URGENT mbna question about reduced settlement

blondieisaband

Hi there

Sorry for the urgent request.

I have missed 4 months payments on my MBNA card. After calling today they've offered me the option of a reduced final settlement. I owe 3700 and they've said they will offer me a final settlement of 2060 to be paid within 60 days. This sounds possible - just - but I'm concerned about the consequenses for my credit record. The guy on the phone says that it will be marked partially setltled but that i will not be pursued for any more cash and the case would be closed. He said this would stay on my record for 6 years but that is is classed as 'better' than a default. My other option is to have the charges and interest frozen but this he said is a 'worse' option in terms of my credit record as it will be marked as a debt agreement that could go on for years until i pay it off.

I need to make a move quickly on this - please could someone tell me what to do!! I'm stressing as to the best option.

Thank you

blondieisaband

I should add ive just spoken to the national debt line and after an hour on the phone giving all my details they basically said they couldnt answer but that there advice was not to believe what credit card people said and to not agree anything until i have it in writing. THey said the best option would be to get them to agree to mark my record fully satisfied but that that was unlikely.

Moggles_2

I have missed 4 months payments on my MBNA card.

If you've been in arrears for 4 months, presumably you've received a default notice from MBNA or, if not, you're about to be issued one. If a default notice is registered with the credit reference agencies, it will stay on your credit files for 6 years anyway.

As advised, I wouldn't part with any money until you have written confirmation of the terms.

Your post raises other issues and you may want to post again on the *Debt-Free Wannabe* board. You'll get lots of advice and support there from users who have faced similar situations

http://forums.moneysavingexpert.com/forumdisplay.html?f=76

NickX

Basically I think your Credit File is going to be damaged whatever course of action you choose to take.

I think an offer of £2060 on a debt of £3700 is pretty good going representing a payment of around 55% of the original debt. I'd take this but before you pay them a penny make sure you have the offer in writing clearly stating that it is a "Full and Final settlement", thereby meaning they cannot chase you for the remainder of the funds anytime in the future.

stephane_2

I agree, have you checked your credit file recently? it will show your last 4 missed payment but I believe that it is registered as a default from 5 missed payment, but missed payments or default your credit file is now damaged for many years to come (6 years in fact). You must get MBNA to make the offer in writing to you and it must state that it will be a "full & final settlement" and what are going to be the terms. Do they want you to pay the debt within 6 equal payments? if it is you must make sure you can afford them because if you miss one single payment that they will come back to you saying that the agreement is void and they will have no hesitation to sell the account to debt collectors and trust me you don't want to have to deal with these peoples.

ICan'tStandIt

A full and final settlement is much better than a default, but they will update your credit file accordingly as, after all, you didn't pay them all the money back did you ?!

Unless you can afford to pay back everything or at least get the account back on track and then clear it all at a later date, I could go with the F&F.

It could be argued that it is a little harsh on those with excellent payment history as they would never get such an offer.

fermi

Before you accept an offer you should have it in writing that:

a) Your/their offer is to be accepted a "Full & Final Settlement" and you will have no further liability for the debt.
b) The entries on your credit references should be marked in some way to indicate that the debt is settled/satisfied or partially settled/satisfied, with no outstanding balance.

It is acceptable in a "Full & Final Settlement" for the entry on your Credit Reference Files to be marked as "partially settled" or "partially satisfied" AS LONG as there is no balance outstanding.

After all, the lender has not received all that they were due, and there should be some distinction between how this is recorded compared to someone who has settled in full.

Because there has been some confusion on this issue on DFW I checked this with both the Information Commissioner and National Debtline. Particularly with NDL, as their factsheet on the subject makes no mention of it.

The Information Commissioner's Office directed me to one of their publications in which they wrote:

Where the lender has accepted as part of a negotiated settlement a payment that is less than the outstanding amount and the customer has agreed as part of the settlement how their credit record will be affected:

In these circumstances, we understand a lender may be reluctant to mark the entry as ‘satisfied’ or ‘settled’. However the entry must record the position adequately, for example, by showing that no further monies are expected and the account was partially paid.

And National Debtline clarified the difference between that and their factsheet by writing:

We note that you require clarification regarding full and final settlement offers because the information on our fact sheet and the Information Commissioner’s website seem to differ.

You are correct in thinking that it is important for you to have confirmation from the creditor that your offer is accepted as full and final settlement. You must also ensure that you keep this confirmation for at least 6.5 years in case the debt is passed onto another debt collection agency in error.

If the creditor will agree to mark the credit file as satisfied this would be an excellent result for you as it would look better on your credit file. However, your credit file should show an accurate credit history and to mark a debt as ‘satisfied’ when it has only been partially satisfied could be deemed to be misleading. Therefore the creditors are well within their rights to mark your credit reference file partially settled/satisfied.

Batgirl_x

I defaulted on my MBNA credit card. I repeatedly told them of my circumstances and that I could not make the payments they requested. At their request I sent them faxes and letters detailing my finances. I did this four times over 6 months and they ignored it or lost it and just kept calling me demending money. I didn't make any payments and finally a member of their team sorted out a repayment plan with no interest until my situation improves. So far I have been making monthly payments for 7 months at £35 . My debt was £3800. As far as I'm concerned if they had helped me in the beginning I would have had hundreds of pounds less in charges in the first place. They have made their money from me and I'm content to repay them slowly but surely without the interest!

I don't advise you to do the same though as of course it is bad for ones credit!