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Is it possible to make full and final if you havent missed payments?


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Hi Guys.

 

I have about £17k of unsecured debt along with 2 mortgages

(one property is my sisters who allowed me to take a mortgage to pay of other debts.

 

Now i have found that i am borrowing money to pay my credit cards and loans.

 

The debts are:

 

Loan: approx £7000 with Egg

CC1: approx 2500 with MBNA

CC2: approx 2500 with MBNA

CC3: approx 3000 with Barclaycard

CC4: approx 200 with Halifax CC

 

At the moment i am making JUST about right payments, or i am having to spend on my CC's on other things to afford the repayments for these.

 

Currently i have no savings.

 

A friend of mine has offered to lend me £10k interest free over 5 years providing i can make settlements to at least all the credit cards amd prefrebly Egg Loan.

 

Up to date i have not missed any payments or made late payments because of the way i am balanacing my finances and borrowing money from family.

 

The reason i have been offered this money is becuase my partner is now pregnant after delaying having a child for nearly 4 years due to not being able to "afford" it. Calculating the up coming cost of te new addition i know if i dont act now i will be severely stuck after having the new born.

 

Do you know if the unsecured debtors would consider full and finals if i was to explain the circumstances and to explain unless this can be achieved i will no longer be able to afford repaymens to any of these?

 

I forgot to add.

I have not used the MBNA credit cards for over 2 years,

i have not used the halifax card for over a year except for a balance transfer over a year ago.

 

I do use the Barclay card,

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I do not think that you have to default on any payments in order to offer a lump sum to clear your debts. If you have the money there, it is a good idea to put this towards clearing your debts now, before you do start falling behind with the payments. Very sensible in my opinion :)

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  • 4 weeks later...

Hello s8n,

 

How are you doing with this, have you approached your creditors?

 

You are in a good position with the lump sum of £10k to seek a pro-rata settlement payment with your creditors.

This type of settlement payment to your accounts is also known as 'Composition Agreements'.

 

If you still need any advice on this see:

Full and Final Settlements by The Mould or Full and Final Settlement

-The Truth by vjonh, both in the legal issues forum.

 

If you need any help working out the % to offer them, I have posted the formula up to help people work out how much to offer to each creditor with the lump sum available.

 

Well, please up-date, when you can.

 

Kind Regards

 

The Mould

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Hi, The Mould.

Thanks for your response. As yet i havent approached the creditors because i was concerned about the effects on my credit rating. Especially since one of mortgages have expired so needs to be renewed the other is due to expire in August.

 

I have read both articles, and i am thinking of taking the safe route and discussing the offers, getting them to fax/email me the offers and to take it from there.

 

I have some questions:

1. Do you or does anyone know what affect a partial (full and final) will have on my credit rating?

 

2. I contacted Experian and they said on the rating it self, nothing, however it will be on my credit file which lenders will sometimes look at in detail. Is this likely to happen?

 

3. Do i have to tell all the debtors about each other. What if i made a offer to each individually?

 

4. Will i risk my home..and the other property?

 

5. What steps to take next?

 

Thanks again to all that have responded thus far.

Edited by s8n
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OK s8n,

 

I am just on-line for a couple of minuets, I will get back to you tommorrow.

 

Very quickly, given your set of circumstances, you will be better off with a 'Composition Agreement' with your creditors, and I will explain this tommorrow.

 

OK, I will get back to you either in the morning, if not, it will be tommorrow night around 10.pm

 

Kind Regards

 

The Mould

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It's a concern that you state you have 2 mortgages, one on your sisters property.

 

Sorry but I must ask, how did you manage to get this? Is it in your name or your sisters?

 

Without knowing the full details, this could have serious implications further down the line if you can't pay.

 

I would advise you to read up on MANY threads regarding F & F, it can be done but not easily.

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Hi, The Mould.

Thanks for your response. As yet i havent approached the creditors because i was concerned about the effects on my credit rating. Especially since one of mortgages have expired so needs to be renewed the other is due to expire in August.

 

I have read both articles, and i am thinking of taking the safe route and discussing the offers, getting them to fax/email me the offers and to take it from there.

 

I have some questions:

1. Do you or does anyone know what affect a partial (full and final) will have on my credit rating?

This will remain on your credit file for six years, essentially, this will inform future creditors that you did not fully honour the agreement, but you did satisfy the agreement.

2. I contacted Experian and they said on the rating it self, nothing, however it will be on my credit file which lenders will sometimes look at in detail. Is this likely to happen?

When you make an application for credit, the creditor will view your credit files to assess what type of debtor you are, what type of risk, if any.

3. Do i have to tell all the debtors about each other. What if i made a offer to each individually?

You would be better off in entering in to DMP, and letting them negotiate a settlement with your creditors on your behalf ( A Composition Agreement).

Your circumstances, at present, will not be seen by your creditors as a good enough reason to accept a lesser sum in settlement and forgo the remaining balance, your offer would be without 'Consideration', the rule of 'Consideration' does not apply to' Composition Agreements'

4. Will i risk my home..and the other property?

You home will be at risk if you fail to keep up with your payments to your mortgage lender, the same applies to the other property.

5. What steps to take next?

Consider contacting CCCS, or Pay Plan, or a body like that, they should be able to assist you.

Thanks again to all that have responded thus far.

 

OK, s8n, I hope this will help you.

Kind Regards

The Mould

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It's a concern that you state you have 2 mortgages, one on your sisters property.

 

Sorry but I must ask, how did you manage to get this? Is it in your name or your sisters?

 

Without knowing the full details, this could have serious implications further down the line if you can't pay.

 

I would advise you to read up on MANY threads regarding F & F, it can be done but not easily.

 

Hi Dotty.

Basically my sister was going through a messy period in her relationship to her partner. She didnt want to let him know she was purchasing a property, as i didnt have any mortgages she asked if i could purchase it on my name.

 

She understood the risk if i was unable to pay.

 

So far i am keeping up with all the payments, the only thing that is leaching me dry is the credit cards and loans.

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OK, s8n, I hope this will help you.

 

Kind Regards

 

The Mould

 

Hi mate thanks for the extended response.

1 and 2. the only lenders i am concerned about are the mortgages. I have no intention of taking any more unsecured credit either with credit cards or loans.

In light of this how would mortgage lenders see it do you think?

 

3. I contacted the CCCS and they said they couldnt help much. So i thought i would contact the debtors directly. My plan was to contact each one with a standard letter just working out the different percentages of debts and explaining the situation. Also telling them about each other and showing how i have fairly worked out the cash between them. Giving each one a percentage of the money equal to the percentage of debt i owe them.

 

4. When i asked the risk to home question i meant if i asked to do a full and final with them are they likely to go after my home or the other mortgaged property? Also are they allowed?

 

Thanks

S8n

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I would advise you to sort out your mortgages before doing anything with your creditors, the lending market is VERY difficult at the moment.

 

Did you have these debts when you obtained the mortgages? If you didn't, then these will be taken into account with any new application.

 

You mentioned that one mortgage has expired and the other is due to expire in August, I assume you mean the product (fixed/capped/other) so are you on standard variable rate now?

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I was following another thread on 'Full and Final' but this one seems more relevant to my situation!

 

I have debts with 3 companies:

 

MBNA Credit Card - £7,500 (Had account since 2006 )

Home Shopping Loan - £7,000 (Had account since 2009 )

RBS Loan - £7,00 (Had account since Oct 2008 )

 

I have never missed a payment on these accounts but I am struggling to meet the minimum on the card and the payments on the loans. I really want advise about how you get to the point of being able to consider a 'full and final Settlement' as a viable option. Do the debts have to get into arrears for a specific time period? Do the debts then have to be passed onto a debt collection agency before settlements can be arranged??

 

I also want to know exactly what the offer letters should contain. Do you include details of all existing debts and the settlement amounts you are offering? do you include a financial statement of affairs straight away?

 

I found a template letter on another site, but I don't know how relevant it is or what information to include with it!

 

Any advise would be welcomed!!

 

Hello again missspender,

 

I have replied to this on another thread, sorry about that.

 

Kind Regards

 

The Mould

Edited by The Mould
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Hi mate thanks for the extended response.

1 and 2. the only lenders i am concerned about are the mortgages. I have no intention of taking any more unsecured credit either with credit cards or loans.

In light of this how would mortgage lenders see it do you think?

Hello s8n, great news regarding your discipline in relation to credit cards or unsecured loans. Full and Final settlements are not really adverse data on your credit files, if you have a default or defaults on your credit files then that's a different matter, it doesn't mean that you will not be able to obtain a mortgage, it will mean that the rate you will be charged at will be higher. So for the time being, try to keep up with your payments to all of your creditors, you know, while you are going to attempt a settlement with the credit cards or other loans.

3. I contacted the CCCS and they said they couldnt help much. So i thought i would contact the debtors directly. My plan was to contact each one with a standard letter just working out the different percentages of debts and explaining the situation. Also telling them about each other and showing how i have fairly worked out the cash between them. Giving each one a percentage of the money equal to the percentage of debt i owe them.

Yes that is very good, let them all know what the situation is, and see if they will agree to your pro-rata payment proposals, if one of them accepts, then communicate this to the others without delay and they should follow suit quite quickly. Your creditors will want you to provide a financial statement along with the reason to why you are seeking to settle the accounts with a lesser sum than that to which you owe.

4. When i asked the risk to home question i meant if i asked to do a full and final with them are they likely to go after my home or the other mortgaged property? Also are they allowed?

Undoubtedly, they are going to want to know if you are a homeowner, your circumstances and the amount being offered will be taken into account by them when they weigh everything up, this will help them to determine whether they will be better off to take the settlement offer, or let you fall into arrears and then take the course of action of debt-collection, and if that fails a CCJ, and if you break that order then a charging order on either of your two homes. Given the fact that you are the owner of two properties, they could take the long route to getting all of their money and obtain a charging order on your second home with a repossession order to force the sale, so they get the full amount owed.

However, if they did take this route, you would have to first default on the CCJ.

 

So, I guess the answer to your question "Are they allowed", I'm afraid is yes, they would be able to do this, but if and only if, they rejected your settlement payment proposals, you fell into arrears on the accounts and defaulted, debt-collection failed, CCJ obtained and you defaulted on that.

 

I think you are a responsible person, because you are looking at the near future events that are going to happen, the birth of your child, you can see that financialy, you are going to be struggling to keep your promise under the contracts, and I think if you can get this message across to your creditors then there is a really good chance of successfully negotiating a settlement with them.

 

You say CCCS were not helpful or could not help, why is that? (I hope you don't mind me asking)

 

Anyway, see if you can get all 5 of them into a composition agreement.

 

Well, I hope this will help you, please up-date, when you can, bear in mind, because of the school holidays I will only be able to get on-line mainly in the late evenings, I am trying to get on-line in the day time, but it is very difficult.

Thanks

S8n

 

Kind Regards

 

The Mould

Edited by The Mould
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Hi dotty50: the answers:

 

Did you have these debts when you obtained the mortgages? If you didn't, then these will be taken into account with any new application.

 

Yes i did have the debts when i took out both mortgages. Initially i took the £50k one, the second one where ok with this as it was a rental property.

 

You mentioned that one mortgage has expired and the other is due to expire in August, I assume you mean the product (fixed/capped/other) so are you on standard variable rate now?

 

The 50k mortgage is expired and on a standard variable.

I can get that sorted in the next few weeks.

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The mOuld:

I am going to try to ensure non of the payments are missed.

 

Re: CCCS, the issue they had was i hadnt fallen into behind payments and that they where cautious about the fact that i have 2 properties.

 

Will definitly keep you guys updated..and if all works out well i owe you some major drinks :D

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