agree with what you are saying - yes better off going via the DCA and I would normally do that but if the credit card company offers to settle at 25% (in my case have been offered this) then I think its worth taking. I think when you set out to sort out your credit and debt problem you have to take what you can get and I feel not be to uptight about credit files - who wants a load of debt again anyway?

[bobdauilda]

Yep your offer of 25% direct is worth taking but try and get them to mark as fully settled. Why can't all CCC's be like the one that you have had an offer from? Incidentally can you give a clue as to who they are please? Are they four letters beginning with M?

[Bigdebtor]

I have had them via SAR - but not 100% sure they must send them. However their absence would suggest they don't exist - so ask again and threaten to report to Data protection people if not with you in 40 days - also put the account into dispute if they don't supply.

 

The third type of letter - CPR? - where you request all documents to be relied on in court should definiteley draw out if the CCA does still exist or not.

Edited November 17, 2009 by Bigdebtor
typos

[fredsdebt]

Yep your offer of 25% direct is worth taking but try and get them to mark as fully settled. Why can't all CCC's be like the one that you have had an offer from? Incidentally can you give a clue as to who they are please? Are they four letters beginning with M?

 

Yes, four letters begining with M. They just wouldnt go for marking the debt as 'fully settled' instead mark as 'short settled'. For now I am happy with that - I just want this paid off and will worry about my credit file another day. I would suggest its a good time to contact these guys if anyone is looking to settle as they seem quite keen to collect cash in at the moment. Those I spoke to seemed reasonable which is in complete contrast to other credit card companies that I have been speaking to recently.

 

Thanks,

[Dotty50]

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

[bobdauilda]

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

[Bill Shidding]

Hi Fred, hope you find the following useful;

 

4. Legal issues regarding making full & final offers - being accepted/agreed and how to make sure they dont/cant come back because of a technicality or some minor legal angle which you didnt cover.

 

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.

 

5. Tidying up your credit file afterwards - wording etc.. to ensure this is done as part of the full & final offer. ie. correctly worded letter templates or links to where they can be found.

 

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