Final Settlement for Credit Card with Default

swaite53

Hi everyone. As you'll probably see, this is my first post, but have been lurking around here for many months.

Firstly, I'd like to thank everyone for the help I've picked up on here, and have successfully managed to complete a PPI claim on an old RBS loan, to the value of £4,300.

My financial status isn't great - I have a default with an RBS credit card that was given to me in July 2012 at a balance of £5,500. I've been paying around £70 per month since then, and the current balance is at about £3,800.

As I've come into the £4,300 I mentioned above, the first thing I want to do with it, is clear my credit card balance (and hopefully a loan, that hasn't defaulted). So, I thought I'd phone RBS and ask for a full and final settlement figure (hoping to get a bit knocked off...

The chap on the phone was polite enough, but wouldn't have won an award for friendliness or helpfulness. He went away to check with his colleague, and basically, said they wouldn't accept any offers - I could either pay off the £3,800, or carry on paying £70 per month and interest has been frozen since 2012. I challenged him as to why, and he said because I was paying a back a good amount per month, there were no deals. He then went on to say how it would actually be more beneficial for me to pay back the full amount. When I asked why, he said that it would look better on my credit file.

Maybe I'm wrong, but in 2018, won't my default be gone, regardless of whether I partially settled, or settled in full (therefore irrelevant)? And even if I fully settle now, the default will still be there until 2018 anyway (so not much more benefit there either, or at least not over partially settled)?

Is this normal for there to be no offers to clear the balance, or is it dependent on the person the other end, and I was just unlucky to speak to someone who wasn't being helpful?

Makes me wonder if I've been too honest and helpful, and whether I should just stop paying so that it goes to an outside company, then offer them £3k to clear it.

Is it worth paying it off in full to get rid of them, or shall I dig my heals in and play hard with them?

Any comments anyone has, would be greatly appreciated - thank you in advance...

eskbanker

Probably not what you want to hear but: you borrowed all the money, you spent all the money, you now have the money to pay off the debt in full, so pay it off in full, simple as that!

Edit: how would you have reacted if RBS had said to you "we owe you £4,300 for your PPI claim, shall we call it £3,500 as a final settlement then?"?

tomtontom

You challenged him as to why you should repay the full amount that you owe? Is that not how credit cards normally work?

swaite53

Thanks for the replies. I guess it is as simple paying it all off, and always what I had planned to do. It's only that I read of people offering as little as 50% of the balance, and it being accepted that I thought I'd try.

The fact that they almost tripled my interest rate in a few years, despite never missing a payment at that time, means they were happy to squeeze extra money from me, just thought I may be able to get something back (I was only looking to get about £300 off it).

glentoran99

I love these holier than thou posters!!


Basically to pay back less you need to demonstrate you cant afford to pay them back the full amount, the guy is correct in what he says you are paying them back a good amount and they are happy with that, If however you could only 'afford' to pay them £1 a month they would be more inclined to settle as they would think they aren't going to get it all.

swaite53

glentoran99 wrote: »

I love these holier than thou posters!!


Basically to pay back less you need to demonstrate you cant afford to pay them back the full amount, the guy is correct in what he says you are paying them back a good amount and they are happy with that, If however you could only 'afford' to pay them £1 a month they would be more inclined to settle as they would think they aren't going to get it all.

Thank you. I used to wonder why people tried to make offers and claim PPI a few years ago - now I'm in that situation myself, it all makes sense.

I think what's frustrated me is that I've never tried to evade it at all, as I know it's my fault (although tripling interest rates did not help) but seem to have got no thanks for it. I've always paid as much as I can to reduce it as quick as possible.

bengal-stripe

swaite53 wrote: »

......they almost tripled my interest rate in a few years, despite never missing a payment at that time.....

swaite53 wrote: »

.....interest has been frozen since 2012.

I suppose, one statement does cancel the other one out.

tomtontom

glentoran99 wrote: »

I love these holier than thou posters!!


Basically to pay back less you need to demonstrate you cant afford to pay them back the full amount, the guy is correct in what he says you are paying them back a good amount and they are happy with that, If however you could only 'afford' to pay them £1 a month they would be more inclined to settle as they would think they aren't going to get it all.

Paying back what you owe = holier than thou? :T

boo_star

swaite53 wrote: »

Thanks for the replies. I guess it is as simple paying it all off, and always what I had planned to do. It's only that I read of people offering as little as 50% of the balance, and it being accepted that I thought I'd try.

The fact that they almost tripled my interest rate in a few years, despite never missing a payment at that time, means they were happy to squeeze extra money from me, just thought I may be able to get something back (I was only looking to get about £300 off it).

People that get offers like that have generally been delinquent (not paying anything) for years, if you're paying (and £70 a month sounds about right for a standard monthly payment without interest) then they generally won't be interested in partial settlements.

swaite53

eskbanker wrote: »

Probably not what you want to hear but: you borrowed all the money, you spent all the money, you now have the money to pay off the debt in full, so pay it off in full, simple as that!

Edit: how would you have reacted if RBS had said to you "we owe you £4,300 for your PPI claim, shall we call it £3,500 as a final settlement then?"?

Not to sound argumentative, but it wouldn't have bothered me. I'd paid the money, and didn't expect anything back, so would have been happy with any offer they'd made - which is kind of how I thought they'd feel (ie. had written me off, so would have been happy with an offer as something is better than nothing - and I was offering £3,500 for £3,800).

5 years ago, I didn't agree with people making PPI claims, or trying to reduce debt they owed (hence this claim dates back to 2005, and have only just put in now), however, it's amazing how views change when you're forced into a situation beyond your control.

Anthorn

This is probably not what everyone else wants to hear but may help the OP.


First of all, exercise caution on whether to settle a defaulted account. Based on my own personal experience, it's pretty much agreed that defaults drop off the credit history after 6 years. Also agreed is that a settled account remains on the credit history for 6 years after the settlement date. But a default which has dropped off doesn't come back when settled. Think about it.


I settled a default after a year and it was on my credit history for a total of 7 years!


On repaying, if you wait for an offer to settle the debt at a reduced cost you'll wait for ever. Make your own offer and if it's reasonable it will be accepted. But be very careful of doing that where an account is close to being statute barred because you'll break the statute barring and the 6 years will start again.