F&FS offer negotiation - mostly good, but where next

Lamplighter

Hi all

Not posted for a while.

In a nutshell, was out of work following redundancy for sustained periods from late 2008 to mid 2010, now back in work. With sporadic and low income during this time, couldn't meet obligations and debts built up.

Back into work mid 2010, fairly decent salary. Preceding 18 months yielded accumulated indebtedness of around £54k, incl. utility companies, six defaulted credit accounts incl. bank, loan and car HP (but no CCJs) - most debts with little or no repayment for 12 months. Some debt with DCAs, difficult to assess whether sold-on or acting as agents.

My mission now that I'm back in employment is:
1) to move my debt from "bad" to "good" category,
2) to reduce my overall debt position in so doing,
3) to eliminate my debt in the shortest possible time,
4) to put my credit record on a recovery path, and
5) to communicate and negotiate to avoid any single creditor carrying out various legal threats that have arisen.

On strength of monthly income, I'm now able to accumulate around £25k in short-term personal loans (= circa. 45% of debt level) at very good interest rates (family, friends and willing foreign bank investment), mostly on 36month repayment plans. My strategy is to seek to reduce my overall indebtedness by offering ex-gratia payments from within this £25k as full-and-final settlement of debts at a reduced amount.

Repayments of the loan will leave negligable monthly surplus, i.e.:
INCOME = COST OF LIVING + £25k LOAN REPAYMENT + "not much"

Using the above explanation, I have approached most creditors with pro-rata offers of 45% F&FS and immediate payment, with the alternative being a pro-rata monthly payment towards the full amount from the "not much" surplus.

Happily, many of the creditors have agreed (some moved me up slightly from 45%, which has meant finding some surplus, but none higher than 60%), including the utility companies who seemed very happy to assist by removing incurred costs and charges.

I'm struggling though with one particular DCA, and annoyingly the debt is somewhat small in comparison with many of the others (less than £1k) and the account is registered in default.

Negotiation: I offered 45% ex-gratia immediate payment as F&FS, they refused. I explained that I had limited scope to move as I was making a universal offer on pro-rata basis, but given that the amount is small I'll move to 50% - refused. I then rounded up to the nearest £100 (c. 57%) - again refused. They explained they were looking for 70% minimum (this is only around £80 more than the 57% offer), so I asked them to write confirming 1) this was in consideration of F&FS, and 2) that my credit file be marked "satisfied" in full.

However, they replied that the file would only be marked "settled in part", and I would still have liability for the balance 30%, simply they would stop pursuing it!

I'm not sure where to take this now. Surely the logic beind F&FS is that there is benefit to both parties, viz. the creditor receives instant payment rather than a monthly drip-feed, and the debtor settles at a reduced amount. However, in this case, the DCA is looking for an immediate 70% but also that I retain liability for the balance 30% - there is no attraction for me to pay any lump sum, they might as well have a monthly portion of the "not much" surplus!

Thankfully the majority of the debt consolidation has gone well, I've so far managed to reduce overall indebtedness to around 60-65% of previous levels, satisfied three of the six defaults, removed two CCJs that landed after starting work within the 30-day time limit, and am able to budget my repayment plan.

I'd be grateful for any comments, in particular how I ought to deal with this one DCA (F'red'rick'son).

Thanks for reading!

Lamp

milliemonster

My advice would be to settle all the other F&F's that you have negotiated and then continue to pay the DCA from the 'not much' in dribs and drabs, you are right in that due to their stubbornness there is absolutely no incentive to pay that debt off and as it is only around £1k, I would stick to your guns and just continue with token payments, you can't force them to accept a full and final, try again with them in another 6 months after token payments and see what they say

ItMightBeUsefulOneDay

Lamplighter wrote: »

However, they replied that the file would only be marked "settled in part", and I would still have liability for the balance 30%, simply they would stop pursuing it!

Being marked as "settled in part" is ok as that's what you've done.
Still being liable is NOT. They could (and probably will) sell the 30% on to a DCA who'll begin the process all over again. You need in writing that the debt is closed, no more liability, no-one will ever chase you and so on. The templates on this site are very good but you need to insist that those words are used and not some subtle variation which actually means they're selling the debt on once they've got the most out of you.

I agree with milliemonster. Write to them and inform them since they've refused your F&F offer the money has been offered to other creditors who've accepted it. Tell them there is no more F&F money left and that you'll be resuming the token payments.

In time you may well find they start to write back with letters stating how they "accept your 57% offer". At this point you can choose whether or not to say, "Tough, you're too late" or finish this one off.

Lamplighter

Thanks both Milliemonster and IMBUOD.

Once I hit difficulties in early 2009, I paid only sporadically on the debt in question (to the original lender) before it defaulted, and nothing since (to lender or DCA).

In discussions with the DCA* they repeatedly refused to accept the offers, and asked for a SOA which I told them I wasn't obliged to provide at their request, and indeed that I was not about to provide either!!

When negotiations broke down, I carefully advised them that I would distribute the funds available amongst the creditors willing to accept, and I thanked them for their intransigence as it allowed me more scope to negotiate with the other creditors (the irony was totally lost on them!). I also guardedly told them that, if ultimately asked for income and expenditure information by a body legally empowered to make such requests, any SOA provided would show only marginal surplus monthly funds from which to distribute regular repayments, once the principal bank debt has been deducted as an expense.

They told me bluntly "OK, so we'll put you down as 'CAN NOT PAY'" - yup, just about sums it up lads!!

After reading a totally different post on here, I am going to go back to the original creditor and establish whether the DCA is acting as agent or whether they sold the debt; if the former, I'll ask to discuss settlement terms with them directly.

Cheers, Lamp

*note: on the whole, I've found most creditors, including DCAs, utility providers and even the taxman and council, very receptive to discussions and willing to see the benefits and points of view of both parties, and to negotiate accordingly. Sadly, this particular DCA doesn't fall into that category, and displays their lack of comprehension in their curt and boorish manner.