Full and Final Settlement

borrowing

I have a debt of £6105.42 on a M&S credit card. I was in a difficult place 2 years ago and had no income for 9 months. I defaulted on the account after 6 months of non-payment. I did inform the company that I couldn't afford to pay them anything. Just after the default notice I got a new job in another city. As soon as I was paid a month later I called M&S and asked to arrange to start paying again... but was informed that my account had been passed to an agency and I should deal with them, they were very rude about it so... maybe not the best thing to do... I just didn't bother.

I moved away to another city. A family member still lives at that address and I occasionally pick up post as I get the odd letter/junk mail etc. I havent replied to anything regarding this debt or made any payments since December 2008. The family member does not have my address.

Today I picked up some post from the old address and included is a letter from Credit Security Limted stating...

"Once again you have disregarded our request for payment of the above debt.

We are now left with one course of action but before referring your account for recovery by a doorstep agent and in a final gesture to resolve this matter our Clients are prepared to accept a reduced sum settlement.

Providing payment is recieved by 3rd Jun 11, the sum of 1831.63 will be accepted as partial payment in full and final settlement and your Credit Reference file will be amended accordigly."

I've been thinking about this debt recently and could pay the 1831.63 at the moment. Of course 3rd Jun has passed, but I presume that if I were to get in contact they'd offer the same again?

Now I have a few questions...

1. Is a partial settlement worth anything to my credit record? Would it make any real difference, or is a default a default as far as getting new credit is concerned (thinking of a mortgage in the next 3-4 years but no credit cards)?

2. Is there any chance they would mark the default as settled rather than partially settled with only a partial payment? Would that be any better?

3. Do you think there's any further room for manouver? Could I get that 1831.63 number any lower? Considering they have no idea where I live now.

4. What are the chances of them taking this to court and getting me a CCJ for the full amount? That would break my finances!

Tixy

Hi

partial settlement is worth something, it proves you no longer owe any money, but the default will continue to hurt for the rest of the 6years from the default date - though the older it gets the less it should hurt. its possible to get a mortgage with a default that has been satisfied but you are unlikely to get the best deals around - and might need a larger deposit than otherwise. If you are talking of 3-4years it might well be preferable to make it 4 and wait for the default and debt to no longer show at all.

2. A few reditors will agree to this but its pretty rare.

3. Could well be, you could certainly try a counter offer (you'd need it in writing to have proof its full & final settlement). National debtline has a useful factsheet and template letter

4. Possible, although you might have expected that if they were going to do it they'd have done so before now. Its possible they don't have the correct paprwork to take you to ourt -but of course that would be a gamble and if they don't have your address you ould end up with them taking you to court and having a CCJ before you even knew about it.

borrowing

I've decided to try and negotiate. Here's what I've sent today:

Dear Sir/Madam

Re:− Account/Reference Number xxxxxxxxxxxxxxxxxxxxx

Without Prejudice

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 as I was made unemployed in late 2008 which drastically reduced my available income. I have several debts which I am unable to pay as a result of this. I was sent a letter on 24/05/11 offering a reduced sum of £1831.63 in full and final settlement of this account. I did not receive this until today as I no longer live with family at this address. However, I have discussed this offer with my family and have been offered £1250.00 to clear this account.

I want to offer this money (£1250.00) 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 nor 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 make an entry on a credit reference agency file relating to the above account as having been settled in full and the account closed. The default marker on the account would also have to be removed. If you are unwilling to accept these terms the money will not be made available to me and I will not be able to pay.

This offer is available until 15/07/11. Payment can be made within 3 weeks of receiving your written agreement of this offer and method of payment.

I look forward to receiving your reply.

Yours faithfully

I have formatted it like that with the bold bits. I've done a bit of searching and can't actually find anyone who's had a default removed like this with a full and final settlement? Am I being unrealistic? :-\

atush

How are they going to write you back? Have you given them your address?

I am a little uncomfortable that you can afford the 1800+ but are offering less?

Let us know what happens.

borrowing

I've put the old address at the top of the letter. I'd assume they'll still reply to that address as they have no other means of contacting me. I will have my relatives keep an eye out for any mail at the old address for the next few months.

I could pay the £1800 but things would be very tight and I also have other creditors. If I paid £1250 I could continue to keep them going.

I haven't done a CCA request but digging around I've discovered that most M&S accounts from my era (pre 2006) don't have a valid agreement. I'm pretty sure this debt will be non-enforceable... hence the offer to settle for 30% already. It's really having the default removed which would make all the difference.

iwillbedebtfreeinmylife

wow iv been aiming to offer 50% to my creditors! after readin this i think i should start lower. Am looking forward to hearing about their response to you....good luck!!

lvm

I would be very surprised if they removed the default - you didn't pay for 6 months therefore obtaining the default. It's accurate information so it should stay there.

aimingforadebtfreelife

What has happened is that CSL has bought the debt off M&S. Whereas before agencies were working on behalf of M&S they were on commission so they would not do too much work tracing you. Agencies like CSL pay about 10p in the £1 for a debt so probably bought yours off M&S for £600. Because they have physically paid out money for the debt they will agressively chase it. Like all businesses they will offer an amount to settle which will prove a quick return for liitle work. If you fail to respond then they will chase you and will quite easily locate your new address as it is now their money at stake.

IMO the default will not be removed. Once they have bought the debt they will transfer the credit reference listing to their name and keep the original default date. The default will drop off after 6 years from registration. They have to by law provide true and accurate information to how the account was conducted. You failed to pay them and went away not informing them of the change of address. That is no grounds to call the shots in the letter to demand it be removed. On top of that you are offering even less. The settlement offered was good and should have been snapped up as they will no hound you for the money at your new address and chances of a CCJ are high. I would write to them and apologise not received letter in time and pay them the reduced settlement and end the matter. Remember they have invested their own money in this and will chase you down.