Timeline for Full & Final Settlements

welshlass111

Hi everyone!

Love this forum I have learnt so much from you all since I joined!

I am hoping to be in the position to be able to offer f&f offers to my various creditors shortly and was wondering how long you guys that have experience of F&Fs took to negotiate to the amount you wanted to get?

I wonder when I should start contacting them etc.

Any help would be great!!!

Thanks

welshlass111

Did I post this in the right place?

Anyone out there? ;-)

Please help!!

Toto

This was a post I wrote a few months ago, this is just my thoughts on the whole thing but you might be able to pick something useful out of it.

I have notice many people are asking advice about offering creditors full and final settlements on their debts, so I thought it would be useful to start a thread advising on how these can be achieved.

Full and final settlements can be offered and there are resources out there to help you. The national debtline have some good information on their website with template letters to help you. Below is the fact sheet on their website which is packed with useful information.

http://www.nationaldebtline.co.uk/en...ement_of fers

In brief, it is usually best to offer settlements via a third party, all of the usual free debt advice companies can do this for you, CAB, Paypal, CCCS or you can do it yourself.
Usually you need to be on some kind of payment plan first, certainly you will need to be in default. You usually can not offer a settlement to the original lender while full monthly payments are still being made. If the debt has been passed to a debt collection agency you will have much more negotiating power, although this isn’t a hard and fast rule, original lenders will negotiate if they feel you are a lost cause heading for bankruptcy or an IVA, even on secured debt!

You should not tell the creditor you are providing the funds yourself, you should suggest the funds are coming from a third party, even if you are selling a house. Creditors don’t think about the bigger picture, they think only about your debt to them, so if you have £10,000 available and £20,000 in debt total but £3,000 to lender A, Lender A will not see why he should settle for much less when he knows you have £10,000 more than enough to cover his debt. How much to offer a creditor depends on how much you have available, how much will be accepted is anyone’s guess to be honest, some creditors will settle at 10% others will hold out for the full amount, this is where strict negotiation comes in, but there are no hard and fast rules.

It is important to do your sums and be very strict in the negotiation phase. Make a spreadsheet detailing every one of your debts. I included on my spreadsheet amounts of all charges relating to each debt, rather than go through the reclaiming charges procedure I decided to deduct the amount of the charges at this point to save us all the hassle of going through the court procedure. Once you have all details work out your maximum pro-rata figures you are able to offer each creditor (the fact sheet above explains this better than I would ever be able to do). Now you are ready to start approaching your creditors.

First of all I opened an ING direct savings account. I transferred the sum available into there. On the ING account you can have up to 10 sub savings accounts, so you can give each sub account the name of a creditor and split your funds pro rata into each. This stops you from getting confused with amounts during negotiation; it is sometimes tempting to give the first creditor more just because they are the first to talk figures, leaving less or nothing for the last in line. If you have each creditors money in a separate pot you will be much less likely to overspend on one.

I think it is better to start negotiating at a lower figure than you expect to settle for, you then have room to negotiate upwards rather than offering a fixed sum with no room for movement.

How much to offer really does depend on many things, if the debt is old and has many years of debt repayments at small amounts remaining you can usually offer a lower amount than a newer debt which is likely to be cleared in a matter of months. Creditors look at the depreciation of money over the years and also the possibility of you declaring bankruptcy or entering an IVA when deciding what is the best deal for them. £10,000 is worth much less in 10 years time than it is today and if you may go bankrupt the £10,000 may be worth nothing at all. They are always, quite rightly, looking to obtain the best deal for themselves; sometimes settlements are the best deal because they are guaranteed a smaller sum now which may be worth much more than 10 years of £20 a month. With this in mind it is useful to add into negotiation letters the length of time it is going to take you to repay this amount and the chances of circumstances changing for the worse, forcing you to take a more drastic route to clear your debts.

Creditors often open negotiations themselves; I had many letters offering me a settlement figure long before I was in a position to accept. Remember debt collection agencies have already purchased the debt at a small % of what is owed, so as long as they end up in profit they are usually more than happy to take the money, saving them the hassle of administering a long repayment plan.

Never ever pay anyone to offer settlements; there are lots of sharks out there looking to profit from your debt. You do not need an IP to deal with this for you and you NEVER need to pay for debt advice, if in doubt at all make a call to one of the free debt counselling charities to get advice and assistance.

Settlements aren’t guaranteed, they are a bonus if you do get them accepted, but sometimes it can be a lengthy process. If at first you hit a brick wall, continue to make your reduced payments and keep the money safe in your account. In a few months time ask again if the DCA will re-consider. This is why it is very useful to let them know the money is coming from a third party and not sitting in your bank account. If they know you have it they will want it all, which wouldn’t be the best deal for all of the creditors, it is wrong to favour one over another and pay one off if there is a possibility you may not be able to repay the other debts. In a bankruptcy situation this would be cause for a bankruptcy restriction order or the official receiver reclaiming the money paid to a particular creditor. You are better to hold the money until either a pro rata agreement is reached or you do take another route. If of course you are never likely to need to enter into an IVA or declare bankruptcy you are free to snowball the funds and clear the highest interest bearing debt.

I hope this helps answer some questions, I am not an expert but I have had some experience in negotiating with debt collection agencies

welshlass111

Wow thats quite an essay! Thanks for that its really useful

Thanks for all your help!

k993802

I'd just like to add my thanks for that info - very helpful indeed.