Write-Off Proposal Query

Tabitha_T

Hi, has anybody had any experience of a creditor proposing a nominal write-off amount in full and final settlement of their account?

I have a bank/credit card company who have essentially agreed to my write off request (on medical grounds) and have told me they will accept £24 as a final payment on the account (the current balance of which is £7K). But, they have sent me a repayment schedule showing £2 per month x 12 months, commencing in April and finishing in March 2014. My father has suggested that he helps me make a one-off payment of £24 in order to close the account now. I'm just a bit concerned that I may compromise their proposal if I suggest that I can pay the whole amount upfront to get the account closed earlier than next March.

Any thoughts? Thank you. Tabs

fatbelly

I don't know what the logic is of their proposal. It will probably cost them £2 to administer each payment.

My feeling is - if they're going to write it off, they should write it off.

Are they trying to get an actual acknowledgement of the debt before it goes statute barred? When did you last make a payment?

If you have been paying, and this isn't something sneaky, then have a closer look at their letter that says 'they will accept £24 as a final payment on the account'

Providing there are no weasel words or 'without prejudice' then you could pay £24 and consider the account closed.

RAS

When did you last pay anything into this account?

Tabitha_T

Hi, thanks for your responses. I last made a token repayment to this account in October 2012. Prior to that I had been making token repayments of £2 per month for 2.5 years. When my HB reduced and my rent increased in Sep I was unable to maintain even token repayments and wrote to all creditors to explain the situation.

I'm not sure what this 'without prejudice' bit means, their actual letter does contain this phrase, I quote:

"We are prepared, without prejuduce, to accept £24 in full and final settlement of the debt, provided that the first payment and all subsequent payments are received each month by the date(s) shown. Please allow sufficient time for payment(s) to be received."

It does seem a little odd when I have told them I can't even afford token repayments and I am certainly not in a position to be paying any other creditors. National Debtline told me I shouldn't be paying one creditor and not another. (Mind you, I have now had 10 out of 15 creditors agree to write-off).

The other slightly worrying thing is that I have now received another letter in the mail (dated a day later than the one detailed above) that says collection activities have been suspended on the account, as has the interest, and please be sure to contact them by 12 August 2013 to review my situation and agree a way forward. I kind of have alarm bells ringing at the moment in regard to the whole thing...... Tabs

tpl

Hi, sorry i can't help...but would be also interested to know what 'without prejudice' means on the letter....is it a bad thing....does anyone know? Thanks, and sorry for hijacking!

Cynical_Monkey

tpl wrote: »

Hi, sorry i can't help...but would be also interested to know what 'without prejudice' means on the letter....is it a bad thing....does anyone know? Thanks, and sorry for hijacking!

As part of an attempt to settle a dispute, the parties frequently make statements without prejudice. When this is done, the contents of the statement cannot be put in evidence without the consent of both parties.... The statements often relate to the offer of a compromise and, were it not for the privilege, they would constitute significant items of evidence on the ground that they were admissions.

Essentially, it means that if the regular payments aren't made and the creditor takes the OP to court for the full amount of the debt after they miss a payment, the OP CANNOT produce the letter and say "Well, they offered me a settlement figure of £24 so I'll pay that instead of the £7,000 they now want".

They could legally withdraw that offer if you don't stick to the explicit terms they've offered - Personally, I'd borrow the £24 and have that in my bank account and let the £2 monthly direct debit come out as they've suggested - no point over complicating it or taking the risk of them withdrawing the offer...

Tabitha_T

Thank you, that's very enlightening. I kind of feel that I should do the monthly thing too, seems like it could potentially bring problems to pay off in one hit. Interesting though that they are the only creditor to have come up with this option. I'm still a bit phased by the second letter asking me to make contact in August 2013 with update to my circs. All very odd but I think it's a safer bet to pay monthly and prolong the agony for another year. Thanks guys for all your input. Tabs

fatbelly

You can't use their letter as a defence to a court claim.

I don't understand why they have set up the hoops as they have but it looks like you are going to have to jump through them and at the end of 12 months you'll discover what sort of company you have been dealing with.