Help with Full and Final settlement

michelle1985_2

Hi we are hoping to pay off the debts we have we sent the letters for full and final settlement and have just recieved one back from Capital one saying they will accept the amount and if we do pay less than the full outstanding balance that it will show as satisfied with an additonal flag of partial settlement. What does this mean and is it settled and what about credit file will it look ok.
We are hoping to pay the debt off and start saving for a deposit for a mortgage which is going to take a few years but should credit be ok by then.

The amounts we have offered are
Capital one - owe £407.76 offered £304.24 accepted
Littlewoods - owe £668.74 offered £445.25
Lloyds Credit Card - owe £1202.58 offered £852.18
Loan from Lloyds - owe £7831.95 offered £5576.23
Lloyds overdraft - owe 1049.75 offered £779.51
Vanquis credit card - owe £727.19 offered £542.58

Hoping they will accept these

michelle1985_2

anyone any ideas about the partial settlement

GeorgeUK

Can you tell us exactly what their letter says?

You need to get them to confirm in writing that they agree that the payment will be made in full and final settlement of the debt and that you will not be liable for the remainder of the debt. As long as they agree that you will not be liable for any other monies, then this is okay.

The partial agreement part can be a little confusing. If they say that it will appear on your credit file as a partial settlement, then this is pretty standard. If however they say that the payment will be in partial settlement, then this is not what you want.

You need written confirmation that you are absolved from any further liability for the debt before making payment. If it is a joint debt, then you need to write the letter on behalf of both parties.

michelle1985_2

Hi the letter says,
Thanks you for contacting us about the outstanding balance on you capital one credit card. We are writing to confirm the settlement arrangement that has been agreed.

To settle your account a payment of £304.24 will need to be recieved by 14th July 2010. We have listed all payment information on the reverse of this letter. Your account will be settled if the payment is recieved and cleared by this date.

We have provided details below on how this settlement will appear on the credit reference agencies once the account has been settled

If you have paid your full outstanding balance this will show as satisfied.
If you have paid less than your full outstanding balance this will show as satisfied with an additional flag of partial settlement.

This settlement offer is available until 14th July 2010. If the settlement is not recieved by this date your account will return to its previous status. Payments should continue to be made in accordance with any agreed payment plan.

Please do not use any capital one credit cards with the aboce account number. This includes any held by additional cardholders. Any spending may end the settlement offer.

GeorgeUK

To settle your account a payment of £304.24 will need to be recieved by 14th July 2010. We have listed all payment information on the reverse of this letter. Your account will be settled if the payment is recieved and cleared by this date.

It does not state if the settlement will be considered a full and final or partial settlement. Just saying it is a settlement is not enough to stop them coming back and asking for the remaining balance.

If you have paid your full outstanding balance this will show as satisfied.
If you have paid less than your full outstanding balance this will show as satisfied with an additional flag of partial settlement.

This is okay - how it looks on your credit file is not the issue. It is whether they consider the settlement to be F&F or a partial/short settlement.

This settlement offer is available until 14th July 2010. If the settlement is not recieved by this date your account will return to its previous status. Payments should continue to be made in accordance with any agreed payment plan.

There is nothing in the letter stating that you will not be liable for any outstanding or unpaid amount. You need clarification from them in writing about this before making payment.

This offer is made on the clear understanding that, if accepted, neither you nor any associate company will take any other action to enforce or pursue this debt in any way whatsoever and that we will be released for any liability.

This is from the nationaldebtline letter and this is the type of thing you require them to agree to before making the settlement payment.

The letter as it is does not protect you from them coming back next month and demanding payment of the remainder of the debt.

fatbelly

I have to agree with George on this. I never cease to be amazed at how difficult creditors find it to use the phrase 'full and final settlement' in their letters.

Anyone of a cynical disposition would think they are doing it deliberately...

michelle1985_2

Hi again well we have only received letters from capital one and lloyds overdraft and lloyds credit card which both of lloyds have refused, does anyone know if it normally takes this long for the rest to reply i sent the letters on 6th June. Also does anyone know if there is any templates so i could send to lloyds to try to get them to reconsider

GeorgeUK

I doubt it would take a month for them to reply. If you are still making payments, they may be happy to just keep getting these. I don't think there are any templates for a 2nd appeal - just add an extra paragraph and add anything that may make the offer seem more appealing. (Length of time to get the offerred amount etc)

michelle1985_2

I stopped payments as if they had replied they would have been paid off before the monthly payments had been sent to them. I sent some letters back again yesterday asking for a response and that the offer was only available for another 14 days

UnderPressure

I am no expert on this by far actually but..................

By doing this I am presuming even a "flag" will cause you difficulties so far as credit in the future and definately stopping payments until something is agreed will impair your credit score.

Can I ask why you are even doing this? You obviously have some disposable cash so are you just trying to be clever without fully understanding the consequences of your actions? Why would you try and do this with debts under £1000? You have the money to pay so why not just pay and not spoil your credit file?

I think your actions are foolish and for some reason you are under the assumption that your actions will not damage your credit file just save you a few quid when in reality..............................

fatbelly

UnderPressure wrote: »

I am no expert on this by far actually but..................

By doing this I am presuming even a "flag" will cause you difficulties so far as credit in the future and definately stopping payments until something is agreed will impair your credit score.

Can I ask why you are even doing this? You obviously have some disposable cash so are you just trying to be clever without fully understanding the consequences of your actions? Why would you try and do this with debts under £1000? You have the money to pay so why not just pay and not spoil your credit file?

I think your actions are foolish and for some reason you are under the assumption that your actions will not damage your credit file just save you a few quid when in reality..............................

Hi

F&F deals will only work where the debtor has already defaulted on the contractural payments, often where a dmp has been started. So the credit file is already messed up and an F&F deal can only improve things, because it brings finality to the situation (and you might even persuade the creditor to mark the file 'settled').

I think we all assumed that the OP knew this, and the fact that Cap One have accepted such an arrangement, and the OP says it's 'going to take a few years but credit should be ok by then' infers that she does.

I think your first paragraph is correct, though your final one may not be!