Are debt settlement letters legally binding?

shireknight

I've been making monthly payments on a large debt (now down to £13'000) for years and suddenly out of the blue the debt collectors have written thanking me for keeping up regular payments and offered me a settlement figure of £9000 to clear the debt once and for all.

I can't afford £9000 however it has certainly made me sit up and take notice and if they were to write again at some point offering to accept £5000 I think I would jump at the chance and borrow £5000 from a bank just to finally get this debt off my back however I'm a bit nervous that there's the potential here for a big sting.

If they did offer a settlement of £5000 and I accepted, borrowed the money and paid the debt off could they then come back at a later point demanding the outstanding £8000 and take me to court or is that letter legally binding to the point where I could show it to a judge along with proof that I paid the settlement amount that was offered and have him/her annul the debt?

One thing that makes me slightly suspicious is that the letter specifically says "The debt will be shown on your credit file as "partially settled" why would it say partially settled if as far as me and the debt collector are concerned the matter is now at an end?

a4a

Answering in reverse, it would say partially settled because that is exactly what it will be. You owe X but only pay Y.
This would therefore show on your credit file as that.
The letter probably would be legally binding but to safe guard yourself you would need to write to them and make it completely clear that this in full and final settlement of any monies outstanding to them, with no caveats.
Do not under any circumstances pay them anything until you have laid that out to them and they have accepted it.

[Deleted User]

You may struggle to borrow anything to pay the balance, if you have an existing debt with a DCA.

scaredlady

Although as has been said you probably wouldn't be able to borrow the money, it is interesting to note that you say you would borrow the money from your bank to pay/clear the debt , as though you would not owe any money then.
However you would ,you would then owe the bank. So you would still have a loan.
Or am I missing something somewhere.

a4a

And if you borrowed the money from your bank, you would be paying interest whereas there is every probability the current debt has frozen interest? If you are paying regularly it is unlikely that they would make such a largely discounted offer.

happy_bunny_2

How much per month do you pay?

When was the account taken out?

Card or loan?

Are they still charging interest?