Offer Payments??? CC's and Storecards

Gareth83

A good ladyfriend of mine has run into debt problems which I'll post up full details in another thread a bit later.

She has an Argos Storecard and a Barclaycard. Both are above and beyond her credit limits and she cannot afford to make the minimum payments so she's getting charges left right and centre.

It doesn't help when the APR of the Argos card is 27.9%!!!!!!!!!!!!

I rang them on her behalf and eventually made a payment of £40 (the full amount was £640) to prevent the debts being passed on to the debt collectors (or so the lady said).

I explained the situation of financial difficulties and she gave her two options:

1. They can freeze all interest and charges but will still have to pay the full amount. This will be capped at £600 but will have a negative impact on her credit rating.

or

2. Make an offer payment of what she "advises" to be around 80% of the amount and see if they will accept it.

the second option sounds better/cheaper but will mean finding £480 (600*0.8) from somewhere and pretty fast. I may be willing to put it on my AMEX Platinum and get the 5% cashback for helping her out and then she can owe me the £480 (would rather not though as the initial purchase was by her ex).

So I have a few questions. Would it be better going for option 1 and just take a black mark on the credit score, it may cost more but at least she knows the fixed amount to work towards?

Or go for option 2 and if I can't help she would have to get a loan elsewhere (not sure on the rate due to her already poor credit rating)??

if she went for option 2, does anyone have an idea what she should be offering to Argos? I was thinking something along the lines of initial purchase + 10%??

What do you think? Or is the 80% a decent figure? I'm guessing that figure is what they are advised to give but could actually accept a lot lower????

Thanks in advance

Gareth83

anyone able to offer advice?

Burlesque_Babe

are you sure it hasn't already gone to a debt collection agency? If they are looking to accept a full and final on an account which is still with Argos and is a 'live' account, I would be a bit surprised?

Did they give any idea of the 'negative impact' on her credit file? Do they mean a default?

Gareth83

it hasn't gone to a debt agency yet. What is surprising about that?

she has had already had 2 defaults on the account. So not sure what impact chosing option 1 would have.

What do you suggest she does?

Do Barclays with the 7.9% fixed rate give out to people with poor credit?

Burlesque_Babe

I would be surprised that they would accept a full and final on an account that can still be used - there would be nothing to stop someone (not your friend I hasten to say!) running it back up and then getting another 'discount' by saying she can't pay.

If she already has 2 defaults a third won't make any difference as her credit is already trashed until they drop off - unless they are just about to drop off in the next couple of years, then it would be good to avoid getting another to keep her file marked for another 6 years.

I doubt Barclays (or any mainstream lender) would give her a loan with 2 defaults to be honest.

My advice would be to ask her to do a full statement of affairs and ask you to post it up here so we can see the full picture and then help.

I can't see option 2 being good for you unless you can get her to guarantee she pays off the amount you lend her - plus any interest incurred on the CC you put it on (and if she refuses to pay you, you are then saddled with the debt) and it isn't a good option for her to try to get a loan as it is a small amount which will be virtually impossible to get unless she goes to a shark company such as Payday loans - and even then she'll pay a huge interest charge.