Full and Final Settlements

Faith177

Hi Everyone

Not sure if this is the right board to be posting on so admin by all means please move if needed

OH was on the verge of going bankrupt in Feb but due to a car accident we were unable to raise the sum needed to action this

Due to him being in hospital and his resulting injuries and his job lost we entered into a £1 agreement with all his creditors. He has picked up two defaults during this time from Lloyds for overdrafts on his accounts

We have now received a payout for the claim but we need to make it go as far as we can until OH condition improves and he can get back into work

I was thinking of asking for full and final settlement details from each of the creditors to get them paid off and draw a line under things. How do I go about doing this is it just as simple as asking them or is there something else we need to do first?

Also seeing as his credit history is already scuppered would us asking for full & final make it any worse than it is

MrsTinks

I would actually not be paying that cash to his creditors - at least not yet.

Assuming this is all unsecured debts which I am guessing if he was about to go BR? In which case us the money to live on like it was intended in his compensation. Once he gets a job offer but before he starts would be the optimal time to make full and final offers, till then offer them £1 a month like you have been.

Unless you think the money will not only pay off the debts but also support him till he returns to work?

redux

I would say maybe chat with them about the prospect of doing this in future, but don't go through with it now., and don't declare how much you have. You might need that money to live on for the time being, depending how quickly things pick up again. Meanwhile they've presumably zeroed interest, and they can wait.

Edit: sorry, was too slow replying, and this more or less duplicates above remarks. But I'll leave it rather than delete

sourcrates

You'd be wasting your time to be honest, as original creditors rarely give much discount for settlements.

Now if you wait until all his debts have progressed to the debt Collection agency stage, they will be much more willing to do a deal, it's all about timing in the debt game.

fatbelly

I'm 100% with the others on this. Once the lump sum is gone you may be reliant on the benefit system, which is not generous, contrary to popular belief.

Unless you have sufficient income to support both of you.

He needs to get back into stable work, then post a statement of affairs for us to work out the options.

Until then stick with the token offers.

Faith177

Thank you everyone with your replies I think I was just so eager to get it over and done with I hadn't thought about stretching it out a bit longer.

They are all in debt recovery stage now just some have been a bit more understanding with regards to giving defaults.

I think I'll hold off till we get threatened with another default and then pay that one off and so on

fatbelly

All accounts should default after 3-6 months of missing the contractual payments.

He already has two.

Once a default is on the file it stays for 6 years. If paid off it becomes a settled default. Either way it will be viewed negatively by lenders.

So I don't see why you should be motivated by 'threats of defaults'. Yes, F&Fs may be a way forward provided the cash is genuinely spare money and not needed to live on.

And then, as Sourcrates says it's all about timing. The creditor has to be of the mindset that they are committed to losing money and thinking about selling it to a third party, or have already done so.

MBNA used to be very open about the process, and write with a generous settlement figure at that stage.

Then a 30-50% settlement might be possible and you might want to post on the Weggy thread

https://forums.moneysavingexpert.com/discussion/115430

Faith177

fatbelly wrote: »

All accounts should default after 3-6 months of missing the contractual payments.

He already has two.

Once a default is on the file it stays for 6 years. If paid off it becomes a settled default. Either way it will be viewed negatively by lenders.

So I don't see why you should be motivated by 'threats of defaults'. Yes, F&Fs may be a way forward provided the cash is genuinely spare money and not needed to live on.

And then, as Sourcrates says it's all about timing. The creditor has to be of the mindset that they are committed to losing money and thinking about selling it to a third party, or have already done so.

MBNA used to be very open about the process, and write with a generous settlement figure at that stage.

Then a 30-50% settlement might be possible and you might want to post on the Weggy thread

https://forums.moneysavingexpert.com/discussion/115430

Thank you that's very helpful x