Help - full and final settlements.

Mattb2010

Hi

I have been looking at this forum for a while and found it really useful so finally decided to ask a question.

I currently have several loans and credit cards that up until now I have managed to pay (only min payments though). However this is through robbing Peter to pay Paul. Due to my my good credit file (at the moment) I can remortgage my property and release some equity. However due to my income I can only raise 65% of my property value which is not enough to clear my debts in full. Therefore I was wondering could I offer my creditors a reduced full and final settlement figure? Would they accept lower figures even if I have equity in my house still?

Any advice would be greatly appreciated.

Thanks

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ITtim

You would have to ensure they marked it as settled in full, otherwise it will show on your credit report.

king100

Mattb2010 wrote: »

Hi

I have been looking at this forum for a while and found it really useful so finally decided to ask a question.

I currently have several loans and credit cards that up until now I have managed to pay (only min payments though). However this is through robbing Peter to pay Paul. Due to my my good credit file (at the moment) I can remortgage my property and release some equity. However due to my income I can only raise 65% of my property value which is not enough to clear my debts in full. Therefore I was wondering could I offer my creditors a reduced full and final settlement figure? Would they accept lower figures even if I have equity in my house still?

Any advice would be greatly appreciated.

Thanks

Do you know if your loans or credit cards have a valid CCA.

Please read below.

IS MY AGREEMENT ENFORCEABLE( Via section 127(3) CCA1974)
PRESCRIBED TERMS FOR THE PURPOSES OF SECTIONS 61(1)(0) AND 127(3) OF THE
CONSUMER CREDIT ACT 1974 Taken from sced.6(1983/1553) regulations
(If you just want to find out, skip the bits in between the stars it’s just some extra information)

**What do we mean by unenforceable?
In the Consumer Credit Act section 127 there is a provision for making an agreement unenforceable if it does not contain certain pieces of information.
Subsections 1,2,3,4 state which pieces of information these are, and everything mentioned there must be included within the body of the agreement, if one is missing the agreement is unenforceable.

How does unenforceable differ from enforceable with a court order only?
When an agreement is unenforceable it means that the court or the judge cannot make a ruling on it. The court cannot make it enforceable.
When an agreement is enforceable only by ruling of the court it means that the agreement can be stopped by the debtor but the court has the power to re-instate it and allow the credit to continue to enforce.**

The Pescribed Terms are these

A Amount of credit
A term stating the amount of credit

B Repayments
A term stating how the debtor is to discharge his obligations under the agreement to make the repayments, which may be expressed by reference to a combination of any of the following-
(a) Number of repayments;
(b) Amount of repayments;
(c) Frequency and timing of repayments;
(d) Dates of repayments;
(e) The manner in which any of the above may be determined; or in any other way, and any power of the creditor to vary what is payable.

C Rate of interest
A term stating the rate of interest to be applied to the credit issued under the agreement
D Credit limit
This may be a term or the manner in which it will be determined or that there is no credit limit.

---

Which of these applies to you depends on the type of agreement you have?

For a Running Account (credit card) agreement

BC and D Apply





For a Restricted Use Debtor Creditor Supplier

• Where the dealer is the supplier and the creditor is the one providing the finance. The money can only be used for the purpose it is given. There is no interest on the purchase (the cash price is the same as the total price)
• And there is no advance payment

A is applicable

For a fixed Sum Credit Agreement
A conventional credit agreement with none of the above restrictions

A and B apply

For a Hire Agreement

B is Applicable

This paper only covers section 127(3) of the Act agreements can also be unenforceable by contravention of sections 1 and4 this will be the subject of the next paper.
Please note that these Prescribed terms where not changed in any way by the [URL="tel:2004/1482"]2004/1482[/URL] Ammendments although the form in which they appear on the agreement was. Subsection127(3) was repealed on the 6th of April 2007 so that unenforceability due to 127(3) will only apply to agreemens executed before that date.

Tixy

If you have been paying all your payments on time so far they are very unlikely to accept reduced F&F settlements. The reason being is that they can just continue as things are and will get the full payment.

Reduced settlements of any size are only given after a person has defaulted and the creditor thinks there is quite a high chance they won't get full payment or that it will take many many years to get payment in full.

Only real exceptions to this are if you owe money to a company who are really struggling financially, welcome finance being a good example.

Before you decide to turn unsecured debt into debt secured on your property think very carefully about the additional risk to the roof over your head. If you lost your income (eg lost your job or through ill health) then you would stand a greater risk of losing your house.
Might be worth reading this before you make a decision http://www.moneysavingexpert.com/loans/secured-loans much of the reasoning in it or against them applies to increasing your mortgage as well.

Also if you are moving debts that are short term at high aprs to longer term at a lower apr you might still find that you pay far more in interest overall. Worth doing some comparison calculations before you make any decision (the snowball calc at whatsthecost.com is quite useful for this).

Tixy

king100 wrote: »

Do you know if your loans or credit cards have a valid CCA.

If you consider looking into this option and did decide to stop paying on the basis on an unenforceable agreement remember that your credit rating would be severely affected (with defaults etc) which would make getting new credit and mortgages much more difficult for the next 6 years. Its only appropriate to consider if you don't mind your credit file being wrecked.

GeorgeUK

If you have not defaulted on your accounts, the most you are likely to achieve is 95%. If you are paying the minimum payments then there is no reason for them to take a reduced settlement offer.

I'm also not sure how this may affect your credit file. As ITtim says, these settlements may be reflected as partially settled on your file which can impact your credit rating.

Have you looked at other options of reducing the debt? 0% credit cards? reclaiming missold PPI and creditcard charges?

If you are struggling right now, it may be better to post up a statement of affairs so we can see if there are any areas where you may be able to make savings. I don't think a settlement would be accepted in your case right now.
https://www.makesenseofcards.com/soacalc.html Try to make it as accurate as possible rather than what you think you are spending or should be spending.

Mattb2010

Thanks for the replies

I did think it may be difficult for me to get them to accept f and f due to no missed payments. However my thinking is that I literally at my limits with my credit cards and only making min payments. If I don't get this remortgage and the lenders accept f and f I think I will only be a month or two away from either having to enter into a debt management or IVA.....if I could prove to my creditors that this is the route I am heading unless I can make F&F do you think I have more joy as with an debt management/IVA I believe they would get potentially a lot less.

thanks

Tixy

Hi

Its difficult to advise how your creditors would view this without seeing your full financial positon and whether they would accept that you needed to be in a DMP/IVA and could not afford the current repayments.
As George suggests it would help if you could post a statement of affairs using the link he gave. This would help us see whether there are any other ways you could reduce your outgoings or what options might be suitable and whether a DMP would be accepted.

Mattb2010

Tixy wrote: »

Hi

Its difficult to advise how your creditors would view this without seeing your full financial positon and whether they would accept that you needed to be in a DMP/IVA and could not afford the current repayments.
As George suggests it would help if you could post a statement of affairs using the link he gave. This would help us see whether there are any other ways you could reduce your outgoings or what options might be suitable and whether a DMP would be accepted.

Thanks is their a std template I could use to show my current financial position

Tixy

We use this form http://www.makesenseofcards.com/soacalc.html which has instructions for posting up onto MSE.

GeorgeUK

Use the SOA calculator i posted
https://www.makesenseofcards.com/soacalc.html

If you fill this in and format it for MSE, you should be able to copy and paste the results into a post here.