Advice on Full & Final Settlement to creditors

k993802

Hello!

Having spent months looking over many threads a gleaming so much invaluable information from them, I'd be grateful if anyone could offer any advice with regards to Full & Final Settlements.

Background info:
1) Debt held between myself & OH.
2) EAR/Accor are providing free advice service and have been contacting creditors on our behalf. (they've been very helpful in agreeing offers of payment with creditors and sending letters/talking to creditors etc).
3) Started contacting creditors in Oct06 with first Financial statement and offers of payment.
4) Currently paying circa £1000 a month pro-rata to our creditors.
5) Sold our appartment in Feb07, releasing £28k as cash - currently in savings accounts. (sold to avoid being forced to sell or having creditors applying for a 'charge' on the property value. And as we were unable to attain a fixed rate mortgage - renting allows us to enter a stable monthly outgoing into our budget)
6) All debt is still with original creditors - none has been sold on yet (except Amex - I think that has gone to a company called RMA Resolve)
7) Bankruptcy is not an option as I would not be able to work in my industry again due to being expelled from the professional body.
8) An IVA is not desirable, currently our income is set to increase year on year as career develops (as it has for the last 5 years) - obviously this is an assumption and I accept this may not occur.
9) Both myself and my OH are 26 years of age.
10) We have held the cash in savings with the mindset that should a creditor push for bankruptcy, we could pay them off and therefore avoid bankruptcy. Obviously this falls down if several creditors do this at the same time. (also my knowledge of how bankruptcy is instigated by a creditor is limited at best).

So, £28k cash in the bank, our debts are as follows:

Royal Bank of Scotland Loan £14953
Royal Bank of Scotland overdraft £1000

Alliance & Leicester loan #1 £7748
Alliance & Leicester loan #2 £2517

Halifax Credit Card #1 £9287
Halifax Credit Card #2 £8350
Halifax Credit Card #3 £1698
Halifax overdraft £1000
Bank of Scotland Credit Card £3165

MBNA Credit Card £6848
MBNA Credit Card £7000

Lloyds TSB Credit Card £9104
Lloyds TSB overdraft £1300

HSBC Credit Card £6500
HSBC overdraft £1190

Capital One Credit Card £8887
Amex Credit Card £5450
Tesco Finest Credit Card £4375
Nat West Credit Card £3904
Morgan Stanley Credit Card £3171

TOTAL DEBTS £107447

So we have approx 25% of the total debt held as cash savings.

I personally don't see how offering a the £28k pro-rata as full and final settlement is going to be accepted.
Are there any implications of offering say 50% of the debt to select creditors as a full and final settlement?
I will of course be speaking to EAR/Accor about this, but I thought i'd open it up to this forum as it is an absolute gem in terms of members experiances and knowledge!

Any advice or commentary would be greatly appreciated!

Thanks in advance

Toto

Hi, welcome and well done for posting, but first of all could you post your SOA. Click here fo a guide to help you.

It might be that we can pick through it to save some of your monthly expenses. Then we can look at options available to you for the debts.

k993802

hi, thanks for the reply.

It appears as though I wasn't explicit enough, but to be clear, I'd appreciate advice on Full & Final Settlements, not on setting up a sound budget as that is currently in place and agreed with the creditors (hence the agreed 'offers' of payment).
As stated the amounts paid to each creditor sum to £1000/month. The £1000 is pro-rata'd to the creditors on the basis of the amount owed.

I hope this helps you in offering any greatly appreciated knowledge/advice.

Toto

It would be useful to know how long you have been in a DMP and how long the accounts have been in default.

My thoughts are this to be honest. As you are currently paying a substantial amount each month pro rata, and the accounts are still held by the original lender you probably won't get a massive f&f reduction. You simply aren't a lost cause.

You can try offering what you have. The reason I asked you to post a SOA is often we can find potential savings that you hadn't thought of. This would allow you to either offer the creditors more each month, bringing the total debt down or for you to increase the savings (if the debts are frozen interest) so you do stand a chance of full and final in the future.

k993802

Thanks for your reply Toto,

We stopped paying our 'contractual' minimum payments and monthly payments back in Oct06. We have received formal Default notices from all creditors over Feb07 to March07.

Believe me the budget is tight, not that you don't have the expertise to spot further potential savings, only my wife and I decided to forego all luxuries and pretty much all non-essentials - right down to swapping over to cycling into work everyday rain or shine! (thank goodness for work showers!) to avoid paying for petrol/public transport.

danno_4

Hi k993802
If you offer a full and final offer then that's what it is full & final,If you are dealing direct with lenders then there is no possable way they will except.I work in insolvency and i have to say that very rearly do i say what i'm going to say to you.Without a shadow of doubt bankrupcy is a must.Why? you have no assests at all and with that kind of debt!!!!!!Now lets talk about the problem it would cause with your job,may i ask your job or your oh job.Also out of the debt what is the split.this is paramount to my response,Also what proportion of the debt belongs to the default notices.answer these questions please and i may have a solution,
kindest regards
danno

Toto

Ok, well the usual things we would suggest regarding budget is first of all join quidco if you haven't already. Use Uswitch to check your utilities are all the cheapest possible (and get cashback for the switch if you make one) check for cheaper insurances etc. Go over to the OS board to see if you can get some reduction in your grocery spend, the guys over there are so helpful, we eat much better and healthier now at 1/3 of the cost.

I don't think bankruptcy is a must for you, yes you have a high level of debt but you also do have the means to reduce that debt at a reasonable rate. £1000 a month is pretty good going.

I would first of all offer the full and finals at what you can afford pro rata, the chances are you won't get anywhere, usually low settlements happen because you are seen as a lost cause. But it doesn't hurt to offer. If the creditors really won't accept you need to speak to the people who are dealing with your DMP. Please do check that they are actually free. They might tell you they are but find out where their fee is coming from. The only free charities I know of are Payplan, CCCS and the CAB. Don't pay anyone to help with your debt problems, you're just lining the pockets of sharks.

danno_4

Toto wrote: »

Ok, well the usual things we would suggest regarding budget is first of all join quidco if you haven't already. Use Uswitch to check your utilities are all the cheapest possible (and get cashback for the switch if you make one) check for cheaper insurances etc. Go over to the OS board to see if you can get some reduction in your grocery spend, the guys over there are so helpful, we eat much better and healthier now at 1/3 of the cost.

I don't think bankruptcy is a must for you, yes you have a high level of debt but you also do have the means to reduce that debt at a reasonable rate. £1000 a month is pretty good going.

I would first of all offer the full and finals at what you can afford pro rata, the chances are you won't get anywhere, usually low settlements happen because you are seen as a lost cause. But it doesn't hurt to offer. If the creditors really won't accept you need to speak to the people who are dealing with your DMP. Please do check that they are actually free. They might tell you they are but find out where their fee is coming from. The only free charities I know of are Payplan, CCCS and the CAB. Don't pay anyone to help with your debt problems, you're just lining the pockets of sharks.

Toto,
Before you start calling people involed in insolvency sharks you need to find out more on how they work.I myself work in insolvency i never advertise all my work comes from recomendations i have never had to advertise in 30years that i have been in the industry,I also when i have some free time help on here.When you say ccc's and payplan are good i agree they do offer good advice,May i ask how they are funded?Did you know that some lending banks and credit card companys help them.Know we work a little different when you approach them with debts of say 50k then thats what you will pay.Me i try to get that balance down to say again about 20k not a bad difference for a shark!!!
kindest regards
jaws

Toto

Anyone who profits from the misery of others is a shark in my book. So you offer an IVA, good for you, but please don't ask me to think of you as some kind of hero. There are free charities to help people who administer DMPs for free, would you do that for free if the client didn't want your IVA?

tpurch

I had the £28K I would put it straight to the debt. You could clear a number of your creditors off the list! This would free up more money to pay others. I understand why its desireable to offer a full and final settlement, but can you really see them going for it.

You say you sold your property to stop creditors putting a charge on it, but you haven't used the money to payoff creditors, how would that look if you do go Bankrupt.......?

You don't what to enter an IVA because your income is going to increase over the next few years???? surely this is a good thing. Being debt free in 5 years. You have no assists so they won't be asking you to remortage at the end of it.

Sorry if this all sounds negative (its not mean't too!).

Wannabesaver_4

i am about to offer full and finals to my creditors after selling my house and going into rented. I have approx £13K to pay off £28K debt - feel very nervous about them accepting it as well!

Good luck - you never know. In my case my father is very ill which will have an impact on my repayments soon so hopefully they will accept the offers.

Would be a big weight off my mind!