Can you offer a lower amount than what you borrowed?

ItalianHulk

Does anyone have experience with offering a loan company or bank an amount less than what you borrowed as a way to settle the debt early ?

For example, if you borrowed £10k, and agreed on a monthly payment of £100. After a period you 'offered' the lender say £5k in order to settle the debt in full and final payment. Did the lender accept? What did they say, etc.

All experiences welcome as I am considering doing this for a debt I have, but want to know what reaction to expect from the lender, prior to me offering them a settlement amount.

Regards
ItalianHulk

Jenna

Hi,

I'm sorry I can't help much as I don't have personal experience of this situation, I'm sure someone else who knows lots more than me will be along soon enough though!!

In the meantime I might suggest calling your local CAB who would be able to give you some advise on this.

Hope it all works out.

izzybusy23

ItalianHulk wrote: »

Does anyone have experience with offering a loan company or bank an amount less than what you borrowed as a way to settle the debt early ?

For example, if you borrowed £10k, and agreed on a monthly payment of £100. After a period you 'offered' the lender say £5k in order to settle the debt in full and final payment. Did the lender accept? What did they say, etc.

All experiences welcome as I am considering doing this for a debt I have, but want to know what reaction to expect from the lender, prior to me offering them a settlement amount.

Regards
ItalianHulk

Hi there

My OH is considering doing this in about 12-18 months time. He currently owes £9000 to a creditor, interest frozen, and once he sells his car and adds to that he is going to offer a lump sum payment as full and final settlement. I understand that if you have been making regular payments then offer a decent lump say then most creditors will accept it.

The national debtline website have a template letter that you can send to the creditor. I have included the link for you as it tells you about certain do' and don'ts.

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

Good luck!

midebt

i have experience of this


we owe 17800 on an unsecured loan with R B S and thy will accept 15700 as a full and final offer - though it has been passed over to barnets' which i think is there own solicitors.
howeve most crdit card we have will not accept any offer........not as easy as some people make out on here........

its a case of fighting one's own battle ......

cahoot will accept a much lower amount as a settlement figure but halifax and barclays are the die hards............

hope this helps..........all the best

immoral_angeluk

Generally creditors will only accept a lower off if you're in serious arrears or it's been passed on to a debt collection agency.

Crown

This is discussed regulary on here and if you do a search for full final settlement you will find related threads.

have a look at http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers who have excellent advice in regards to this.


A lot of creditors depending how long you have been on a repayment plan do accept !!!!!! offers. The lowest ive read about was 30% of the figure. The average opening offer though seems to be around 50%.

I have had luck settling a few small catalouge accounts for around 70% of the debt.

Good luck

midebt

forgot to add ......

out of the the 10 crdit cards or catalogues etc etc we owe to

cahoot will accept lower offer - so will
fashion world catalogue
CL finance/debenhams

the ones below all refused any offers and have said its there policy not to do so .

barclays
halifax
first national
mint
littlwoods

hbslc

I'm considering this too. Is the !!!!!! recorded against your credit rating?

Crown

hi hbslc,

No creditor will normally accept a Full and Final settlement offer unless they have already issued a default notice against your account. Once you have the default issued it cannot be removed for 6 years although you can have a comment posted against it like "satisfied in full" ect.

One thing to remember with respects to your credit record is that if you are serious about getting out of debt why would you want to obtain further credit within this time anyhow? Not to preach but I have decided im never using credit cards again and now live within my income and am slowly reducing my debt.

The only credit I have needed is a remortgage and although I have had to shop around as the high street lenders wont touch me I have obtained a reasonable rate with the help of a broker at 5.9%. After 6 years there is no record of any of these debts as they automatically drop off (or should do!) unless you have gone to court and been given a CCJ.

Good luck

hbslc

Crown

You're right. I'm still stuck in my old way of thinking! I have been considering increasing my mortgage to cover all unsecured debts. This would increase my mortgage by 35k, eradicate my CC debt at 17-20% APR, but increase my mortgage debt at APR 6%. If I then overpay my mortgage, I'm effectively reducing my monthly interest charges, and clearing the debt quicker. The alternative is a secured loan. If things go wrong, my salary needs would be less than what they are now. Other then obvious risk of losing ones house, what do people think of this?

Crown

hbslc wrote: »

Crown

You're right. I'm still stuck in my old way of thinking! I have been considering increasing my mortgage to cover all unsecured debts. This would increase my mortgage by 35k, eradicate my CC debt at 17-20% APR, but increase my mortgage debt at APR 6%. If I then overpay my mortgage, I'm effectively reducing my monthly interest charges, and clearing the debt quicker. The alternative is a secured loan. If things go wrong, my salary needs would be less than what they are now. Other then obvious risk of losing ones house, what do people think of this?

I dont want to hijack the OP thread so maybe you could start a new thred in relation to this? I will just say though that I dont think itsa good idea to remortgage and consolidate the debt as you will be turning unsecured debt into secured and run the risk that if something unforseen was to happen you could lose the house. also many lenders will only let you overpay by a max of 5% PA

Have a look across atthe Mortgage free wannabe forum for more details on this. Consoldiation only works if you really do fix your spending habits and are disciplined. If you were to consolidate then Cut up and cancel all your credit accounts as you will run them up again in time.

I have made this mistake to often by keeping a card just for emergencies and then falling into bad habits