Full and final offers questions

Jenjen

Hi everyone

I've not posted for a while but I'm looking for some advice re settling our debts.

We've been on a DMP with Step change for almost 3 years now and it has been going really well. We've managed to increase our payments a few time and our current DFD is March 2019 with a strong chance we can increase again in the future and make it even sooner than that. The debt now stands at just over £21,000.

However, everything changed at the weekend when a family member offered to lend us the money to pay off our debts, we would still have to pay them back so wouldn't really be debt free, but it would be totally flexible payments, guaranteed interest free etc. However, they would like us to investigate settling the debts for less than the £21,000 and would prefer to lend us no more than £15,000 and if possible less than that.

So after a little research (mainly on here and national debtline website plus a phonecall to stepchange) we sent each creditor a letter at the weekend offering them a pro rata payment based on us being able to raise £10k. We knew this was a cheeky low offer at just under 50% but decided it was worth a try.

Today we have received the first reply out of the 12 creditors. They won't accept our offer but they will accept 75%. So my question is do we just go with that as we know we could get the money from our family member, or do we write back maybe offering to meet them half way? I don't want it to drag out forever but at the same time if there is a chance we can pay less then we would like to take it.

Also, we have already made this months payment to step change but this money has not been paid to the creditors yet so is not taken into account in the account balance. Do we deduct this months payment from anything we pay in settlement as they are going to get it from Stepchange anyway. And do we need to be cancelling our arrangement with stepchange at this point to stop them taking any further payments to complicate things further?

Just one final question if anyone can help? 4 of our debts are with Barclaycard and we sent all the offer letters recorded delivery on Tuesday. At the moment Barclaycard have still not signed for theirs, (we sent them all in 1 envelope). Do you think this means they haven't got it or could it be that Royal mail just haven't updated the page? How long should I wait before sending it again.

Thanks in advance for any help.

Jenny

sourcrates

Hi,
Barclaycards post, as per most other large organisations post, is all delivered in bulk to a mail centre. You wont be able to obtain a signature for it.
If the debts are still with original creditors, then its unlikely they will settle for 50%, if it were me, and I was not too bothered about my credit file, I would cease all payments, allow the debts to be sold on to DCA`s, let them play letter tennis for a while, then make them the offers to settle.
However this could take a while to play out, but if you really want to settle for minimum amounts, that's the only way to achieve it.

moohound

Mine were a mixed bunch of original creditors and DCAs and a couple of the original creditors took low settlements 30-40% (Virgin and Post Office CC) I made 'cheeky' low offers and was pleasantly surprised when they agreed.

and a couple of DCAs would only accept 90% (1st Credit comes to mind) so it all seems a bit random, I had only been in my DMP for 10 months.

Good luck with it.

Jenjen

We also have a mixed bag of some with DCAs, others with the collections debt of the original creditor, and others that are still 'live' accounts albeit in arrears.

The one that has come back to us is with a DCA so it's one I was kind of hopeful would be more inclined to accept a low offer. The letter doesn't even include any details of how to pay so I'm wondering if its just all part of the game and they are expecting me to write back with an in between offer. But maybe that's just me reading too much into it.

I'm not desperate to settle for a low amount. Our family member will lend us whatever we need to clear the debts, they just want to be sure that we get them as low as we can.

My credit rating is already trashed due to the DMP but I don't really want them to start hassling and chasing us if we stop paying. Even if we come out of the DMP I would like to continue paying our agreed amounts until each debt is settled, and we are in a position to do that as we don't need to start repaying our family member instantly.

Thanks for the replies so far.

Sourcrates so do you think that Barclaycard will have received their letters even though they haven't signed?

sourcrates

Jenjen wrote: »

Sourcrates so do you think that Barclaycard will have received their letters even though they haven't signed?

Well, as I said before, all large organisations get there mail in bulk, by that I mean by the van/lorry load, and its all processed through a mail centre, similar to a sorting office, so it can take some time to reach the right department.
Its swings and roundabouts with royal mail weather they get signatures or not, I have had registered post left with normal post in my porch, on more than one occasion, give it a couple of weeks, I'm sure it will get there.

Jenjen

Thank you for your help. I'll try to relax and wait for their responses.

So can anyone help on whether to write back to the one we have received a reply from offering somewhere in between our 50% and their 75%. Or is 75% likely to be their best offer. I'm just not sure how far we can push them and I don't want to waste time if I may as well have just paid the 75%. But equally I don't want to ask for more money from our family member if I don't have to.

We have over the last few days received replies from a few of our smaller creditors. The 2 overdrafts (Both under £300 each) have said that they would not even consider a settlement as the accounts are still technically live and have not been defaulted. To be honest I was pretty much expecting that and we will just pay those at the end when all the others are settled with the money we would have used to make monthly payment. And I've just had a phone call regarding one of the smaller credit cards (Balance under £800) asking for us to send a copy of our income and expenditure as they would like to see that before they consider full and final.

Monkeyballs

Hi Jen,

First of all, well done you on your DMP progress to date

Now, a serious question for you... Is there any possibility that this loan from your family member is genuinely affordable to them and is there any possibility that they could find themselves in the position of needing all the money back faster than what you are currently considering?

I only ask because it's not uncommon for people to post on here about family "problems" resulting from helpful loans which didn't pan out... Not saying this will be the case but borrowing from people who see you as a number such as banks, credit cards, etc is a whole lot different to borrowing from family and if things go pear shaped then a £6k saving might not be worth it in the long run...

Back to your original question, obtaining good F&F's can take a bit of haggling so take a little time to counteroffer and see what happens in my experience DCA's offer 25% upfront without much wrangling. If you've a good history of repayment on your DMP then it could make it more difficult (why should they lose money if they're confident that they'll get it all over the next few years?).

MB

Jenjen

Thank you Monkeyballs

It had crossed my mind that it would be needed back sooner, and so we did ask at the time it was offered and we were assured that we can pay back in our own time. It is a close family member and the money has come from an inheritance and we will only be borrowing a fraction of what they have available. So I'm certain that won't be an issue.

I see what you are saying re the full and finals. Step Change have said similar things to us. Despite the DMP we have been pretty good customers, we've never missed a payment, just reduced the amounts and we have systematically managed to increase the amount we pay to the DMP every 8 or 9 months over the last 3 years. We were feeling quite pleased with ourselves about that but I suspect we've actually shot ourselves in the foot when it comes to agreeing settlements!

I will wait a few more days for a few more responses so we can see the big picture a little clearer, then I will start writing some letters back to try and haggle them down a little more, but I won't hold my breath for success.

Thank you for the response

Jenny