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  • FIRST POST
    • izzibear
    • By izzibear 15th Mar 17, 10:03 AM
    • 12Posts
    • 1Thanks
    izzibear
    How to settle debt
    • #1
    • 15th Mar 17, 10:03 AM
    How to settle debt 15th Mar 17 at 10:03 AM
    Hi, I'm looking for some general advice about how to go about settling my debt. I owe around 40k in total on credits cards, an overdraft and a bank loan. About 5 years ago I entered into an arrangement with my creditors (an informal one, not an IVA) to pay 1 a month because mine and my husband's income dropped and we could not longer afford to service all the debt. All the creditors agreed to freeze the interest on the debts. Over time I've gradually increased the payments but am still only paying between 1 and 25 a month on each debt.

    I'm now about to inherit some money and will have about 15,000 available to settle as much of the debt as possible. Should I write to each of the creditors individually and offer them all say 30% of what I owe? Or should I try to prioritise the debt and pay off either the biggest or the smallest first? As none of them are interest-bearing now it makes no difference from that point of view.

    Also, are there any letter templates on here that I could use to approach my creditors?

    Any advice much appreciated.
Page 1
    • Keezing
    • By Keezing 15th Mar 17, 11:08 AM
    • 208 Posts
    • 156 Thanks
    Keezing
    • #2
    • 15th Mar 17, 11:08 AM
    • #2
    • 15th Mar 17, 11:08 AM
    This is a great resource and includes some template letters: https://www.nationaldebtline.org/EW/factsheets/Pages/fullandfinalsettlementoffers/lumpsumoffers.aspx

    The main rules when negotiating are start low and keep everything in writing. You can talk to them on the phone if you want but insist on confirmation in writing.

    Personally I would prioritise the smaller debts, as it's always good to get a lender off your back, and removes the risk of litigation.

    Other people may prefer to clear the larger debts.

    Good luck!
    • Arleen
    • By Arleen 15th Mar 17, 11:09 AM
    • 826 Posts
    • 601 Thanks
    Arleen
    • #3
    • 15th Mar 17, 11:09 AM
    • #3
    • 15th Mar 17, 11:09 AM
    Once you let them know that you have money and can pay more, they will start bearing interest again and they will likely ask for new income and expenditure sheets from you.

    Also to need to pay just 30% is a massive cut for them. This sort of offers usually happen when no one pays and it's sold 2nd or 3rd time, making the debt rather hopeless case, where any money is better than nothing.
    • Keezing
    • By Keezing 15th Mar 17, 11:14 AM
    • 208 Posts
    • 156 Thanks
    Keezing
    • #4
    • 15th Mar 17, 11:14 AM
    • #4
    • 15th Mar 17, 11:14 AM
    Once you let them know that you have money and can pay more, they will start bearing interest again and they will likely ask for new income and expenditure sheets from you.

    Also to need to pay just 30% is a massive cut for them. This sort of offers usually happen when no one pays and it's sold 2nd or 3rd time, making the debt rather hopeless case, where any money is better than nothing.
    Originally posted by Arleen
    Once an account has defaulted, the lender (or DCA) will not reinstate interest.

    Given the age of these debts, it's very unlikely that the accounts are still open.
    • izzibear
    • By izzibear 15th Mar 17, 11:53 AM
    • 12 Posts
    • 1 Thanks
    izzibear
    • #5
    • 15th Mar 17, 11:53 AM
    • #5
    • 15th Mar 17, 11:53 AM
    I forgot to say the debts are all with debt collectors now, although I'm not sure if that makes any difference.

    I was also wondering if they might start asking for income and expenditure details again. Since this is an informal arrangement and not an IVA, do I have to give them those details?

    I suppose the risk if I refuse is that they will issue proceedings, but how likely is that after the length of time the debts have been running? They've already been with debt collectors for several years and have only been getting a fraction of the payment each month so surely it would be worth their while to consider a lump sum, even if it's only 30%?
    • fatbelly
    • By fatbelly 15th Mar 17, 12:25 PM
    • 10,669 Posts
    • 7,967 Thanks
    fatbelly
    • #6
    • 15th Mar 17, 12:25 PM
    • #6
    • 15th Mar 17, 12:25 PM
    Those debt collectors may well be debt buyers, particularly if Lowell or Cabot feature.

    Your situation of a very long-term dmp, debts with companies who have paid maybe 10p in the for the account, lump sum cash available without borrowing, is ideal for full & final offers.

    I'll post a link to show some of the percentages you might be able to get

    http://forums.moneysavingexpert.com/showpost.php?p=69978335&postcount=1179
    Last edited by fatbelly; 15-03-2017 at 12:30 PM.
    • sourcrates
    • By sourcrates 15th Mar 17, 12:30 PM
    • 10,553 Posts
    • 10,344 Thanks
    sourcrates
    • #7
    • 15th Mar 17, 12:30 PM
    • #7
    • 15th Mar 17, 12:30 PM
    Is Lowell one of your creditors ?

    They regularly offer discounts of up to 60% and allow you to repay the balance over time.

    Other specialist debt purchasers offer similar deals.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • Keezing
    • By Keezing 15th Mar 17, 12:45 PM
    • 208 Posts
    • 156 Thanks
    Keezing
    • #8
    • 15th Mar 17, 12:45 PM
    • #8
    • 15th Mar 17, 12:45 PM
    I forgot to say the debts are all with debt collectors now, although I'm not sure if that makes any difference.

    I was also wondering if they might start asking for income and expenditure details again. Since this is an informal arrangement and not an IVA, do I have to give them those details?

    I suppose the risk if I refuse is that they will issue proceedings, but how likely is that after the length of time the debts have been running? They've already been with debt collectors for several years and have only been getting a fraction of the payment each month so surely it would be worth their while to consider a lump sum, even if it's only 30%?
    Originally posted by izzibear
    Use the income and expenditure forms to demonstrate that you are unable to afford "regular" repayments and if they don't accept your settlement offer they will be waiting a VERY long time for their money.

    You may also choose to issue CCA requests to ascertain the enforceability of your debts. This may influence who you choose to pay off, I.e. If the debt is enforceable you should focus on clearing that one.
  • National Debtline
    • #9
    • 15th Mar 17, 12:46 PM
    • #9
    • 15th Mar 17, 12:46 PM
    I was also wondering if they might start asking for income and expenditure details again. Since this is an informal arrangement and not an IVA, do I have to give them those details?
    Originally posted by izzibear
    Hi

    You don’t have to supply your income and expenditure details, but if they show that you can only afford small monthly payments it could help your settlement offers.

    James
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • izzibear
    • By izzibear 15th Mar 17, 1:26 PM
    • 12 Posts
    • 1 Thanks
    izzibear
    Yes Cabot and Lowell are two of them. Also Blair Oliver Scott, Moorcroft, Arrow Global, CapQuest and Wescot. It does look like they've bought the debts then and might be willing to take a relatively low settlement figure.

    I hadn't realised that checking their enforceability was an option - I would have thought that since I've acknowledged the debts and am paying them, that means they remain enforceable and stops the 6-year limitation period from starting to run?

    Although I think I've read something about debts not being enforceable if the creditor can't produce a copy of the original credit agreement, so maybe that's worth checking.
    • izzibear
    • By izzibear 15th Mar 17, 1:30 PM
    • 12 Posts
    • 1 Thanks
    izzibear
    Thanks for that link, it's really useful and I'll bear it in mind when I write to them all.
  • National Debtline
    I hadn't realised that checking their enforceability was an option - I would have thought that since I've acknowledged the debts and am paying them, that means they remain enforceable and stops the 6-year limitation period from starting to run?

    Although I think I've read something about debts not being enforceable if the creditor can't produce a copy of the original credit agreement, so maybe that's worth checking.
    Originally posted by izzibear
    Keezing was talking about requesting the CCA credit agreement. If a copy can’t be supplied with the correct terms and conditions the debt is unenforceable, as you say.

    This factsheet goes into more detail on requesting credit agreements:
    www.nationaldebtline.org/EW/factsheets/Pages/getting-information/credit-agreement-advice.aspx

    James
    @natdebtline
    Last edited by National Debtline; 15-03-2017 at 1:57 PM.
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • izzibear
    • By izzibear 15th Mar 17, 2:49 PM
    • 12 Posts
    • 1 Thanks
    izzibear
    So if they can't provide the credit agreement I just stop paying and ignore their letters? Seems harsh after they've all been so reasonable with me.

    Also will a request for the credit agreement put them on their guard and make them less inclined to agree to a settlement? Or maybe I'm making the whole thing too personal!
    • izzibear
    • By izzibear 15th Mar 17, 3:06 PM
    • 12 Posts
    • 1 Thanks
    izzibear
    Also, if they can't produce the agreements and I stop paying, would they have to take the debt off my credit record?
    • Keezing
    • By Keezing 15th Mar 17, 3:41 PM
    • 208 Posts
    • 156 Thanks
    Keezing
    Also, if they can't produce the agreements and I stop paying, would they have to take the debt off my credit record?
    Originally posted by izzibear
    No, it just means they can't take you to enforce the debt at court, which means they can't send bailiffs etc.The debt will still be on your credit file for 6 years post-default and they'll still ask you to pay, they just have no way to make you.
    Last edited by Keezing; 15-03-2017 at 3:45 PM. Reason: Added clarification
  • National Debtline
    If they can’t provide a copy of the credit agreement with the correct terms and conditions it’s ultimately up to you whether you continue paying or not. If you want to repay the money that you owe then that’s fine. The point is that if the debt is unenforceable you have a lot more leverage when it comes to negotiating, especially if you want to make the settlement offers discussed earlier in the thread.

    James
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • izzibear
    • By izzibear 15th Mar 17, 4:09 PM
    • 12 Posts
    • 1 Thanks
    izzibear
    "The debt will still be on your credit file for 6 years post-default and they'll still ask you to pay, they just have no way to make you."

    Is this 6 years from the first default or the last? ie if I settle will it be from the date of settlement or will it drop off my credit file 6 years from when I first defaulted?
  • National Debtline
    "The debt will still be on your credit file for 6 years post-default and they'll still ask you to pay, they just have no way to make you."

    Is this 6 years from the first default or the last? ie if I settle will it be from the date of settlement or will it drop off my credit file 6 years from when I first defaulted?
    Originally posted by izzibear
    It will drop off 6 years after the first default date.

    James
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • Keezing
    • By Keezing 15th Mar 17, 6:14 PM
    • 208 Posts
    • 156 Thanks
    Keezing
    Is this 6 years from the first default or the last? ie if I settle will it be from the date of settlement or will it drop off my credit file 6 years from when I first defaulted?
    Originally posted by izzibear
    It's 6 years from the date that the original lender defaulted (i.e. terminated/cancelled/closed) the account.

    It's not 6-years from your first missed payment, which confusingly can also be referred to as a default.
    • izzibear
    • By izzibear 27th Apr 17, 7:53 PM
    • 12 Posts
    • 1 Thanks
    izzibear
    Update on settlement offers - more advice needed!
    Thanks for all your advice on this a few weeks ago.

    I've now written to them all and asked for copies of the credit agreements. Only a couple of the creditors (out of a total 8) have sent them and the rest have said they are not the creditor but will ask their client for the agreement.

    They're all now well past the statutory time for responding but I don't feel I can stop paying and disclaim the debts as I've been making reduced payments for years now. So I've written to them in terms that I understand the debt is now unenforceable etc etc but that I am nevertheless in a position to make a reduced settlement offer (just to let them know that I know I'm in a stronger bargaining position).

    A couple of them have sent the dreaded income and expenditure forms for me to fill in, which I will do, but they've said they will only note my credit file as partially settled with a zero balance outstanding, and not as settled or satisfied.

    Should I accept that, or stick out for them updating my credit file with the debt as settled? I don't want this to drag on forever, but neither do I want to end up no better off in terms of my credit score.

    I'm assuming that their standard policy is only to offer settlement on those terms, so am I wasting my time arguing with them for a full settlement to be noted on my credit file?
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