Is it possible to negotiate a settlement with credit card companies?

Condmach

Hi all,

I have £28,000 on 4 credit cards which I would dearly love to get rid of. Was wondering if it's possible to negotiate a settlement with any or all of them. A relative is willing to lend me £9000 and recommends I try and raise the rest via a secured loan, but suggested contacting the credit card firms beforehand to see if they would be willing to accept say 80% of the balance owed. By the way, 2 of these credit card accounts are now closed - I am just paying the balance off.

Thanks in advance.

WASHER

I can't offer help with settlement figures...sorry.

DO not take out a secured loan in order to repay these debts, you will be paying interest on that loan too, and your home will be at risk if you cannot keep up the repayments.

WASHER.x.

Welshdebtor

As said already I would not get a secured loan to pay off unsecured debt, way too risky and expensive in the long run.

can not help with suggested settlements amounts either, just keep it at a level you can cope with.

TakingControl

Are you currently in a payment plan or still paying the minimum each month? If you haven't defaulted or stopped paying I doubt they would settle at all.

MBNA took a 55% F&F from me but I was 15 months into a DMP whereby Capital One refused the settlement at the same time.

alias07

Hi, sorry I don't have any info on settlement figures either, BUT I do know you shouldn't even contemplate a secured loan. And this is from someone who went and got one - and dearly wished I hadn't. Now me and my husband are stuck with it - selling the house would not pay it off. I wish I had got some proper advice before doing it, but I really thought it was the best option at the time - it wasn't. We tried to sell the house a couple of years ago, and had been told previously by the comapny we could transfer the secured loan over but no - they regard it as a new application, so we would have been paying interest on top of the interest that is already on it - would have added thousands! We're keeping up with repayments but basically we are stuck in this house until we can pay the secured loan off.

There will be other options available to sort out your debt - and lots of helpful people on here to give you advice on how to do it - just please don't get yourself stuck with a secured loan. It looks like you've decided to get it sorted before it's begun to spiral out of control - which is brilliant. All the best with sorting it
Ali

Condmach

Thanks all.

Firstly, I think I confused myself - I should've said a personal loan, not a secured one. But thanks for the advice on secured loans regardless!

To answer TakingControl, it is currently minimum repayments, but I am looking to fix them at slightly above the current repayment amounts (if I don't manage to get a loan for the remainder).

On a related matter, has anyone had any dealing with Zopa UK Loans?

Thanks again.

Tixy

As said above credit card companies won't agree a reduced settlement unless you have been unable to meet minimum payments and have defaulted on your account (which goes on your crdit file for 6years).
Even then cc companies don't tend to accept particularly low settlements, usually people only get substanitally reduced settlement offers accepted once a debt has been sold on to a debt collector.

Some threads on ZOPA peer to peer lending on the loans board you could look at, some good experiences, some not so good.

Before you consider any other lending or consolidating your debt at all have you first looked at all your monthly spending and written out a statement of affairs? that might be a better first option and will allow you to see how much you should have to put towards your debts each month and how long it will take to pay them off if you just stick with the current credit cards. Generally on here people don't recommended consolidation loans.

You could also consider posting the statement of affairs on here to see if people can help reduce your outgoings by suggesting changes that will help you bring down your debt free date.

Condmach

TakingControl wrote: »

MBNA took a 55% F&F from me but I was 15 months into a DMP whereby Capital One refused the settlement at the same time.

Pardon my ignorance, but what does F&F stand for?

Tixy

Full & final - as in full & final settlement - usually meaning a reduced full & final settlement.

jamesd

Using the relative's money on the card with the most expensive borrowing would be the starting move in this. Balances are updated once a month so it would be between one and two months before your reduced credit use showed up. Best to do one of the closed cards because that would reduce your maximum possible unsecured borrowing amount and do most to improve your credit rating. Then get a credit check and wait until it's showing as cleared.

If you can, set up a standing order to pay £1 to each of the existing cards. Many cards report whether you make minimum payments to credit reference agencies and it can be taken as a sign that payments are unaffordable if you pay only the minimum. An extra £1 a month by standing order is enough to prevent this flag from being set.

Next thing to do is try for a 0% balance transfer credit card deal, like that from Virgin/MBNA. The initial fee for the balance transfer then the year and a half at 0% will save you money.

After that, try a 0% for purchases M&S card. Then you can buy Sterling travelers cheques from M&S as a purchase. Pay the cheques into a bank account and use the money from there to do some repaying. This reduces the rate to zero for some more of the money.

Once those are done, go with a 0% for purchases card and put all of your normal spending on the card, using the money put on the card to pay off some money from the most expensive of the still open cards. That'll gradually shift more of the money to 0%.

If desired, offer the relative payments equal to the after tax interest rate they can get from the best available savings account, so they aren't losing out on interest by lending you money.

If the relative has more money available and is willing to take a risk of lending more, it's possible to clear more cards and hope to get enough in 0% deals to repay the extra money lent by the relative. This isn't guaranteed, so the relative needs to be willing to take a risk that the lending could be for a while.

Don't make more than three applications a month and give it at least a month if you get a couple of decline decisions, better three months. To many in a short time looks like desperation and puts off lenders.

Condmach

Thanks for the excellent advice jamesd, very much appreciated.