Full or Partial Settlement?

Thelaughingcat

Hi there, I'm a total newbie for posting on the forums here but whenever I have had a question in the past someone has normally already asked it and had it answered on here. Now I'm a little stuck.

I have spent the last few years in serious debt and I have been chipping away at it slowly but surely. My next targets were going to be two credit cards that are now owned by Lowell Financial or one of their many alter egos. I looked at my budget and worked out a payment plan to pay them both off in the next 9 months in full and went to run it by a friend that used to work for them.

He told me categorically NOT to offer such a generous payment package and instead offer a settlement figure of 30-40% of the total debt as it is apparently standard practice to accept such offers. He said that would be posted as settled to my credit report almost instantly.

Not paying the full amount didn't sit well with me but on speaking with my mother tonight, it turns out that they have been harassing her for my debt as well, something that she hadn't mentioned as she knew I was paying back as fast as I could.

I'm now pretty upset about this and willing to go along with my friend's advice. My question is this; will my credit rating be affected by the fact that I haven't cleared the full amount or is it just the fact that it is settled that potential creditors look at? I don't want to cut off my nose to spite my face!

Cheers in advance and asks for reading the essay :rotfl:

PS: if the debt is 4 and a half years old and I pay it off in the next 8 months does it disappear anyway in a year and a half or is it 6 years from my last payment?

Thelaughingcat

Just trying to bump this one back up again so all the lovely people out there get a chance to help me. Very worried about my options here

SusieT

the default on your credit report will disappear after 6 years if that is what you mean?
As for the partial settlement if you are already paying them and at the current rate will get it paid in the next 8 months its unlikely that you will get much of a discount so you would be looking to pay posibly upwards of 70% as they know that by waiting a short while they will get it all. If your current rate would take years then yes start at something over 20% and see what you can do. Good luck

Angry_Bear

Your friend is talking about offering Lowell a "Full and Final" settlement (often F&F around here). It does seem to be pretty common, and 30-40% is around the mark usually suggested as a starting figure, although I believe many debt collection agencies will try to haggle you up a bit.

There are a few template letters around, the usual suggestion is to tell the company that you have been offered a sum of money by a relative specifically for paying off debts and that it is only available for a short time, and only if they accept it as F&F, otherwise you will offer it to another creditor (or something like that). I'll have a poke around and see if I can find an example letter and give you a link.

The important part is to make sure you get (in writing, email isn't enough) something from them stating that they will accept the amount as "Full and Final" settlement of the debt and that they will mark your credit report as fully satisfied.

Angry_Bear

Here, try the National Debtline site http://www.nationaldebtline.co.uk/england_wales/debt_advice.php#6

Looks like this

Mr A N Other
1 High Street,
Newtown,
Kent
R21 4RH

January 11, 2013

The Loan Company
Company House,
Church Street,
Newtown,
Kent,
R1 7HG

Dear Sir/Madam

Without Prejudice

Account No: 1234567890123456

We write with reference to the money which you are claiming on the above account.

We can confirm that we are unable to offer to pay the money which we owe in full. . However, we can raise £_____ and we want to offer this 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 we will be released from any liability.

We also request that, if accepted, you will make an entry on a credit reference agency file relating to the above
account as having been paid and the account closed.

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

We look forward to receiving your reply.

Yours faithfully
Mr A N Other

Thelaughingcat

Thank you both for getting back to me tonight - Susie, I haven't contacted them at all yet so they don't know my current financial status but you're right, it's the defaults I have to wait for to come off. I had some pie in the sky idea that once I had paid my debts, they showed as completed. I now realise that isn't true at all, the six year limit is a hard one. Angry Bear, thank you so much for the letter, I didn't realise that I had to get them to state that formally, I'm drafting one right now! You are both stars

Thelaughingcat

I'm also going to reconsider now I've calmed down, I do have a duty to clear these in full, I just wish I could pay them back to the institutions that I borrowed from rather than giving money to the cowboys that bought them up.

SusieT

If you are paying someone who has bought the debt for £0.12 to £0.16p in the £ they would still be getting a profit. One good thing with a defauly is that for the first 4 years it does make getting any credit very hard so forces you to change your habits and by the time you start getting offered credit again you don't need it as you will have learnt to live without