Getting debt Free - agreeing final settlements

Wannabesaver_4

Hi All - i would really appreciate any advice anyone has on this.

We are selling our house to hopefully pay back debts. We will have around £15-20K to pay off £30K of debt. We have been advised by the CCCS to contact creditors and ask them to accept final settlements. This would mean offering a creditor £6000 instead of the £10,000 we owe them for example.

Has anyone had any experience of this and how far under the real amount do they tend to accept? I REALLY want to pay everything off with this money and am scared they wont accept it.

Here is what i think we will offer - what do you think?

£10k Owed- £6000 offered
£8500 Owed - £4500 offered
£4000 Owed - £2500 Offered
£1000 owed - £800 offered
£1000 owed - £800 offered
£240 owed - £140 offered
£3500 owed - £2000 offered

PLEASE please any advice would be great!

CLAPTON

are you currently on a DMP or are you paying the debts properly?
if on a DMP how long ago did you start and how much are you paying each creditor each month. are any the debt with DCAs?

Toto

First of all, a lot of this depends upon how long you have been making reduced (or no) payments on the account, who owns the debt (original lender or DCA) and how long the payment plan, if there is one, is going to run. The more of a lost cause you are in the DCAs eyes the better your chances of a full and final being accepted.

I did do some settlements with my creditors. First of all I looked through each account and added up all of the charges they had put on my account and subtracted that to save us all the hassle of me reclaiming those charges through the courts. Then I started my offer at 50% knowing full well they would refuse and bargain. In the end they almost all settled at 75% of what I owed minus charges.

My advice would be to go in with your first offer slightly less than you expect to pay because they will want to negotiate. Of course you could stick to your guns but it is likely to take longer if the DCA doesn't think he is getting the best deal. Also, avoid telling the creditor you are selling a property to fund this, the general advice is to get a third party to make the offers on your behalf.

Let us know how you get on.

jediross

Maybe not quite the same thing but many years ago I was repossesed owing about 25K, settled with the lender for around 4K!!

Wannabesaver_4

I am on a DMP that started this month - so will be making second payment on the 1st Feb.

I was going to in at 50% and see what they said - the CCCS said they wouldnt do this for me - although when i spoke to them first off i thought they said they would. Quite scared of doing it.

We have had letters to say a couple of the debts have been passed on but we havent had any new details so i assume i go to the original lender???

Very nervous of doing it beacuse i want to be completely clear using this money - and i know i WILL NEVER have another CC ever again!

Toto

The thing is you can only offer up to a maximum of what you have got and to be honest it is in the creditors interest to have a % of the outstanding debt now as a lump sum than have it in drips over the coming years. There is a formula which they use which basically works out the deprecition of debt over the years... on top of that they factor in the risk of your circumstances changing and the possibility that they might end up with a lot less if you end up doing an IVA or filing bankruptcy.

So my advice would be, get a 3rd party to offer the money, write a letter explaining that this is a one time offer and that there is absolutley no more that can be offered. Tell them that the money will be available in full in (a timeframe you can achieve) It also doesn't hurt to remind them of the length of time your current DMP will run and tell them about any potential future change of circumstances which could affect your ability to maintain the DMP.

All of this may not happen right away so my advice would be to work out an absolute maximum you can offer each creditor and stick to it like glue. Put the money in an high interest account ready for them if they accept. Do not be tempted to give more to one because they are the first to come back with an acceptance but at a higher amount, because this will mean you have less pro-rata to offer the last in line. Of course you should tell the DCA that the money will be given to the creditors who accept first which could mean this is a limited time offer for them (if that makes any sense).

As a general rule you are in a better position if the debt is owned by a DCA and not the original lender, because the DCA will have bought the debt for a small % of the debt so he will have much more room for negotiation.

However, all of this said, there are no guarantees at all. You may not get anywhere with offering reduced settlements, if you do it is a bonus. You might have to just pay the money to the DMP as a pro-rata payment to all creditors if they all dig their heels in. But best of luck, there is nothing to be scared of you are offering to pay them after all and the worst they can do is say no.

recyclingbox

When i settled in this way a few years ago, i wrote to all my creditors and asked them for a settlement figure . I then rang them and said i can't afford it. Negotiations took place and more often than not a fair bit more was knocked off the figure. One company (metropolitan i think) asked me for a figure then they said no i said lower they said higher - bruces play your cards right!! this carried on until we both agreed...

Oh yes don't actually tell them you have got any money, just that things might change and if they did.... if they know you've got £25K and you owe them £6k they won't see any reason why they can't have all their money! Play your cards (right) close to your chest!!

Recyclingbox

Broken_hearted

I'm having a nightmare trying to get DCA's to accept settlements at the moment.