Full & final settlement at a % of what you owe?

PabloEscobar

Morning guys.

I`m currently in a DMP with Money Village (Spectrum),and have been since 2006! I have 6 creditors now, 5 of which are debt collecting agencies such as Fredrickson, Capquest & Connaught. I will soon be in a position to pay off this debt due to selling our house, and moving into rented accomodation, and was wandering what the best way to approach this is.

I know money village will do it for me, but no doubt for a substantial fee, on top of their monthly fee they receive anyway. Firstly, I don`t think there is anything in writing with MV to say I have to use them to pay off the debts. I was planning on just contacting the creditiors myself, and negotiating a settlement. Does anyone have any experience of either MV or settling debts themselves in this way?

Also, does anyone have any advise as to what percentage I should realistically be looking at paying? I know you can get reduced figures for a full & final settlement, but has anyone paid debt off this way before? If so, I`d be interested in knowing what % I should start negotiations at. I`ve already had a letter from Connaught offering me 75% off, for full & final settlement, this even before I have contacted them.

I know this post is a bit long winded, but It would be good to hear from people who have been in a similar situation, and listen to their experiences.

Thanks

sourcrates

Hi Pablo

First of all, when you have the money, I would bin money village, as there costing you money, then write to each creditor and find out how much you still owe them, when you have this information, write back to each of them with an offer, I would start at 30p in the pound, and see what they say, its all a dance really and these are just different steps in the dance, say you have limited funds from a house sale to pay off all your creditors and this amount is the best you can offer in full and final settlement. Be prepared to negotiate but dont offer too much, for example the average return to a creditor in an IVA is around 30-40p in the pound, so they will be used to accepting offers of this nature, dont be fooled by any bravardo from them, they will be out for the best offer they can get but stick to your guns and only offer a similar amount as above, and they will accept it in the end.
good luck with it !!

PabloEscobar

Thanks very much for the reply.

Ditching Money Village was top of my agenda, so it`s good to know I wasn`t alone in thinking this. I`ve got a list of all my creditors, so i`ll go off the national debtline letter template, and see how I go on.

Again, thakns for the advise.

The_Boss

If you will soon have the money to pay off each debt then ditch Money Village and settle for the full amount with each lender separately.

PabloEscobar

Thanks. But why would I settle for the full amount when I can pay a smaller % and still be debt free?

The_Boss

PabloEscobar wrote: »

Thanks. But why would I settle for the full amount when I can pay a smaller % and still be debt free?

Since you asked...

A DMP is there to enable people struggling with too much debt to repay what they can realistically and reasonably affor and help them out of a hole. In your case, you have said you will soon be able to pay off all the debts, so that is why the basis of my advice is to ditch the administrator and settle in full with the lenders. They may give a lower settlement figure as you have mentioned in one instance. But DMPs are not there to enable individuals to make a fiscal profit after running up huge debts in their name so I am bemused as to why you would want to haggle further than a full and final settlement fee.

If your circumstances were different I would have advised differently.

flirtythirty76

I have just settled my 5 creditors that I was paying through Stepchange/CCCS.
I wrote the early settlement request letters myself & offered the creditors 65% of the outstanding balance in full & final settlement of the accounts.
All but 1 creditor accepted & the 1 that didnt settled for 70% & this saved me over £15000. in total.
Be specific in what you request in the letter, as in update credit file with "settled", no 3rd party can pursue you for the remainder of the debt etc.
I also included my dmp income & expendiure calculation sheet & all my other creditor details so basically they could see the entire situation.
Good luck.

PabloEscobar

The_Boss wrote: »

Since you asked...

A DMP is there to enable people struggling with too much debt to repay what they can realistically and reasonably affor and help them out of a hole. In your case, you have said you will soon be able to pay off all the debts, so that is why the basis of my advice is to ditch the administrator and settle in full with the lenders. They may give a lower settlement figure as you have mentioned in one instance. But DMPs are not there to enable individuals to make a fiscal profit after running up huge debts in their name so I am bemused as to why you would want to haggle further than a full and final settlement fee.

If your circumstances were different I would have advised differently.

Thanks for the reply again. I am aware of what purpose a DMP has, and who they are aimed towards. I`ve been in my plan since 2006, so for nearly 7 years have been paying the set amount and increasing it whenever possible at review.

However, our house sale is now going through to enable both myself and my partner to clear our debts and begin life debt free. We wouldn`t be selling the house if we didn`t want to clear the debts. Of course I would want to get the lowest Full & Final settlement possible. Wouldn`t the majority of people? I`m not trying to make a fiscal profit,as you put it, just looking for the best outcome for myself and my partner. This is natural.

If you have a problem with that, that`s your choice.

PabloEscobar

flirtythirty76 wrote: »

I have just settled my 5 creditors that I was paying through Stepchange/CCCS.
I wrote the early settlement request letters myself & offered the creditors 65% of the outstanding balance in full & final settlement of the accounts.
All but 1 creditor accepted & the 1 that didnt settled for 70% & this saved me over £15000. in total.
Be specific in what you request in the letter, as in update credit file with "settled", no 3rd party can pursue you for the remainder of the debt etc.
I also included my dmp income & expendiure calculation sheet & all my other creditor details so basically they could see the entire situation.
Good luck.

Thanks for the good advise. i`ll be getting a template letter together shortly.

Out of interest, did you write to all creditors at the same time or do one at a time?

flirtythirty76

Yes I wrote to all my creditors at the same time using the same template letter & enclosing the other DMP bits.
Got to be honest & say that after 3wks of no replies I had to call all my creditors re the settlement & request written confirmation of the proposed settlement amount...I thought they would have responded quicker at the thought of the accounts being settled in 7dys rather than 10years!
Good luck.

2babyboys

Hi Pableoescobar, are you saying Connaught said you only need to pay 25% of the balance outstanding?