Partial Settlement v Full and Final

thinkpositive1

I have a very tempting "offer" from one of my creditors to settle the balance on my account (if I can find the lump sum to do it) but they have said it will be registered as a PARTIAL settlement.

Advice from National Debtline and other reputable charities suggests that I should only agree to a FULL AND FINAL settlement.

The creditor has confirmed on the phone (and that they would in writing) that the partial settlement is sufficient and that they would not pursue the outstanding balance.

Has anyone had experience of this / can offer advice? The creditor is MBNA.

I want to settle this but legally I am unsure where I would stand.

fermi

From a previous thread.......

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.

I should just add that 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.

Because there has been some confusion on this issue I checked this with both the Information Commissioner and National Debtline. Particularly with NDL, as their factsheet 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 incase 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.

If you are at all unsure of the wording or whether to accept an offer, the best idea is normally to run the offer past one of the free professional debt advice services. National Debtline for example.

thinkpositive1

Thanks Fermi

Appreciate your help on this.

It sounds a little confusing or that there is a bit of a "grey area" in this respect.

They have said they will NOT list it as a full and final settlement only a "partial settlement" but the key seems to be in the phrase "account satisfied" from what I can make out?

From what I recall they also used a phase: "we would confirm no further action will be taken to recover the remaining balance".

I just need to know this is legally ok for no-one ever to pursue me for the remainder of the balance.

I would take your advice of checking any wording with National Debtline in any case.

Thanks

fermi

Not really a grey area. There is just a difference in what you need in any letter regarding liability for any remainder, and how it is considered fair to record the settlement on your credit reference files.

They are two very distinctly different matters.

So...........

1) As far as liability is concerned, you should make sure you have it in writing that the settlement means that your liability for any remainder has ended, and the account will not be chased or passed/sold on.

2) They can mark your credit files as partially settled/satisfied. That is fair enough really, as it distinguishes your account from one that has actually been fully settled by payment of the entire balance. However, the credit file entry should also clearly show that the account is closed and the balance zeroed.

thinkpositive1

Fermi that is great - I understand that better now.

Thanks so much for your help.