Full and Final Settlement Offer Woes

tjb998

Hi,

I have been on a DMP with StepChange since 2014 which started with 10 creditors and debts of £35,000. The only debt left now is to Debt Managers (Services) Ltd the balance of which is £2000. 

My monthly DMP payments increased in May 2020 after my annual review and according to StepChange, Debt Managers Ltd accepted the new budget and increased payment offer.

A friend recently offered to loan me a maximum of £1300 to settle the debt on the strict condition that Debt Managers Ltd accepted the reduced amount as a full and final settlement and marked the debt as settled (in full) with credit reference agencies.

I made the offer to Debt Managers Ltd  and they came back with a counteroffer stating they would accept a minimum of £1400 and whilst they would close the account, the debt would be updated to partially settled, not settled or settled in full.

My understanding of a full and final settlement is the creditor accepts the pro-rata offer as a final amount and the debtor is released from any liability for any outstanding balance?

If I agreed to their counteroffer and paid the £1400.00 what is to stop Debt Managers chasing for the remaining balance or selling the balance to another company who would then do the same?

Now they have stated they want me to complete yet another budget (their own form not Stepchange's) and they want to know how much per month I will be paying my friend back (if he lends the money to close the account).

Requesting this information makes no sense (as according to their communication the account would be closed) unless they were planning to still hold me liable for the remaining £600 after the lump sum of £1400 has been paid?

Many thanks

Tim

fatbelly

OK, you've offered £1300 - they've suggested £1400.

It sounds like £1350 is the way forward.

Partially settled is the correct mark.

The money is coming from a third party as a gift; no further information needed.

Make sure you get the deal in writing and that it's unambiguous

sourcrates

Never share too much information with a creditor, they will want to know the in`s and out`s of everything, due to affordability checks imposed by the FCA.

Only full settlement of outstanding monies would result in a "settled in full" marker.

Use the National Debtline template letter for settlement offers, as long as they agree to the terms set out in that letter, you are 100% covered.

Fatsdom

You made a big mistake telling them it was a loan from a friend. Write to them again and say its a gift offer from a family member to pay off the debt, and if the offer isn't accepted the gift will not be made. You could also try and blackmail them a bit by hinting at future financial troubles (perhaps say there is talk of job losses at work) to spook them. 

sharpe106

tjb998 said:

A friend recently offered to loan me a maximum of £1300 to settle the debt on the strict condition that Debt Managers Ltd accepted the reduced amount as a full and final settlement and marked the debt as settled (in full) with credit reference agencies.

I made the offer to Debt Managers Ltd  and they came back with a counteroffer stating they would accept a minimum of £1400 and whilst they would close the account, the debt would be updated to partially settled, not settled or settled in full.

My understanding of a full and final settlement is the creditor accepts the pro-rata offer as a final amount and the debtor is released from any liability for any outstanding balance?

If I agreed to their counteroffer and paid the £1400.00 what is to stop Debt Managers chasing for the remaining balance or selling the balance to another company who would then do the same?

Now they have stated they want me to complete yet another budget (their own form not Stepchange's) and they want to know how much per month I will be paying my friend back (if he lends the money to close the account).

Requesting this information makes no sense (as according to their communication the account would be closed) unless they were planning to still hold me liable for the remaining £600 after the lump sum of £1400 has been paid?

Many thanks

Tim

The account will not have been settled in full, so why would they mark the account as that. All they are doing is accepting that it is partially settled and they will be getting no more money from you. It is basically their terminology for saying it is no longer worth out effort to chase the money.

The reason why they want you to fill the new form in is because if they accept it they won't get any more money out of you. They also want to know now how come you afford to pay your friend back and not them the full amount basically. With 20/20 hindsight you should not have mentioned where the money came from but it is done.

As others have said I would go with the £1350 offer. But before you do have a good think about accepting the money from your friend what happens if you can not pay it back to them?

TheAble

Maybe just do it cleanly and pay off the £2000. You're almost there after all.