Confused about Full and Final settlement offers

mi33cupc@ke

I wonder if someone could enlighten me on making full and final settlement offers. We have debts of around £26,000 not including our mortgage. When I had my LBM about a year ago I cut all of our outgoings right down and now we just about cover the payments each month so we are not struggling drastically as such. I've never defaulted always making the monthly payments on time. However, we've had these debts for so long I just want them gone. How do full and final settlement offers work? I've seen the template letter but how does is work. How do you work out how much to pay them, does it have to be a certain percentage of the outstanding balance? Do I have to already be on a DMP or IVA or have defaulted for them to agree? Or are they just going to laugh in my face and say no?

Thanks for any help its much appreciated.

Tixy

Hi

If you have always paid your debts on time then the chances of getting F&Fs accepted are minimal. As they assume that you will continue to pay and that they will therefore get all their money back eventually.

If you have defaulted or are on a DMP then the banks are already aware they may have to write off some of the debt as a bad debt so will sometimes accept a bit less (not loads but sometimes 75% or so).

If your debts have been sold on by the bank to a DCA that is when you can get good deals (as they will have paid far less to the bank than the balance of the account).

Only real exception to this is if you have a loan with someone who are in financial trouble (welcome is a good example right now and are accepting F&Fs even from people who haven't defautled).

mi33cupc@ke

Thanks for replying. Doesn't sound like an option then. How do you think I would fare if I ask them to freeze the interest? How long can I ask them to freeze it for? At least then I can start making some sort of dent in the balances.

Deep_In_Debt

You can try asking them to freeze interest but as you are up to date with payments and never defaulted, I think it's unlikely but no harm in trying though. You could try asking them to freeze for say, 6 months and see what they say.
Usually creditors will only freeze interest and accept F&F's if you've been struggling for a while, defaulted and on a dmp.