Full & Final Settlement Guidance Please

JustAsking_2

I have a DMP and was recently contacted by DC who stated they “would take a reduced amount in Full and Final Settlement”. At the same time, I received a letter from my bank offering “would take a reduced amount as partial settlement”. Of course, I would prefer F&FS and when I contacted the bank to state this, they said they are “legally bound to note the debt as partial settlement” and could offer no explanation re: DC offer………………The bank (Nationwide) and the DC letters overlapped – Nationwide had passed my details to DC.
The debt is for credit card. Is this correct re: bank’s ‘legality’ obligations?
Can bank note debt as F&FS? Thank You

fermi

They are not legally bound to mark it as a partial settlement.

They are perfectly at liberty to mark it as simply settled if they wish to do that.

However, if they have accepted less than the full amount then it is legally acceptable for them to mark it as partially settled, if that is what they wish to do.

What is "acceptable" for them to do is not the same as what they are "legally bound" to do. I think the person at the bank that you spoke to has got themselves confused over the difference.

fermi

Make sure that you get any terms of a settlement in writing before you part with a single penny.

You need to see that:

- The account will be settled, and you will no longer be liable for any remaining balance.
- You will not be chased for the remainder, and it will not be sold on.
- The account balance on your credit reference files will be zeroed, and will be marked in some way to indicate that the account is settled and no more money is expected to be paid. Settled in full would be preferable, but a partial settlement marker is acceptable if that is as far as they are willing to go.

Anything short of the above ^^^^ in writing is not acceptable terms for a settlement.

JustAsking_2

Thank you for your advice. I note your comments about the “sold on” aspect and wondered whether this had already happened – the DC trail is KPR (whom I understand to be Nationwide’s in-house debt collectors?)then three months ago,*Roxburghe – *I wondered whether sold to them, hence different settlement terms but when I raised with Nationwide, Nationwide insisted debt still with them and “Roxburghe acting on their instructions” in which case, can I insist on F&FS as offered in writing by Roxburghe as Nationwide state “acting on their instructions”. This is all in writing.
If the debt has been sold on, would Nationwide be in a position to accept a settlement anyway?
Also, if sold on, have Nationwide written off for end of year accounts purposes?
On a separate note regarding ‘sell ons’ – does the account holder (debtor) have to agree to this – isn’t it a change of credit card contract?
As regards defaults – after how many years are these removed from records and also is removal subject to debt being satisfied or default removed regardless?

fermi

Any settlement off would have to be in writing from the owner of the debt.

In this case, that would seem to still be Nationwide.

I've seen several cases now where people have accepted offers from debt collectors who claim that they have authorisation to make and accept offers on their terms.

It then turns out that the debt collector did not have permission from the original creditor to offer those terms, meaning that the settlement is null and void.

That doesn't mean that you can't make offers/negotiate via a debt collection agency acting on a companies behalf, but final confirmation of any offer must come in the form of a letter direct from the owner of the debt.

JustAsking wrote: »

If the debt has been sold on, would Nationwide be in a position to accept a settlement anyway?

If/when the debt is actually sold on, Nationwide would no longer be the owner of the debt, and so they would no longer be able to settle it or authorise settlement. That ability would pass to whoever bought the account.

JustAsking wrote: »

On a separate note regarding ‘sell ons’ – does the account holder (debtor) have to agree to this – isn’t it a change of credit card contract?

No. The debtor (account holder) does not have to agree to it.

JustAsking wrote: »

As regards defaults – after how many years are these removed from records and also is removal subject to debt being satisfied or default removed regardless?

6 years after the initial default date.

The records are removed regardless of whether the debt is settled/satisfied.

JustAsking_2

Thank You for advice

saltnvinegar

fermi wrote: »

I've seen several cases now where people have accepted offers from debt collectors who claim that they have authorisation to make and accept offers on their terms.

It then turns out that the debt collector did not have permission from the original creditor to offer those terms, meaning that the settlement is null and void.

That doesn't mean that you can't make offers/negotiate via a debt collection agency acting on a companies behalf, but final confirmation of any offer must come in the form of a letter direct from the owner of the debt.

Likewise Fermi

The wording that I've seen DCA's use here is particularly sneaky something along the lines of:

"We may be prepared to negotiate a settlement in Full and Final in settlement of your account"

Meaning they may be prepared to negotiate with the client.

So what happens is they say they accept a payment of £xxxx but in the context of the previous correspondance what this means is that they will 'negotiate' this with their client, who of course declines it.

By then its generally too late as the DCA has your cheque and has cashed it.

Be very very careful negotiating F&F settlements as its a minefield.

Its essential that everything is put in writing at all times.

Best

SnV

JustAsking_2

Received letter today from Nationwide. The exact wording as under. Is this good enough?

1) I confirm that once payment is received, the remaining balance on the account will be written off. The bank will not pursue you for this debt nor will the remaining debt be sold on to any type of third party or debt collection agency.

The bank is legally bound to show a true reflection of how account has been managed, therefore your credit file will show as partially settled.

2) On a separate note, my current bank account has written and offered me an increased overdraft – I already have an (unused) facility. I am on a DMP, unrelated to this bank but I thought that account holders / banks were not allowed to apply / offer overdraft in these circumstances? I shall not be taking up the offer but am interested in the protocol here.

Thank You

topcat9

If you are on a DMP you are not supposed to take on any more credit. I doubt an unused overdraft would cause you any problems though . As far as I know, there is no obligation on the bank not to offer you an overdraft, although they may not be particularly inclined to do so if they know about the DMP.

JustAsking_2

Thank You.