Full & Final Settlement - what % should we offer?

blue_monkey_2

Hi all,

My husband is about to lose his job through ill health and will be getting some money when he officially leaves, then we will go on benefits until he can find something else, I have my own business but have not earnt anything for the last 2 years (4k loss this year) so I am not earning anything now - fingers crossed for this year but as it stands we have no income for the business. We want to use the money he gets to pay off a lot of our debts and have as clean a slate as possible. We have immediate debts like our overdrafts, car finance, catalogue and the like, these will be paid first so when we get our money each month we only pay for the essential stuff like rents, council tax and the like and if we have not got it we can't spend it.

At the moment we go through Baines & Ernst to pay off all our old loans and credit cards (after messy custody battle) and have done for the last 5 years and the debt is around 34k with one amount for 16k left on a secured loan. It was easier for us at the time for them to sort it all out (no nagging please, I know how much money it has cost it was a really stressful time for us and this helped lift the weight somewhat and it has kind of gone on from there, pay them, it is sorted and over and done with). I have called them today and told them I want my paperwork back as we won't have an income and we will go through one of the companies that does not charge us like CCCS because this is money that could be put to better use. Apparently a 'Senior Manager' is calling me back, but if not then tomorrow a letter will be in the post recorded delivery so it gets there 2 weeks before our next payment which is our cancellation period.

The next step is that we are going to contact all our creditors and ask if they will accept full & final settlement on the debts. If they accept then we will use as much of the money as we can to pay off our debts then anything left we will contact CCCS as we will have then sorted out what benefits we will be entitled to while hubby looks for something else (will be around half of what he has been earning though).

Anyway, my question is this. What is the lowest amount that you have offered and accepted, most of our debts are through collection agencies but all except one have frozen the interest. This will be sold on shortly and will hold out until it is sold on so we should be able to get settlement then.

What figure is realistic to offer them and are there any ideas for letters to send. Is it worth explaining that he has lost his job and that we are not using B&E to pay our debts but are going through CCCS or Payplan and that we will have a substantial drop in income and will be on benefits so would they accept x % and that we have not missed any of our repayments at all in the last 5 years (do you think this will be a plus point for us??)

Any help would be appreciated, we want to make sure that everything is done right, it seems silly to fritter this money away (could do with a weeks holiday!!!) when there are other more pressing matters to be dealt with and we can all have a fresh start and get sort out.

Thanks for any help you can offer us.

Xbigman

Do you know the total of all debts owed? And do you know how much you will have available to use to F&F in total?
A good starting point is 50%. It shows you are serious. Most F&F settlements go between 50 - 80%, but it depends on circumstances. If you will only have 50% then you need to start a lot lower.

B&E. You may have gone with B&E in the past for valid reasons, but f you are still with them now you are still throwing away money every month. STOP NOW. Send them no more money. Inform them you no longer require their services due to a loss of job / ill health and cancel any agreement you have. Say nothing else about sorting anything out yourself.
Then write to all creditors send a £1 token payment and tell them B&E are no longer your agents and give details of the ill health/job loss situation. Do not mention F&F settlements in these letters, and send them recorded delivery.
Do not pay more than token payments whilst you are sorting this out.
This will get you into the right starting position to move things forward later on and give you the maximum amount to F&F with to gain the best discounts.

One last thing. You have an overdraft. You should seriously consider opening a basic bank account and closing you account with the overdraft. You then treat the overdraft like any other debt and do an F&F. Remember, if you pay any lump sum into an account with an overdraft that overdraft will have been paid by default, where as it should be just another debt you could eventually F&F to save money.
Regards



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blue_monkey_2

Hi,

Thanks for getting back to me. We are not 100% sure what the exact amounts, I have a list here from B&E but it is wrong, I have to wait to either hear from the creditors or to get the last statements from my creditors from B&E. We should have around £5-6000+ I guess. I am not thinking that this will pay them off but the ones who offer us the best settlement will get paid, if they all go for the 30% that the other companies have done in the past we can pay for them all except the one huge one. We have some letters here where they have offered us 70%, sometimes more, to settle, but at that time we could not afford this. I am waiting to get the statements off B&E but yes, we are going to stop paying them from now on, this is why I have to do the letter tomorrow to get it in for good time to cancel, then they can't take another month from the bank account.

To be honest, we was going to get the letters done now and ask if they would F&F now, this is before we go to the CCCS because then it is another debt (or two) out of the way. We would prefer to keep the bank accounts and pay the overdrafts as well. Pintless to drum up more in interest on those as well if we are able to pay it off, that would get us deeper into a hole to be honest so we have agreed that these will be paid and as far as we are concerned we will not have overdrafts, we are not going to use it if we do not have it in cash from now on. Besides, we would not cope without a debit card to be able to pay for things online and the like, we live in the middle of nowhere without cash machines so we do need to have bank accounts really.

Are you saying I should send in £1 before making the offer on F&F? how long would I have to do this and when should I make the offer. To be honest, the sooner it is sorted out the better, when should I then go to Payplan/CCCS?

I'll be glad to get rid of B&E, it has just be easy for us to get them to do it all but yes, we do agree that we need to deal with these issues now, it would be nice to be out of the woods and not have to think about it.

Thanks again.

delboypass

If the business is losing money - scrap it and get a job that brings in cash to put food on the table. You can always resume the business when cashflow is in the black.

Priority is to get both of you into work bringing in money - You will not get dole or benefits as the redundancy payment is classed as savings.

blue_monkey_2

He is not being made redundant but has industrial asthma so has to leave, the money he gets in will pay most of our debts, we won't and don't have any savings. We have two children that I look after full time, this is why I work from home. The business is not making money now and has not been an issue until now but it will start making money in the next 3-4 months or so because I have accumulated a large level of stock, the reason we do not have the money coming in is because we have invested it in stock - like any business does so I won't be scraping it but carrying off - I have in fact started selling on a Saturday market which has seen more orders coming in so this year will be a new start for us. however, this does not help us for the short term. I have worked hard to get it to the level of stock that I have and we only started with £60 in our pocket less than 2 years ago so I think we have done well to get to where we are.

My husband cannot do the work he is trained to do now and will find something sooner or later but both of us cannot return to work, financially it is not viable with 2 children that are not in school so I will continue with what I am doing now.

This was not really the answer to my question though which is about paying off our debts with the money and how I to go about it.

Xbigman

I've found it is best to take these things in easy steps. So;

1. Dump B&E
2. write to creditors and request up to date balances. Inform them of the imminent loss of job and health situation. Send £1 token payments. Don't send an SOA yet. Tell them B&E are no longer acting for you.
3. Once creditors get back in touch (expect a lot of flack at this point) you can ask about F&F settlements. Keep paying £1 per month. If they ask for an SOA tell them you don't know what your future income will be until any benefit claims have been settled but it will be very low.
4. Once the full and finals are paid out (only pay them anything once you have the F&F acceptance in writing) contact CCCS and go on a DMP. You should think in terms of at least 3 months to get to the point where you contact CCCS.
Regards



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blue_monkey_2

Hi Bigman,

Not been on for a bit as we lost our connection so catching up. OK, we have:

Dumped B&E by recorded letter last week and cancelled the Standing order to them.

I am waiting for B&E to send the details of who we have to send the letters to as they have never provided us with the information so we have no forwarding addresses as some have been taken over by debt companies.

I have drafted a letter to our creditors where we now just have to add the address and the account number telling them the details as you had set out, I did not add the £1.00 payment but but will go ahead and do this.

Will send them out as soon as we have heard from B&E but if we have not heard by next week we will squirrel around and see what info we can find on the companies we owe money to as we have names on the paperwork. We preferably wanted to get in touch with them before the next payment run is due.

Thanks for the advice on F&F, that makes sense as hubby should have had his money by then and we should have some idea of what we are entitled to and yes, we did kind of want it all sorted out within 3 months.

Thanks for the advice and for giving us the extra the clarification we needed as we had decided to go along this route of making the offer later after your last suggestion that we did this. We wanted to make sure everything was done in the right way.

Thanks once again, you have been a great help.

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