Full and final settlement

formidablelady

Was about to commence an IVA but then my husband was made redundant. He will be getting around £30000 in redundancy. IP sugesting offering full and final settlement of £17500 leaving us around 6 months wages left. It works out minus the fees that they will receive about 22p in the pound. Do you think this will be accepted? Also does full and final really mean that or can they still claim money for you for a few years after? Any advice gratefully received.

Gimpsdad

If your IP has recommended that then my advice would be to go with it. Once accepted, then the deal is set in stone and your creditors cannot come after you again.

formidablelady

Thank-you.

National_Debtline

Hello there, a Full & Final settlement is an arrangement where a creditor will accept a part-payment to settle the full amount of an outstanding debt. As such once accepted the creditor should not try and recover the remainder or the amount owing, nor should they pass the debt to another firum to try and chase you.

The beauty of having a full & final settlement drawn up as a 'lump-sum IVA' is that such an arrangement is water-tight and contractually binding; although your IP will take a fee for their work which would lessen the amount your creditors end up with. Under an IVA the arrangement will be binding on all parties if more than 75% of the creditors by volume accept the propsal.

You can also make full & final settlement offers yourself. The benefit of doing this is that the creditors would end up with a higher amount due to there being no IP costs. The drawback of doing it yourself is that you don't have the guarantee of all creditors being held by the 75% rule. An informal full & final would only be totally successful if all creditors agree to it.

If you do go down the informal route you must ensure that all creditors accept your offer in writing, and that they promise not to pass the remainder of the debt to another firm. Keep the confirmation letter in a safe place as that is your evidence that they have made a promise to you. Should they change their mind once the payment has been made you have a legal argument under the principles of 'promissory estoppel' to challenge them.

In a nutshell a lump-sum IVA might be a quicker and easier route but do try and find out how much the IP is going to take for their services. If you do wish to consider the informal route we've a fact sheet covering all you need to know here:

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

Best wishes,

National Debtline.

Gimpsdad

In many respects, what the IP takes for their fee is irrelevant as it comes out of the lump sum that the creditors have voted to accept in the first place.

22p is more than enough in my experience under IVA, I have seen 3p accepted, even 1p and less, but if you try and negotiate that without IVA then I think you will find that creditors will drive a much harder bargain. the reason for that is that you deal with creditors on an informal basis, on IVA the decision as to whether to accept or not will generally go to a creditor voting representative, who tend to look at things a little more pragmatically.

Anondebtadvisor

In my experience creditors accept a lower return in a F&F IVA than they do when a client trys to negotiate a settlement themselves.

Seek some advice from a few companies before you proceed

All the best

formidablelady

Thank-you for excellent advice from national debt line representative, Gimpsdad and Anondebtadvisor. I was just worried it wouldn't be enough and I had read that someone had been chased for further money afterwards but I think this was because of undeclared assets. We have none of these and we are trying to pay back as much as we can. I feel really guilty as this has never happened before. I have always paid my debts but like everyone else our wages have been frozen for the last few years and food and bills have gone up and up until there wasn't enough to pay minimum payments even let alone extra. I still feel ashamed though.

Gimpsdad

Nothing to feel ashamed about, there are things that happen sometime that are completely out of our control, and you seem to fall into that category. You are being very responsible in my opinion, sometimes it is much easier to keep the original debt cycle going and then running up more debt.

The law backs you as well so don't beat yourself up too much about it.

bandicoot421

NDR advice and letter, many thanks for this and the link it hopfully will help me find the right format to sort out my own F&F letter and start the process properly.

formidablelady

Just had my creditors meeting. They have said that they want to see if hubby gets a job in the next 6 months. If he does and it's the same money as he is on now they want the £17000 and for us to continue with the IVA which they have said they feel we could contribute £409 instead of the £290 calculated. Once hubby loses his job his company car goes also. I was wondering whether we would be able to claims for him to get an old banger and for petrol/ insurance costs or if he would have to claim for bus fare to get to interviews etc. bearing in mind most of the positions similar to his can be miles away. Also would we be in a better position if we waited until the middle of August when we have his redundancy or will this make any difference. In the back of my mind I am aware that the more we pay the more money the IVA company make. Obviously now he has lost his job I am trying to keep as much as I can because it can be difficult to find work. Incidentally he worked his way up to be a manager. He has no qualifications or degrees so the chances of him getting the same kind of salary are slim as they are asking for graduates these days.