Help needed!!Full & Final Settlement with MBNA

husnu1

Hi,

This is my 1st post and I wanted to post a message here for so long but I was embarrased and ashamed of my large unsecured loan. I owe money to 6 credit card companies which all add up to £60,000. I have received advice from CCCS after doing an online remedy in November 2009 and they have told me to pay £1.00 token to each of my creditors every month as my priority outgoings were more than my income. I have been paying them the £1.00 token payment regularly since then and my current financial status is still the same and I don,t have any surplus income to go into IVA or Debt Management Plan. So I will have to carry on paying them the token payments for the moment.

I owe MBNA 19,000 and recently they offered(verbally) me a full and final settlement figure of £9,500 which is 50% of the full amount and they said they were open to negotiations. Since then they keep ringing me and asking if I want to negotiate F&F figure with them. They said failing this they will pass the debt to debt collectors. I believe that I can bring this down to about £7,000 which will be about 35% of the whole amount I owe them.

I might be able to borrow this money from the close family but I am wooried about my other creditors. I have nothing extra to offer the others at the moment.
If I negotiate with the MBNA and agree on a figure as Full and Final Settlement, do I need to disclose the information to my other creditors?

What will the legal implications be? I have been told that you should not favour one creditor over the other.

Can they do anything if they find out which they surelly will?

None of my other creditors offered me anything yet and they are all saying that they will be serving me with default notice and then pass the debt to debt collectors or take me to court in about 2 months time and this is worrying me to death. At the moment all the phone calls have ceased and I barely get any phone calls. I have been told that the debt collectors collection tactics will be tougher when they take over the loan from the Credit Card Companies.

Can you please tell me what to do? Shall I go for a full and final settlement with the MBNA.

Has anyone had similar experiences?

Any help would be greately appreciated!!!

Many Thanks in advance

happyhaddock_2

Can't offer any advice as I'm new here as well, just wanted to say hang on in there, someone will be able to give you some help:)

DarkConvict

If the F&F offer would get you somewhere it is worth considering it.

However, if due to the other debts, you decided to do a IVA, bankruptcy it would be a waste of a relatives money.

You need to think long and hard how you plan to tackle all the debts in the long term.

Tixy

Hi

To get round the issue of favouring one creditor over another you would have to tell your creditors the relative is willing to give you the money to pay off this debt in full. So the money comes from them not you.

The issue though is how will you afford to pay back your relative? Presumably they won't be happy with a £1 token payments.

As DC says if you go down an IVA or bankruptcy or even a managed DMP in the future you would not be able to give this relative preference over your other creditors.

I know its tempting to think you can settle for just a third of the value but do think carefully about your personal situation and if, when and how it might improve and how this would affect things.

Xbigman

Are you a homeowner or do you rent?

If you rent you should certainly not borrow money from a relative. The worst that can happen is either Bailiffs seizing goods (in which case you move your most valuable items out) or you get made bankrupt (where you might be heading anyway).

If you are a homeowner its up to you to decide if borrowing from a relative might save your home, but make your relative aware they might wait a very long time for their money back.
Regards


X

husnu1

Hi,

I do own my own home and I have managed to pay my mortgage so far with some support from the family.

If I was to come to an agreement with the MBNA for a Full and Final Settlement the money I borrow will be from a close relative and I have already told them that it might take me a long time to pay them back.

The only thing I am worried about is will this jeopardize my relation with the other creditors and can I trust the MBNA in this matter because I have been reading lots of negative things about MBNA in the forums?

Thanks

mixedupdebt

Hi husnu1,

I'm in a similar fix. Not knowing all your facts, if you have any assets or not or what your income level is, here is what I am planning to do.

I'm planning on the following:

1. update your SOA and list of creditors and debts.
2. Send another letter to each creditor with copies of both the SOA and the creditors list.
3. As part of your letter above, after laying out the financial facts, give your creditors a choice: Offer them a full and final settlement of 10p in the pound. Make them aware of your lack of any assets and that your only other option will be to file for bankruptcy - where they will get nothing (assuming you have nothing left to give them - such as equity in the house etc...). State that the offer is being offered to all creditors equally and that it is a one time only offer. Explain that it is not you that will be paying them - its a relative as you have stated above. Set out some other terms of acceptance - such as writen confirmation and set a timeframe for them to have updated the credit agencies (as you will likely already have a poor rating given the amount you owe). Moving forward you want this cleaned up soon.
4. Send them a cheque for the 10% amount. Make sure you have very clearly stated on your letter that the lodgement of the cheque signifies their acceptance of your full and final settlement, and that even if they write back rejecting your offer, if they lodge the cheque, you will deem the balance / account to be settled.
5. Set a time limit on the offer and back date the cheque a bit so that they can't hold on to the cheque and lodge it later. Given them perhaps 3 weeks.

You may end up with all the cheques being returned. Its up to you if you then go through with the bankruptcy route or not. You can get specific advice on the bankruptcy boards on this bit.

If the lenders look at the risk element - either take 10% or risk getting nothing - it would be foolish not to take it. But then each lender will look at it differently.

Any that accept - great. Will clear some of your debt. You are likely to be left with at least one who does not accept. You may be able to come to a renegoiated offer with them.

Check on the main debt free wannabe forum list for the template letters. Also run it by the likes of the cab or cccs. Make sure the wording is spot on - check legal options / free advice on the f&f bit. You don't want the lender taking the cheque and then pursuing you for the rest anyway.

You could keep the cheque bit for a followup letter if they accept your offer. I feel that they are more likely to take the offer if they have the cheque in hand. You may even have the case that they automatically lodge the cheque and then reject your offer - but that is in breech of your offer which they automatically accepted by taking the cheque.

Be prepared to cancel any un lodged cheques after your cut off date thou.

And send the letter via recorded / signed for delivery - they can't claim to have not received it then.

Good luck.

mixedupdebt

Just been reading up some F&F settlement advice from National debt line - do not send them the cheque initially - only send it once the offer has been accepted. See http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

All the best.

dancingfairy

I would agree with the others above - a full and final settlement with MBNA might be good - one less creditor to deal with but how will you pay the relative back? If your situation is unlikely to improve then how will you feel owing them all the money?
To be honest some debt collectors apparently can be easier to deal with than the original creditor - some are helpful, some less so and some downright awful - probably like dealing with the creditors themselves I guess?
Do not worry too much about defaults - as they are unsecured debts you can't loose your house or anything. Also if you don't have the money - you don't have the money.
I would definitely consider bankruptcy depending on your situation with regards to work etc.
Good luck
df