Making Full & Final Offers: Issues

MyLastFiver

Hi,

Following on from my previous thread, I am on a DMP (currently £46000) with about 10 creditors. Due to an inheritance I will shortly be able to pay them in full.

The advice I received on the previous thread was to try to get my creditors to accept lower offers in full & final settlement.

I had not considered this before because 1. The moral imperative to pay in full, 2. I need the defaults on my credit file to read "settled" and 3. I want to put this behind me and don't want months of bottom-feeding DCAs, ignored letters, moronic call centres etc.

BUT being able to keep some of the inheritance will make a big difference to my family's future and I would be willing to put in some work if it meant that I could settle my debts for less without a big load of hassle.

SO: How likely are my creditors (mostly high street banks or their DCAs) to accept, say, 60% in F&F and mark my file as settled? COuld someone who has been through this process please enlighten me?

Thanks

gonzo127

well here is a ROUGH guide on what companies have been known to accept,

please remember some people get lower amounts other have to pay much more than this,

these things depend on so many variables including what side of the bed the person in the company got out off

anyways rough guide is below

Debt still with original creditor NO default = 90% or more
Debt with original creditor but with a default = 75% or more
Debt with 'in house' debt collectors of the original creditor = 60% or more
Debt with external debt collector however still property of original credit = 40% or more
Debt owned(purchased) by external debt collectors = 25% or more

MyLastFiver

Thanks Gonzo for that useful info. I'm still not sure what to do and will probably pay in full to get the defaults settled and put this whole thing to bed.

gonzo127

no dont just pay up at least offer the full and finals once,

if they accept a full and final, your account will be marked as settled in full (hence the name) which shows exactly the same as if you was to pay it in full, yes it might take a few letters but the savings you can make for your family would be worth it even getting a 80% F&F gives you 20% of the money for your family

MyLastFiver

Hmmm I'll give it some thought!

nategreen

My two pence - haggle like Del Boy Trotter!!

I'd definitely recommend ringing your creditors before sending a letter with an offer. If you're on a DMP and assuming your creditors agreed to the DMP before the accounts had reached the end of the collections process with the company and were sold on, they're probably being dealt with by a specialist department who would tend to have a bit more clout than normal customer services.

Call and explain you're in a position to negotiate a settlement but funds are limited. **I wouldn't recommend advising your creditors the funds are from an inheritance** - doing so would let them know straightaway you have guaranteed funds and at the very least no longer need a reduced payment arrangement. I'd say something like a family member is willing to lend you the money interest free to settle, but he/she can't afford the full amounts outstanding. Ask them what they would be prepared to accept. Negotiate from there. Of course, if you manage to agree anything then get them to confirm it in writing before you make the payment, none of them should have a problem doing this. If you're told the full balance is required to settle, or they only offer a small reduction, don't be afraid to politely ask to speak to a Team Leader or to advise you'll think it over, then call back later to speak to someone else. Simply by ringing in, speaking to someone nicely and coming across as genuine could make all the difference. After all, if a collections advisor has the ability to reduce a balance by say up to 30% when negotiating a full and final settlement, it's only human nature that the nicer you are the more inclined they're going to be to do their utmost for you.

I think if you just write in instead of calling first, there's no interaction, no chance to build a bit of rapport with the person making the decision and they're more likely to give a standard response and very unlikely to offer you the most reduction they're able to offer.

While it may not work with every creditor, I'd be surprised if it did not work with quite a few.

At £46,000 you're talking about a potential saving of thousands, I think you'd be crazy not to negotiate, but of course that would be your decision.

Good luck

handyman123_2

I dont know if this will be of help or not?

Last year I did some work with a chap who after being made redundant had gone self employed, he was a brilliant tradesman and was rapidly building up a good little business, to the extent that he was begining to take out a better wage than he had when employed.

One day I asked him why he was down, he explained that his wife had spent so much on cards a year or so earlyer he had had to take out an IVA. When he was made redundant he had informed his IVA manager, told him about his redundancy, what he was intending to do, the Administrator made no comment.

10 months later the IVA administrator called him saying that they had informed his creditors about his redundancy and that they were classing this as a windfall, and that they wanted between 50 70% of his payout.
Of course by this time he had bought a van, tools and lived off the redundancy while he got started, obviously by this time there was little if anying left.

I dont know how this would affect a DMP, but I would err on the side of caution, tell them nothing, like the previous poster said negotiate like Dell Boy and see what happens.

Best wishes, handyman123.

DarkConvict

@Handyman123

I would argue it, he was honest and stated what had happened, they decided to take no action so he used the money elsewhere. I can't see they can have a claim on anything if such time has passed, you cant be expected to not spend any money for the sake they change there mind in 2 years.
Problem with redundancy been classed as a windfall is for the majority of people it isn't, they need it to find or train for a new job.

handyman123_2

DarkConvict wrote: »

Problem with redundancy been classed as a windfall is for the majority of people it isn't, they need it to find or train for a new job.

Couldnt agree more, I just used this as an example of what happened to someone I know, having been made redundant a time or two, I can vouch for the fact that any payout is not a windfall.

Best wishes handyman123.

GeorgeUK

MyLastFiver, just wondering but why do you want the defaults marked as settled? As i understand it, there is not really much difference made to the credit score between the default being marked as settled or partially settled. It is only once the default falls off your file that a real impact can be seen.

MyLastFiver

GeorgeUK wrote: »

MyLastFiver, just wondering but why do you want the defaults marked as settled? As i understand it, there is not really much difference made to the credit score between the default being marked as settled or partially settled. It is only once the default falls off your file that a real impact can be seen.

George, it's because some time in the next year or two (the defaults will still be on my file) I want to move house. I realise that the defaults will exclude me from most prime mortgages but I was hoping I could approach my current lender, with whom I have an unblemished record, for another mortgage. I would be able to say "yes I have defaults but they're settled".

My current lender is my only hope for a mortgage. It might be a false hope and I was going to seek advice on the mortgages forum. Any thoughts appreciated.