Settlements with Creditors - advice appreciated!

sutton68

Hi everyone

So firstly a little backstory on my situation. A few years ago I had issues with my business (I moved to a new Premises which got unexpectedly closed down one day due to my Landlord defaulting on his Mortgage and leaving me unable to trade!). I was suddenly faced with no real income for around 18 months, whilst still attempting to try and relocate my business to a new site etc which was extremely costly. Unfortunately I ended up getting myself into quite a bit of debt in the process with the majority being high APR lenders. It was a real nightmare scenario!

Anyway, it got to a point where I just couldn't continue. The business was not feasible to get back on track so I decided to take a job for stability. I also got in touch with StepChange having done some research online. They managed to work out an affordable Debt Management Plan for me on approximately £30k of accumulated debt. For anyone in a similar position to me I would highly recommend them as they have been incredible!

I have been in it now for 11 months, kept up with the repayments, sold some things etc and have managed to get my debts down to £21,000, clearing a few that wouldn't accept the DMP. It had been planned that to repay everything would take around 6 years.

Anyway, a family member has offered to potentially help me if there is a way to reduce or settle the debt. 

In your experience, what is the general accepted amount for making 'Full and Final Settlement' Offers?

The Creditors in question are First Source Solutions and Moorcroft. Previously First Source wrote to me offering to reduce a £13500 debt to £7000, but I simply had no way of funding that at the time. 

Naturally if they will settle for a substantially lower figure, it would be beneficial so would be interested to hear our opinions on what is generally accepted? I can then speak with the family member to see what is feasible.

Also, is it possible to settle with just 1 Creditor and leave the remainder in the DMP? (i.e. say I wrote to both offering the same percentage and one declined but the other accepted).

Many thanks for your help!

sourcrates

Hi,

A "DMP" is an informal arrangement, so you can do as you wish.

National Debtline have a range of template letters, you need the full and final settlement one.

Negotiations can be over the phone, but get any deal agreed in writing, as per the wording of the ND letter, before parting with any cash, you should undertake this task yourself, not something stepchange are good at.

Start low, you can always increase your offer, only debts that have been defaulted and sold will be open to any sensible settlement deals, don`t expect quick results either.

TripleH

How long do you have left to pay on your debts?

Remember even if the debt is small still go in low as it frees up more money for settlements.

E.g. if you decide a very cheeky offer of 20% do it for all debts even the small one that is £200 say.