Debt Collection Agencies - Negotiating an offer of settlement

[Todge]

I stood as a personal guarantor for a limited company, which unfortunately went to the wall owing about £10,000 in the shape of an overdraft. The liability has never been in contention - the bank have been pretty decent IMHO.

 

I've been offered a chance by the DCA chasing this debt for them to settle for about 30% of this amount.

 

I'm happy to consider doing this, but want to know where I stand in terms of

1. 'Key wordings' in the agreement (to make it binding)

2. Can they return or renegotiate once I've paid the 30%?

3. Is my contract with the DCA binding on the original bank?

4. Any general advice/experience/problems?

5. Credit Reference impact.

 

I'm working on the principle that as this is 'new territory' for me, I'd ask those who have been before ...

 

 

Thanks in advance,

 

T.O.D.

[Glenn UK]

I stood as a personal guarantor for a limited company, which unfortunately went to the wall owing about £10,000 in the shape of an overdraft. The liability has never been in contention - the bank have been pretty decent IMHO.

 

I've been offered a chance by the DCA chasing this debt for them to settle for about 30% of this amount.

 

I'm happy to consider doing this, but want to know where I stand in terms of

1. 'Key wordings' in the agreement (to make it binding) I'm not sure there are key words but there are things you can do.

2. Can they return or renegotiate once I've paid the 30%? Possibly

3. Is my contract with the DCA binding on the original bank? Depends and this should be confirmed

4. Any general advice/experience/problems?

5. Credit Reference impact. is likely to trash your credit file as short settlement will be recorded on the your file

 

I'm working on the principle that as this is 'new territory' for me, I'd ask those who have been before ...

 

 

Thanks in advance,

 

T.O.D.

 

Hi in general you cannot settle a debt with a short settlement, although the creditor may accept this and not chase you they will retain the right to.

 

Have you any other debts you wish to settle at the same time?

 

One of the ways of making the short settlement full and final is to make a binding agreement between several creditors.

 

This is what i did, i re mortgaged and so had a finite sum and offered each of my creditors an amount pro rata what i owed them. This means i either settled all or non.

 

Another way its for someone else to pay the settlement on your behalf, preferably a Friend of family member but not spouse. I cant remember the full logic but its something like the fact that the payee gets no benefit from the settlement and therefore you cant be chased. Actually that sounds crap but i am certain the method is correct.

 

The other way is to give a consideration for the short settlement. In other words you buy the full and final part, this can be done by agreeing an amount in writing and then paying a little more. Some have said that by settling earlier this may count as a consideration, however, i believe this also depends on whether you are in some form of payment plan and are making regular payments.

 

So a bit for you to think about, if you need info on debts then search for posts by Zootscoot .

 

She has posted about this quite a lot.

 

HTH

 

Glenn