Anyone ever had a succesful Final Offer letter?

donmonster

Hi

My situation is well documented on another thread - but to get the basics here it is:

Original Debt - £48,000
Current Balance - £44,000

Now this current balance does not take into acct any interest or fees (provided by the CCCS) and comes in my monthly statement with my DMP.

I want to write to the creditors and ask will they all accept a pro-rata Final Settlement offer and wanted to know if anyone had any success with this in the past? I was thinking of using the template provided (on the other thread) and also mention that at my current rate the debt would not be paid off for nearly 8 years.

I want to propose that they accept an offer but want to know what sort of level people think I should pitch at. Now I know some don't agree with trying to get anything writen off the debt - each to their own and I understand that. But if they do it I am all for trying it, as I think it may be the better option to Bankruptcy for me.

I MAY and I stress may have access to about £25-28,000 - now this MIGHT come from grandparents who have it set aside as a deposit for a hosue and would not be too keen on me using it to pay off Debts but what I thought was....

If I offered any of the following:

50% - £22,000
60% - £26,400
65% - £28,600

How likely would they be to accept it - as I will stress in the letter they will all need to accept it - anyone have any experience of this and any idea if the bigger creditors are usually happier to settle early?

I would then up my payments - which currently stand at £500 - to £750 into a varierty of Interest paying accts - average rate about 7% - and without taking into account yearly bonus and Interest would have paid back (myself) in a max of 3 years....

Any thoughts appreciated...or are these figures too low - should I be looking at offering 70%+??

Thanks

Debt_Free_Chick

There's no hard & fast answer. It's just down to negotiation. The lenders say to themselves "What would we prefer ... to have all this debt paid, but wait 8 years and run the risk he could go bankrupt owing us nothing? Or a lump sum now? And if a lump sum, how much would he have to offer us to make us think it's a good deal?"

The rule of thumb is anywhere between 50% and 80%. Personally, I think 50% is a little optimistic - but I would definitely offer that and see what they say. They might say "are you 'aving a laugh?" or they might say "tell you what, make it £x (65%) and we have a deal".

Purely from a negotiating viewpoint, go in with your lowest offer first. So if they get more, they will feel as though they've "won" ... and you may get away with paying less than you were actually prepared to

So I would offer 50% and see where it takes you.

Make sure you follow EXACTLY the process set out in the National Debtline factsheet, And enclose a full statement of what you owe to each creditor, so they can see that your pro-rata offer is fair.

Alternatively ... call your CCCS agent and discuss it with them. They may be able to negotiate a better deal for you.

Good Luck - let ys know how you get on.

mattp_3

Yeah I agree with Debt_Free_Chick about the negotiation tactics, it is definitely worth trying a low lump sum offer to each cred and then see what response you get.

If you do not get any good offers, I would recommend you look at entering into an IVA(Individual Voluntary Arrangement) which is an alternative to bankruptcy - you can do two types of IVA, a lump sum which would be a "one-off" payment or a monthly payment scheme (usually a five year term) - sometimes you can do a combination of the two.

IVA's are legally binding and ensure that all interest and charges are frozen - some companies charge £1000's in upfront fees, so ensure that you try a comapny who will not expect payment if the arrangement fails for any reason, such as:

www.shawsinsolvency.co.uk
www.debtclinic.co.uk

I know the Citizens Advice Bureaus regualrly refer people to these companies when people need IVA's as they won't charge any upfront fees.

Hope this is of some help
Regards
Matt

spankymonkey_2

my husband and i lost our house 9 years ago. we have been paying back £30 a month, although they say they want it to go up every year due to inflation and i have to fill out expenditure/ income forms every 6 months. we had a form come yesterday to fill in and it said we could finalise the debt by paying £3500
we owe £13622 . only thing is i would love to get rid of the debt but being on working tax and child tax where on earth do you get the money from. this is only a small debt from what i have seen on here i really do not know how some of you cope with the large debts i have seen!!!

donmonster

That is some write down Spanky - although after 9 years maybe they are realising by asking for £3500 they would be getting almost 10 years of payments!

I rang the CCCS and asked about final offer letters. The girl said pretty much what was advised on here - start low and then negotiate - said they would obviously look at how much you had paid, for how long, and what the balance was.

However she suggested that I write to each creditor individually - which goes against the advice of the template given on my previous thread - about letting them all know pro-rata - so does anyone have any suggestions. I can see where the CCCS are coming from - try and negotiate with them all seperatly - as there is bound to be some who might take 50% while others might only go as low as 80%. She said do not set out in your letter what you are offering everyone else even if it is on a pro-rata basis.

I suppose you could look at that two ways - if one creidtor who say you owe £6000 to sees your total debt is £44000 they could think well at least I am getting my share, but could also think he has such a big debt we should not all give him soo much off. Whereby if they just thought they were the only one and were being offered £3000 to settle might accept....

decisions...decisions....

Malestrom

Its difficult and seems to be an area of confusion. Generally its accepted and logical that you offer an amount pro-rata to each creditor. However, what do you do if 3 out of 4 creditors accept the arrangement and the other one doesn't? With a pro-rata arrangement, you should offer all the creditors an increased settlement figure, which is frankly poor money management.

If I was in the position of having the money to offer, I think I would write the standard pro-rata offer letter first, disclosing amounts offered to each creditor. If all decline, then up the offer on a pro-rata basis. However, if any accept, then write to the remaining creditors on an individual basis with no mention of a pro-rata agreement. There are other posts here that show people have offered FAFS on an individual basis to their creditors and have been successful.

elaine373

I dont usually air my washing in public but just wanted to say that 3 years ago my husband owed £23,ooo to a company. We, having 7 children and no money offered £1,500, (in total not per month) payable over 18 months, in the agreement that this debt would be wiped, They accepted and we cleared the bill(huge relief), I am not saying that every company would accept that, but when they know they cant get what you dont have, then i suggest to any-one start low and realistically, regards, Elaine

spankymonkey_2

well actually funny you say that , i was going to be really cheeky and ask if they would take £1500 to clear the debt or just offer £35 a month a £5 increase instead of £10.

elaine373

They cant take what you dont have, but could prompt bankruptcy, re-possession, (if you own your home)they can even get an order through the court to have a percentage of your wages. We all have to take responsibility of the debts we incurr but at the end of the day,alot of debts are wiped because the person owing has not got the means to pay,in my husbands case, he didnt have his own property, he was self emplyed, he said he would welcome bankruptcy, and he was responsible for six dependants, I would always advise any-one in debt to continually have contact with their debtors and maybe to send an income and expenditure sheet, to show what you can realistically afford. regards Elaine

donmonster

So can anyone tell me what they think of this please - may be in a position to make a full and final offer - and am going to start low with 50% of an offer - this is the letter, anything you think I should change, omit, add etc?

Thanks

WITHOUT PREJUDICE:

Dear Sir/Madam

Re: xxxxxxxxxxxxxx

I write with reference to the money which you are claming on the above account.

I can confirm that at this time we are unable to offer to pay the money which I owe in full.

You will be aware that I am currently on a Debt Management Plan (DMP) with the CCCS who pay you a monthly amount of £XX. They have estimated my balance at £XX which I know may not be a true reflection of the state of the account. At the current rate of re-payments I estimate this balance will be paid off in X years.

However, I can raise £XXX and I want to offer this 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 for any liability.

This amount is only available to me, via a relative, to make a Full & Final Settlement on the account. I have been informed it will not be made available to pay off part of the debt and nor will it be in the future. I may also in the near future be forced to change jobs and take a pay cut, as a result I would have to reduce my monthly payments to you.

I also request that, if accepted, you will make an entry on a credit reference agency file relating to the above account as "satisfied" in full.

Payment can be made within 2 weeks of receiving your written agreement of this offer and preferred method of payment.

I look forward to receiving your reply.

Yours faithfully

livilou

I revently negotiated a successful final offer. We owed 10,000 and we had offered low monthly payments that were rejected, the company then said they would accept 7500 as a final payment, I thought I would try my luck and offered £5000 which they accepted. I used national debtline templates, advice and stuck to my guns and was not prepared to be bullied.

So I would say offer a lower sum initally and see what they say. You can always offer a little more but can't reduce your offer,. I think as long as you keep in contact and show you are trying your best to repay the debt, most companies will negotiate with you.