Full and final settlement query-mbna offer but on dmp

elennor

Hi again
We have around £19,000 debt with MBNA and are on month 6 of our DMP with 13 creditors. MBNA rang today, were actually quite pleasant, and advised me we would be put on bad debt list for 6 years from the end of the month(can't remember proper name for this but youknow what I mean). Then then offered a settlement if we can pay £7800 by the end of June in one lump sum and said they could negotiate if we get near that amount. We have no chance of raising this but my son may have a credit card that he could use and we could pay him monthly. I don't know what to do as this would mean we would be paying interest on the £7000 but at the same time £12000 written off sounds tempting. If they sell the debt does a debt collection agency ever offer full and final settlements? we may have more chance of saving later on towards this.
Any advice gratefully received
Thank you

DarkConvict

MBNA are going to be placing a default on your file.

The F&F offers are common at this point by lenders, but i would not put it on a credit card.
Reasons
The rate is going to be very high
Your son is going to be liable for the debt not you
Taking out credit is against your DMP (although its not you applying for it, just a warning)
The important bit is going to be preference to creditors is not allowed, now since your son would be paying the F&F offer it wouldn't be an issue in that area as its his money not yours, the problem is you want to pay him back and the odds are your DMP payment will not cover his min payment on a credit card so he will end up defaulting, and your not allowed to pay more to him per month as it is preference to a creditor.
Unless you have the F&F offer available mostly in cash i would avoid it incase you regret it. (Use snowballing to work out the cost of it)

It is an opportunity i think you need to let pass.

here is the Snowballing for you. http://www.whatsthecost.com/snowball.aspx

£7000 @ 15.9 APR (average rate), paying £100 a month
It will take you 189 months to pay off these debts if you snowball correctly. During that time, you'll pay £11,814.00 in interest.

If you can pay more per month or getting a lower rate it would help, sometimes you can get life of balence at 6%. But you will be limited by your DMP to what you can afford!

Here are 2 further examples

£7000 @ 15.9 APR (average rate), paying £500 a month
It will take you 16 months to pay off these debts if you snowball correctly. During that time, you'll pay £683.00 in interest.

£7000 @ 6 APR (very low rate), paying £100 a month
It will take you 86 months to pay off these debts if you snowball correctly. During that time, you'll pay £1,579.00 in interest.

Deep_In_Debt

Also, keep everything in writing when negotiating F&F's and don't use your son's credit card to pay. Once they have his card details, they could help themselves to more from his card.

You need to get in writing that this is in F&F, that neither they nor any third party or associate will chase you for the remainder of the debt and that you are released from any further liability and that your credit file is marked as "satisfied". National Debtline website has a good template letter you can use for this.

I had my fingers burnt years ago, paying a F&F on card and they helped themselves to more some months later. I then cancelled the card but they chased me for the remainder some years on.

They may well sell the debt on to a DCA in which case you could get a much lower settlement offer.

elennor

Thank you for your help-the snowballing link is very useful (and very scarey). If DCA's offer a F&F then I will hang on-I just wasn't sure that they did and was worried I may lose an opportunity.