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HSBC credit card partial settlement

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If anyone can help with the following it would be most welcome - I have a deadline for this of the 30th September 2014. I will keep it as brief as possible....


I have had a HSBC credit card for ~ 7 years with a balance of £1,950. During this time I kept up with monthly repayments of ~ £50 a month. 18 months ago I entered a bout of ill-health which culminated in me having to resign from my job. I went on to benefits which gave me enough to live on but not enough to keep up with the card payments. I informed HSBC and they transferred my account to the specialist team (due to ill health). After 7 months they informed me that the account would soon default. I was informed that I could make a partial settlement for some of the balance. I researched partial settlements and got the impression that they were a bad idea - that the remainder of the debt was often sold on leading to pursuit from a third party, and that you needed it in writing that it was a "full and final settlement". I made an offer of £400 for a F&F settlement using a letter template from a debt advice website (my Dad and sister agreed to help me out as much as they could financially because they didn't want DCA's knocking on my door whilst I was suffering with ill-health). The offer was accepted, but the letter does not state that the settlement is full and final. I have rung numerous times requesting it be F&F and they always say that is not possible because the full amount isn't being paid.


Today I rang Stepchange, the Financial Ombudsman, the Financial Conduct Authority and the Money Advice Service and read the letter out to them. None could give me much advice except for the FCA who said whilst listening they were looking for the words "cancelled" and "zero balance". I rang HSBC asking if I could have a letter with those words in but they said they only send out standard letter templates, not tailored letters. The FCA also said to ask what happens to the remaining debt. HSBC said it goes to an internal bad debt department where it sits (for how long??) but that it is no longer associated with your name. I don't understand; if the debt is written off, why can't I have it in writing that there will be a "zero balance". If the balance isn't zero then doesn't the debt still exist?


Here is the letter:


Dear Mr. Dean


We write in reference to your phonecall with us today.


We are prepared to accept the following:


Credit Card: XXXXXXXXXXXXXXXX Payment Amount: £400


This agreement is on the basis that the funds are received and cleared into your HSBC account within 14 days from the date of this letter.


Providing funds are received by the above date, your account will be closed and you will be released from all liability in respect of this account preventing further action being taken.


Please note that in view of the fact that we have agreed to accept a partial repayment of your debt and agreed not to pursue the remaining balance, your credit file which is held with Credit Reference Agencies will be updated accordingly and may affect any future credit applications you make.


We trust this is satisfactory.


Yours Sincerely


Senior Collection Manager


To me, it sounds as though the debt really will be written off, and that there is no chance of me being chased either by HSBC or a third party. However numerous forum discussions from around the web state that partial settlements are a bad idea, and you don't know whether you will be pursued further down the line. I don't understand why they are so cagey about saying the debt is written off and that there is a zero balance. According to HSBC, the remaining debt still exists but stays internally in the "bad debt" department. HSBC have said categorically on the phone that they rarely sell on such debts - the operative gave me his name, staff number, and call time / date, and said if there was any issue in the future to ask for a recording of the call.


Can anyone provide a final answer to me as to whether I should go through with this settlement? I want to settle this debt once and for all, but at the same time don't want to be taken for a mug - if they end up chasing the rest, what is the point in paying the £400 in the first place? I fully accept that my credit score will be affected - I know that is unavoidable. However my concern is that the debt still exists, that there is still an outstanding balance - HSBC have stated I can call up any time in the next six years and pay the remainder, and restore my credit file accordingly. Surely that means the debt still exists? I am worried that they will somehow find a way of recovering the remainder of the debt.


I know people will say - "Ask for F&F settlement" etc. but they categorically refuse to do that because I am not paying the full amount. (NB. The F&F team at Stepchange said they don't get involved with F&F settlements with banks unless the debtor can provide half the amount of what is owed; the current settlement I have with HSBC is just under a quarter). It seems impossible to get anything out of them other than a standard letter - if anyone can guide me as to how to get a letter out of them saying what is needed to ensure this is the end of the matter it would be warmly welcomed. (i.e. what is it that needs to be said, and how do you get them to put it down on paper - they always say they can only send out templates; do you have to speak directly with a manager?).


Apologies for the long post - any advice is welcome.




Charles :|

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