Full & Final Settlement Help Please

Skylark74

Hi... I’m looking for some advice on full & final settlements. I have been in financial difficulty for around 2 ½ years, and I’ve managed this myself by making arrangements with my creditors. Debts show as defaults and the largest 3 have CCJs. I have a lump sum of £25K available against a total owed of £73K. I sent the letter (below in purple) to my 9 creditors and received my first reply below in red today. I’m not sure how to respond so any advice on the next step would be gratefully received.
Currently I’m paying £259.62 per month:
Incasso (Tesco Personal Finance) @£65.05 per month £28,273 owed (38.60%)
Northern Rock @ £80.78 per month £14,444 owed (19.72%)
Shoosmiths (Santander) @ £34.27per month £10,583 owed (14.45%)
Central Debt Recovery Unit (First Direct) @ £29.15 per month £8,158 owed (11.14%)
DG 1602 (First Direct) @ £27.08 per month £6,687 owed (9.13%)
Tesco Personal Finance @ £8.39 per month £2,391 owed (3.26%)
Next Directory @ £5.00 per month £1,483 owed (2.02%)
Santander (Overdraft) @ £5.00 per month £998 owed (1.36%)
Metropolitan Collection Services (First Direct) @ £5.00 per month £221 owed (0.30%)
TOTAL OWED = £73,238


MY LETTER TO ALL CREDITORS 18th MAY

WITHOUT PREJUDICE

Dear Sir/Madam

Re: Account No/Reference No:

I write with reference to the money which you are claiming on the above account.
I can confirm that I am unable to offer to pay the money which I owe in full due to a reduction in income and separation from my ex husband. My circumstances have remained static for the last two and a half years and are likely to remain so for the foreseeable future. However, I can raise £25,000 and I want to offer this as an ex-gratia payment in full and final settlement of the account. This offer is made on the clear understanding that, if accepted, neither you or any associate company will take any other action to enforce or pursue this debt in any way whatsoever and that I will be released from any liability.
I also request that, if accepted, you will mark any entry on a credit reference agency file relating to the above account as "satisfied" in full.
Payment can be made within 21 days of receiving your written agreement of this offer and method of payment.

OFFERS TO CREDITORS BASED ON A FULL AND FINAL SETTLEMENT OF £25,000
COMPANY / DEBT / F&F OFFER / %
Incasso (Tesco Personal Finance) / £28,273 / £9,650 / 38.60%
Northern Rock / £14,444 / £4,931 / 19.72%
Shoosmiths (Santander) / £10,583 / £3,613 / 14.45%
Central Debt Recovery Unit (First Direct) / £8,158 / £2,785 / 11.14%
DG 1602 (First Direct) / £6,687 / £2,283 / 9.13%
Tesco Personal Finance / £2,391 / £816 / 3.26%
Next Directory / £1,483 / £506 / 2.02%
Santander / £998 / £341 / 1.36%
Metropolitan Collection Services (First Direct) / £221 / £75 / 0.30%
TOTAL OWED = £73,238 / TOTAL AVAILABLE = £25,000

I look forward to receiving your reply.

REPLY FROM TESCO CREDIT CARDS 01/06/11

Thank you for your letter dated 18 May 2011, the contents of which have been noted.

Whilst the bank is prepared to assist you and appreciates your current position, we are not prepared to accept the amount of £816 as a full and final settlement to the above account. The amount required to settle the above account will be for the full outstanding balance, as indicated above (£2,374.57).

Alternatively, if you are unable to fully repay the balance at this time please complete and return the enclosed financial statement.

loopy.magic

I think it would have been best to address each of your creditors individually without listing all of the other companies owed money. If I'm reading your letter properly then you're offering Tesco £816 to settle a debt of £2,391. By revealing the full amount of money you have available I think it scuppered your chances of Tesco accepting or you haggling with Tesco to settle on an amount, I do hope I'm wrong though

Posts I've seen for F&F settlements range from around 40% upto 80%, your offer is quite low in comparison.

Skylark74

Oh no... I just followed advice that I read somewhere (can't remember where now)... Do you think it's worth going back to them with a higher offer or should I wait a couple of months and see what everyone else is willing to do? Really I was expecting them to reject it but at least be willing to negotiate a higher amount.

run_rabbit55

wait for the other responses. i wouldnt expect them all to accept though.it will take along time for you to get that many people to aggre to a settlement figure. i was in the same position as you and to be honest it can take a long time for them to finally agree. i got fed up in the end and let my debts get passed over to a dca because they were easier to deal with especially when i had a lump sum to offer. not that im advising you to do this as unless your confident with dealing with a DCA and there scare tatics.

Skylark74

Thanks run_rabbit55, sorry to be ignorant, what's a dca? And when you say a long time was your experience 3m, 6m or longer. Did you leave it at the one letter or chase them?

bottleofred

Hi skylark,

A dca is a debt collection agency. Some creditors will get back to you fairly quickly, others may take up to 3 months and some may not even bother to answer. You should definitely deal with and communicate with each creditor individually though and always do it in writing. You may get a counter offer from a creditor of say 75% of the outstanding balance, but you can then make a couter offer yourself of say 40% (if you have previously offered around 35%) of the outstanding balance until you agree a settlement figure. Don't settle though until you have it in writing that the agreed amount is as "a full and final settlement of the debt". And always keep the letter confirming this for at least 6 years in case another dca comes after you for the outstanding balance. Don't be too persistent in contacting them though, otherwise they'll probably think your enthusiasm to settle will result in them getting more cash! Patience is required with debt collection agencies!

hello2007

I would start very lose for each debt as they buy the debts for nothing.I would say that the money is coming from friend and is available for a limited time. If they agree to your amount get them to confirm it in writing before you make a payment and make sure that a friend writes the cheques on your behalf for full and final so that they cannot say that the amounts that you are offering are partial payments to your debts.
I was also get them to confirm in writing that they will settle any defaults or CCJ that are on your credit file after they have received payment.

Deep_In_Debt

Make sure that they mark your credit file as "satisfied" and get them to confirm in writing that neither they, nor any 3rd party or associate will chase you for the remainder and that you are released from any further liability. Creditors and DCA's are likely to sell on the remainder and you will be likely to be chased again in the future.

DCA's buy debts for peanuts - pennies in the £ - so will probably make a profit on whatever you offer them.

I'd also say that if they don't accept your offer then you will offer it to another creditor - you might find they bite your arm off for it!

Skylark74

hello2007 wrote: »

I would start very lose for each debt as they buy the debts for nothing.

Thanks Hello2007. What did you mean when you said the above?