Can settlement figures on credit cards be reduced if paying off lump sum

Darcey02

Hello - I wonder if someone can advise me on the above please ? My partner and I have paid off a lot of debt over the last few years including credit cards and loans always paying the full amounts. A colleague has told me that if we have some cash we can negotiate with the credit card companies to see if we can pay a reduced amount if we clear the whole balance. My Questions I suppose are

• Is this true ?
• Does a debt agency have to negotiate for you or can you do it yourself ?
• Has any one any experience of this or advise on how to do it ?

We owe about 7000 on a card so if we could claw anything back by paying it off I would like to know. I do understand that we would be saving on interest if we paid in full but would appreciate any advice as we do have a lump sum to use and want to use it as best we can.

I am not a very savvy money person nor a reckless spender ! I am a mum of three whose partner brought debts from a prevoius relationship and also hid large gambling debts. We have worked really hard to pay all the debts and keep a roof over ours and the childrens heads and we are both fortunate enough to be in full time employment.

If any one can spare a bit of advise I would be very grateful.

thank you very much for your help

NickX

Darcey02 wrote: »

Is this true ?

• Does a debt agency have to negotiate for you or can you do it yourself ?
• Has any one any experience of this or advise on how to do it ?

Yes it is true.

A debt agency does not have to get involved, you can do it yourself

You need to give them impression that they will struggle to get the full amount owed and that they are better cutting their losses and taking a reduced figure. This usually means missing payments, requesting reduced payments (possible DMP), and allowing the account to default.

Be aware that this will damage your chances of getting credit in the future.

Good Luck.

Darcey02

Thank you nick - that was part of the quandry , we have always kept up payments and not defaulted ( partly my fault as I was trying to improve partners and my own linked credit rating ). So I think that if we do ring up and try and negotiate they will feel it is in there interests to say no and just keep getting interest added on. But we have never tried to reduce any debts before so its worth a go ! We probably should have done an IVA or something as debts were about 45,000 now down to about 20,000 in total but I was always worried about losing the house if we did. Anyway thank you so much for the clarity and for responding.

NickX

Darcey02 wrote: »

Thank you nick - that was part of the quandry , we have always kept up payments and not defaulted ( partly my fault as I was trying to improve partners and my own linked credit rating ). So I think that if we do ring up and try and negotiate they will feel it is in there interests to say no and just keep getting interest added on. But we have never tried to reduce any debts before so its worth a go ! We probably should have done an IVA or something as debts were about 45,000 now down to about 20,000 in total but I was always worried about losing the house if we did. Anyway thank you so much for the clarity and for responding.

If you have an excellent payment history, then I would recommend paying in full if possible. Any reduced payment could lead to an "arrangement to pay" marker being placed on your Credit File. This would affect any future applications for credit.

I think if you have kept your payments and not gone for an IVA then you have done exactly the right thing. The IVA would trash your Credit Rating aswell.

If you can pay in full, then best advice is to do so. Good Luck.

YorkshireBoy

NickX wrote: »

Be aware that this will damage your chances of getting credit in the future.

Darcey02 wrote:

its worth a go !

So you don't want (cheap) credit in future? Mortgage, re-mortgage for a better rate etc?

Darcey02

Hello Yorkshire boy - You are right that is why I have always insisted we try and steer clear of anything like IVA or missing payments ! when I said its worth a go I mean when we ring we will ask if they can reduce the settlement figure for a cash payment but if they say no we will just pay it off. THank you both for your replies I have often worried that I have taken us the harder route by insisting we pay as required but I feel hartened by your responses as it seems we have done the right thing and we will be happy to pay thefull amount and not have the interest payments - thanks again.

Darcey02

Hello - I can see that Nick has replied again saying best not to try and get a reduced amount at all so we will take the advice from both of you and pay in full. Thanks again for your kind replies

never-in-doubt

Don't mean to tread on toes (sorry Nick) but it is definitely worth asking for a reduced settlement and they will not place adverse markers if you utilise the laws to your advantage....

Say you owe £7k on a card, why not write in requesting a deal for a £5k settlement that they will mark the credit file as settled and remove any and all derogatory data from all 3 credit agencies. This is to include any markers suggesting late payments, arrangement to pay or settlement figures. The account shoule show a true reflection of events in which case I am making a formal offer to close the account amicably.

They will most probably accept as £5k in one lump sum right now is a godsend.... for all they know you could go bust tomorrow and get nada!

I've got some great templates and i'll do one for you if you like, worth a go if it can save you £2 grand.....

Just PM me if you want me to do it and i'll post it here! Put it this way, a few people have done it and successfully had all defaults etc removed simply by paying a few quid!

Nick is right but if you cover the arrangement to pay scenario within the offer then it cannot be included at a later date.

NickX

never-in-doubt wrote: »

Don't mean to tread on toes (sorry Nick) but it is definitely worth asking for a reduced settlement and they will not place adverse markers if you utilise the laws to your advantage....

Say you owe £7k on a card, why not write in requesting a deal for a £5k settlement that they will mark the credit file as settled and remove any and all derogatory data from all 3 credit agencies.

No problems having your say here, but I think that the OP has always made payments ontime and in full, so to the Card Provider there is nothing to suggest that they are going to struggle to get repayment.

They tend to accept such offers (Full and Final Settlement) when they see that there has been some financial hardship. To demonstrate this, the OP would need to pay late, arrange reduced rates etc. This would impact their Credit File.

Sure, if they just make an offer with the proviso that there are no derogatory data left on the Credit File, and its accepted then Happy Days, you've saved money. And indeed there is no harm in asking, but I would be surprised if they go for it without some indicators of financial hardship which in itself isn't going to do the Credit File any good.

To be honest, if the Card Providers accepted "Full and Final" Settlements without leaving "arrangement to pay" markers and the Minimum Payments were always paid on time, then certain stoozers would be quids in

So, no harm in asking the question, but I'd be surprised if they entertain the idea.

Darcey02

Thank you never in doubt and nick both of your posts explore the pros and cons that I was weighing up, becuase if I can do anything to save a bit of money that I can use on another debt I am keen to do so but then I also thought that every one would do it if it was possible. So if I have a bit of help with a letter then ill give it a go but as the credit card dont really know about the difficulties we have had and still have, and if it doesnt really affect the payments they recieve from us they may not be inclined to take it - so we will see. I am grateful for your support to day as it can be a daunting and lonely path trying to sort debts out when you dont want to go to to agencies etc.

never-in-doubt

Darcey02 wrote: »

Thank you never in doubt and nick both of your posts explore the pros and cons that I was weighing up, becuase if I can do anything to save a bit of money that I can use on another debt I am keen to do so but then I also thought that every one would do it if it was possible. So if I have a bit of help with a letter then ill give it a go but as the credit card dont really know about the difficulties we have had and still have, and if it doesnt really affect the payments they recieve from us they may not be inclined to take it - so we will see. I am grateful for your support to day as it can be a daunting and lonely path trying to sort debts out when you dont want to go to to agencies etc.

Hiya

Ok, i'll do it for you tomorrow - but can you confirm the following:

1. How much do you owe?
2. When did you take the card out
3. What shows on Experian / Equifax under this account (late payment markers/arrangement to pay/default/etc)
4. How much can you afford to repay in a lump sum?
5. Who is the lender / card issuer
6. Is a DCA involved?
7. Have you considered unenforceability?
8. How much do you pay a month?
9. How long have you been paying it for?
10. Is interest frozen or still being accrued?
11. Is there a lot of charges on this account, i.e. late payments/missed payments/bounced transaction charges etc?

With this info i'll do your letter and post it tomorrow night for you so try and be on around 8pm or later and i'll get any other info from you and do it so you can send Monday :beer:

Stop worrying! We'll go in with a starter offer of £3.5k and then work up when they say no! You'll get agreement at £5k, but that means calling their bluff by going down unenforceability route - remember i'll be looking to threaten them with a £5k cash or nothing (unenforceability) gamble and they will know that the original agreement will be wrong if it is a few years old.....

Do you, out of interest, have any defaults or baddies on your credit files? Late Payments are bad as well you know.......