Advice regarding full and final settlement bid

sourcrates

The creditor will not accept a lesser offer, than what it currently stands to get, as the agreement has not been broken.


You may get a rebate of interest for early settlement, dependant on the terms of the loan agreements, but in order to offer full and final settlements, you must break the terms of the agreement first, otherwise there is no reason for a creditor to accept your offer, as you are making the contracted payments.


The only way this will work, is if you default on both accounts, and the debts are sold on to a 3rd party DCA, you could then make them an offer to settle

kissinger

sourcrates wrote: »

The creditor will not accept a lesser offer, than what it currently stands to get, as the agreement has not been broken.


You may get a rebate of interest for early settlement, dependant on the terms of the loan agreements, but in order to offer full and final settlements, you must break the terms of the agreement first, otherwise there is no reason for a creditor to accept your offer, as you are making the contracted payments.


The only way this will work, is if you default on both accounts, and the debts are sold on to a 3rd party DCA, you could then make them an offer to settle

I see where you're coming from and I suspected that might be the case, but do you not think that because the loan has been sold on to a third party, albeit for reasons other than my defaulting, there's a better chance of a settlement on favourable terms?

redux

Stevie_Palimo wrote: »

You can offer what ever you want as a !!!!!! to them and I've seen Companies accept less than 50% before with people I know and one was a bank loan and overdraft however it was with a collection agency.

Yes, but those are defaulted accounts, where their acceptance of a reduced amount is balanced against underwriting future problems causing more admin and/or losses.

Someone who hasn't defaulted, doesn't want to and has adequate means to avoid it isn't going to get such terms.

If I was the OP I'd think through the nuances of previous discussions on this to guess whether they might be amenable. I would imagine that any offer would have to be referred upwards to management rather than the first person spoken to, and at that point is there a risk that after a review they instead find a way to restart interest?

I might be tempted to let sleeping dogs lie for now, and meanwhile start saving up the extra needed to clear in full if something does alter. Read another section of the forum, about decent interest of 3 to 5% on some bank current accounts.

Then maybe think of an offer when within £1500 or £2000, and the worst that can happen is they say no and charge 7% on that, which you can pay off in 15 or 18 months and incur only about £100 interest.

But even then it would be tempting not to discuss it and just let it run as long as possible

sourcrates

kissinger wrote: »

I see where you're coming from and I suspected that might be the case, but do you not think that because the loan has been sold on to a third party, albeit for reasons other than my defaulting, there's a better chance of a settlement on favourable terms?

All I can say is give it a try, they can only say no, but bear in mind the above post about "letting sleeping dogs lie" !!!!!

kissinger

redux wrote: »

Yes, but those are defaulted accounts, where their acceptance of a reduced amount is balanced against underwriting future problems causing more admin and/or losses.

Someone who hasn't defaulted, doesn't want to and has adequate means to avoid it isn't going to get such terms.

If I was the OP I'd think through the nuances of previous discussions on this to guess whether they might be amenable. I would imagine that any offer would have to be referred upwards to management rather than the first person spoken to, and at that point is there a risk that after a review they instead find a way to restart interest?

I might be tempted to let sleeping dogs lie for now, and meanwhile start saving up the extra needed to clear in full if something does alter. Read another section of the forum, about decent interest of 3 to 5% on some bank current accounts.

Then maybe think of an offer when within £1500 or £2000, and the worst that can happen is they say no and charge 7% on that, which you can pay off in 15 or 18 months and incur only about £100 interest.

But even then it would be tempting not to discuss it and just let it run as long as possible

Hmm... Good point. I'm in a bit of a quandary now. Do I make a settlement offer (or even just pay off one of the loans to get it out of the way) or do I let sleeping dogs lie given the new development with the interest rate?

If I could find out for certain that they have reduced the rate to zero then I would have a much better idea of what to do. But I can't help thinking they've just made an error on the documentation because why in the world would they voluntarily reduce the amount of interest I'm paying? Then there's always the possibility that if I leave things as they are and finish up repayments years from now, they might look over the account and pick up on the 'mistake' (if it is one) and try to come back for the missing interest payments.

bennyhill_2

Surely even if they've made a mistake on the documentation, they would have to honour any terms that they've stated - so in effect you've nothing to lose by letting sleeping dogs lie.

kissinger

bennyhill wrote: »

Surely even if they've made a mistake on the documentation, they would have to honour any terms that they've stated - so in effect you've nothing to lose by letting sleeping dogs lie.

I would like to think so, but I doubt it because it wasn't a legal contract. It was just a letter informing me of a Change of Agency. I'm guessing whoever did the letter was working from a standard template and just forgot to put the interest rate info in. There are other letters they've sent in the past (e.g., yearly statements) which state that I am paying interest on the loan so they would always have those to fall back on.

What should I do here? Call up and ask about an 80%-ish final settlement and if they knock me back just pay off one of the loans? And should I just ask about the interest issue while I'm on the phone with them?

ThatKiss

While part of me thinks 'if you don't ask, you don't get', I think it's unlikely any discount would be forthcoming. In this situation, I would remove the thought of any full and final settlement.

In your initial post you say you are trying to clear 'a number of loans' then state just two. Maybe just the way I'm reading it, but does this mean there are other loans beyond these two?

You also say you can "raise" £6,500 towards these loans. Is this by taking on alternative debt, or from savings? If the former, I'd remain on the current plan especially with the minimal payments. You can always overpay if you have the spare cash

Was the transfer of both loans notified in the same letter? I would probably have expected a letter per account, which may have given some clue as to any interest rate inconsistency, ie one with the correct value and one with the mistaken value.

It's hard to judge without knowing the full circumstances but, assuming the money is coming from savings and no other debts are outstanding, I'd use the lump sum to pay the larger of the loans off in full, and direct any surplus to reduce the second loan.

Subsequently, I'd snowball the payments previously being made for both loans into the second loan, to pay that back as quickly as possible.

kissinger

ThatKiss wrote: »

While part of me thinks 'if you don't ask, you don't get', I think it's unlikely any discount would be forthcoming. In this situation, I would remove the thought of any full and final settlement.

In your initial post you say you are trying to clear 'a number of loans' then state just two. Maybe just the way I'm reading it, but does this mean there are other loans beyond these two?

You also say you can "raise" £6,500 towards these loans. Is this by taking on alternative debt, or from savings? If the former, I'd remain on the current plan especially with the minimal payments. You can always overpay if you have the spare cash

Was the transfer of both loans notified in the same letter? I would probably have expected a letter per account, which may have given some clue as to any interest rate inconsistency, ie one with the correct value and one with the mistaken value.

It's hard to judge without knowing the full circumstances but, assuming the money is coming from savings and no other debts are outstanding, I'd use the lump sum to pay the larger of the loans off in full, and direct any surplus to reduce the second loan.

Subsequently, I'd snowball the payments previously being made for both loans into the second loan, to pay that back as quickly as possible.

Thanks. That's good advice. To answer your questions: Yes I have one other loan for a small amount but the interest rate on that is minimal so it is not a major worry. When I say I can raise the £6500 that is not from taking out more loans. It is savings accrued over the past 18 months or so.

When I received the Change of Agency notification I did receive a statement for each loan and they both said the new rate of interest is zero. Again, that's a big error to make on their part if it is an error, because that's the same typo several times on two different documents.

redux

kissinger wrote: »

Thanks. That's good advice. To answer your questions: Yes I have one other loan for a small amount but the interest rate on that is minimal so it is not a major worry. When I say I can raise the £6500 that is not from taking out more loans. It is savings accrued over the past 18 months or so.

When I received the Change of Agency notification I did receive a statement for each loan and they both said the new rate of interest is zero. Again, that's a big error to make on their part if it is an error, because that's the same typo several times on two different documents.

In that case, I stick with my suggestion to do nothing for now, and keep saving up for a year or so until you can cover the whole amounts.

Then you have a three way play - try an offer, continue paying modestly at zero interest, or if they review it and add interest either then or in between negotiate that and pay off to close.

But you're the only one that knows all the nuances of the discussions you've had.

But through it all, think kindly on these loans that have improved your career, legal training, ATPL, whatever it was.