F & F Offers - Morally Correct

Brenster

I am seeing more comments on this thread about offering Full and Final offers to banks.  I must admit it doesnt sit right with me.  Most of the time it seems like people are almost approving of this, it doesnt sit right with me. 
This is not meant to be judgemental on anyone in particular it just seems like people are happy to run up debt and then think it is acceptable to offer to pay 50% / 60% (whatever it is) and it is all fine.  I certainly dont sympathise with the banks, but there has to be a moral consideration, when often i see that people have come into a lump sum (whether it be a gift or inheritance, or even have equity in there house which could pay off debt) which can pay 100% of the debt but they think it is acceptable to offer 50% F&F. 
I am sure if a credit card had a balance of £1000, and suddenly they decided to demand payment at £2000 it would rightly be frownd upon by this group because they were changing the rules of the original agreement, but on this forum it seems to be acceptable the other way round.
Again not meant as an attack on anyone inparticular, just interested to see others view.......

DjangoUnchained

Personally i have no moral qualms as you are offering to pay, usuall a debt agency a percentage of the loan, maybe 50% when they have most likely bought the loan  for less than 5%, so they still stand to make a huge profit. Personally i will try and not pay them anything at all as they have no morals in dealing with people.

Karonher

I agree it should be all paid back but to the original lender. That way it may ensure that they only lend what they believe they will get back. If there was no discount, people would only borrow what they could afford to repay.
Clearly there would have to be legislation for change of circumstances.

sourcrates

Hi,

Its nothing to do with the banks, this only really happens much further down the line with private debt purchasing companies.

What you describe as a "full and final offer", is not something a debtor would usually make to his or her credit card or loan company, there are normally quite specific times and circumstances where this can be used, so it is not an everyday occurrence, and never normally to an original creditor.

If you have defaulted on your debts, for whatever reason, and the reasons can be many, and varied, creditors don`t possess the time or the staff to deal with management of them, so they get sold, in bulk, to debt purchasing companies such as Cabot, Lowell, PRA Group to name but a few.
These companies buy up portfolio's of debt, in large quantities, for a very small amount of money, usually about 10-12% of the debts actual worth, they then attempt to obtain the full amount from the original debtor.

Personally, although legal in the UK, I think this practice is way beyond the pale, but that is just my view.

So the original creditor has long since lost interest in the debt, they have sold it, made a few quid back, then written the balance off to tax, so the debt, as it stood, no longer even exists, its now just a number on a balance sheet, so they don`t lose out, the debt purchasing company don`t lose out, as they have what you could call a credit note, they bought for peanuts, only the poor old debtor, whose probably already struggling to make ends meet, would do so, unless they can settle for less than is owed.

Add to the mix the fact that no legal paperwork ever exchanges hands when debts are bought or sold, the original credit agreements stay with the original creditor, so another twist, the debts these companies buy, may not even be enforceable in court, both you and they, won`t find out unless you make a request for evidence of the debt, so the whole thing is one massive gamble to these people, they buy these things not knowing their legal status, do you think that bothers them ?.

That is where settlement offers come into their own, most are offered, and are whole heartedly encouraged by the debt purchasing company themselves, its near standard practice, sometimes the debtor initiates negotiations, after all its what makes the world go round, no one ever pays list price or windscreen price, everything is open to negotiation, its not a moral issue, its just common sense to most people, you really have to understand the industry and how it works, before asking questions like this.

DjangoUnchained

moral thing is though a bank wont accept your offer to settle the outstanding loan for 80% but they will happily sell the debt to an agent for 10% ?

sourcrates

DjangoUnchained said:

moral thing is though a bank wont accept your offer to settle the outstanding loan for 80% but they will happily sell the debt to an agent for 10% ?

Exactly, they have pre-existing arrangements with these companies in order to make the maximum amount of money, the sale of bad debt is still big business for the banks, remember, they are sold in bulk, many thousands of accounts at a time, there can be a lot of profit generated.

DjangoUnchained

sourcrates said:

DjangoUnchained said:

moral thing is though a bank wont accept your offer to settle the outstanding loan for 80% but they will happily sell the debt to an agent for 10% ?

Exactly, they have pre-existing arrangements with these companies in order to make the maximum amount of money, the sale of bad debt is still big business for the banks, remember, they are sold in bulk, many thousands of accounts at a time, there can be a lot of profit generated.

Simple me doesnt understand it. In my case I had an agreement with Barclaycard to pay off an amount a month which would have cleared it all within 3 years. I kept up the payments without fail, never missed any. all of a sudden its sold on to PRA, i never paid PRA a penny, i asked for the CCA, they have yet to supply it so debt is unenforceable until they do. So barclaycard have lost out my full payments by selling it to pra.. PRA havent got anything as Bcard havnt given them the CCA or cant, So far the only winner is me?

sourcrates

DjangoUnchained said:

sourcrates said:

DjangoUnchained said:

moral thing is though a bank wont accept your offer to settle the outstanding loan for 80% but they will happily sell the debt to an agent for 10% ?

Exactly, they have pre-existing arrangements with these companies in order to make the maximum amount of money, the sale of bad debt is still big business for the banks, remember, they are sold in bulk, many thousands of accounts at a time, there can be a lot of profit generated.

Simple me doesnt understand it. In my case I had an agreement with Barclaycard to pay off an amount a month which would have cleared it all within 3 years. I kept up the payments without fail, never missed any. all of a sudden its sold on to PRA, i never paid PRA a penny, i asked for the CCA, they have yet to supply it so debt is unenforceable until they do. So barclaycard have lost out my full payments by selling it to pra.. PRA havent got anything as Bcard havnt given them the CCA or cant, So far the only winner is me?

Its what they term a "numbers game", for every unenforceable debt, there will be 50 that are enforceable, so they still make lots of money, this industry is massive, and extends far beyond one tiny moral argument anyone cares to put forward.

When you see how the debt industry works, its actually a very naïve point of view, and with respect, shows the OP`s total lack of knowledge in that area.

DjangoUnchained

am i lucky then that im the one in 50? after 4 years they still havnt found the cca? i assumed it was more common than that, and many people didnt request it.

sourcrates

DjangoUnchained said:

am i lucky then that im the one in 50? after 4 years they still havnt found the cca? i assumed it was more common than that, and many people didnt request it.

That figure was just an example, quite a few come back unenforceable, creditors can be incredibly lax when it comes to keeping paperwork.

Brenster

sourcrates said:

DjangoUnchained said:

sourcrates said:

DjangoUnchained said:

moral thing is though a bank wont accept your offer to settle the outstanding loan for 80% but they will happily sell the debt to an agent for 10% ?

Exactly, they have pre-existing arrangements with these companies in order to make the maximum amount of money, the sale of bad debt is still big business for the banks, remember, they are sold in bulk, many thousands of accounts at a time, there can be a lot of profit generated.

Simple me doesnt understand it. In my case I had an agreement with Barclaycard to pay off an amount a month which would have cleared it all within 3 years. I kept up the payments without fail, never missed any. all of a sudden its sold on to PRA, i never paid PRA a penny, i asked for the CCA, they have yet to supply it so debt is unenforceable until they do. So barclaycard have lost out my full payments by selling it to pra.. PRA havent got anything as Bcard havnt given them the CCA or cant, So far the only winner is me?

Its what they term a "numbers game", for every unenforceable debt, there will be 50 that are enforceable, so they still make lots of money, this industry is massive, and extends far beyond one tiny moral argument anyone cares to put forward.

When you see how the debt industry works, its actually a very naïve point of view, and with respect, shows the OP`s total lack of knowledge in that area.

Thanks for your input, i freely admit to not being hugely upto speed with how the banks sell on debts, perhaps it takes a person who capitalises on this scenario to know this.

I was always brought up in a way that if i cannot afford it, dont buy it.  And there are too many people trying to take this easy way out, which in the bigger picture impacts the bank fees and interest rates all of us responsible people end up paying (might be getting into my level of understanding here !!!)  I probably went against this in my early years but i paid it back, every penny, through hard work.  You are taking the highground on a minute peice of information you have read up on which is getting away from my initial comment.....is it right.