Help with negotiating short settlement pls

Such_2

Hi all,

This is my first post, though I have browsed this forum frequently.
I have recently remortgaged and have some surplus finds to clear my credit cards.
Well I owe £27k and have £20k to settle with.
I have spoken with barclaycard prior to these funds arriving, (i am currently on a payment plan with them) and was told they will only accept the full amount in settlement. I was told different some time ago - Can anyone tell me how to get them to accept less?

MBNA have said they will accept 80% but require an Income & expenditure summary for my wife and I before they will proceed.They also said that this "short Settlement" will remain on my credit file for 6 years

I am happy to do this but need to remortgage again in 3yrs once my fixed rate ends, and I am concerned about the effect short settlements will have on my credit file.

Can anyone pls tell me if short settlements will hinder me getting a mortgage again in 3yrs?

Thanks for all your help & good luck to everyone!!

chrisbee_2

Hi not sure on the effect a short settlement will have on getting a mortgage in 3ys time but would be good to know.

going back to settlement figures Barclays refused my first offer and I left it a week or so and rang them again to disscuss an offer which they accepted which was about 60% of which i owed. Also mention that other creditor have agreeded to my offer and that if it wasnt agreeded i would have to reduce my month payments to 1/2 i was currently paying

pip7890

Welcome to the DFW forum Such. I'm afraid I can't help on this one, but I'm sure someone will be along shortly with an answer.

PiPx

Debtfix

Your credit score will depend on the lender's criteria. How they work out your score is keep very secret. The answer is you should shop around but there is a downside to this at present. I believe it is to be/has been changed but credit searches count against you in scoring you for credit rating.

Your tactic in the battle to be debt free is correct. Make reduced offers of payment from income to recover low(er) value debt but use a lump sum to pay off the highest value debt. Is your Barclaycard defaulted? Have you approached them to recover excess charges? Get your statements out and calculate a new balance based upon deducting all interest and charges from the default value or since you told them you were experiencing difficulties. Then discuss your offer to them again. You may not get it belowthe £20K you have but at least you will be putting forward an argument that is based on your account details.

The reduction you are asking for is £7k on £27k approx 25%. This IS within reach but Barclaycard can be bluody minded at times so if they are difficult then tell them that if they don't accept, your offer reduces to £5.00 a month (an absolute minimum I have found) and you will use the lump sum to pay off other creditors. Lucky MBNA.!

No need for politeness in money matters just set a goal and be firm.

Such_2

Thanks for the replies.
Re MBNA and BC, both froze the interest over 12mths ago when I was having difficulties.
Can I still claim back charges prior to this?

Debtfix

Worth trying Matin's campaign to recover part charges. Refer to the sections on this site on credit card charges

Such_2

Debtfix wrote: »

Worth trying Matin's campaign to recover part charges. Refer to the sections on this site on credit card charges

Can I still recover charges if the account is settled?
Thanks

Debtfix

If you are due a refund then you are due! If the account is settled refer to Martin's recovery procedure. This is new and I am not up on it yet.

chrisbee_2

Such wrote: »

Can I still recover charges if the account is settled?
Thanks

yes you can still recover charges i done it myself and been in a dmp with barcleycard for over a year now ! they will just credit your account with the amount they owe..

Such_2

I spoke with MBNA today and they said they will accept 85% as a short settlement but would not put anything in writing.
The chap said that once I paid they will write to me to confirm that the account is closed but it will be registered as a partial default at the credit agencies staying on file for 6 yrs.

I told him of my reluctance to do this without something in writing and he stated that there is not a standard letter that is on his computer!

They would not offer full and final settlement for less than 95%, and said they do not generally send out letters as the account could change with interest & charges during the period between offer and payment.

Not sure to pay up and wait for their letter to show the account is closed!

He's given me all his details so I can write to him to send a cheque, and said no-one will chase me in years to come for the "outstanding" balance.

Not sure what to do?

Debtfix

I have been negotiating with MBNA on behalf of a client today who owes £3500. MBNA has entered into a position in which £1450 will repay the debt but register a partial default. My client's age (59) means that a partial default will make no difference to his credit status because his level of debt means that he will be in debt for the rest of his life. Bankruptcy is not an option as he owns property and he could not afford an IVA.

The second option offered was to pay £31 per month for ten years. As he has no idea at this time of his "ability to pay" and the time deadline (30 th Jan) is too short to allow me to conduct the in depth debt interview required to determine his ability to pay I could not advise he agree to pay this amount.

The third option is to allow the account to default (ie do nothing) and a default notice under the Consumer Credit Act to be issued. This opens up the possibility of the debt being sold / passed on to a debt collection company. These companies are used to hard negotiations but will accept less per month if the right reasons are given. Also they are more likely to sell / pass the debt on if they meet with a difficult response to their demands. Their business is not debt collection ... it is cash flow. Provided you pay every month a sum above £5.00 they will leave you alone. Of course if you can afford to pay more then I advise that you do. While you are in debt you are financially vulnerable.

(Just read through all the posts. One strategy you could employ to get your way is to stop paying anything on these two accounts. They will get mad and they will put charges back on your account BUT they are under strict rules to deal with defaulting accounts and after a period of upto six months they will pass your debt onto a debt collecting company. Debt companies will offer full and final settlements to new accounts of 30% and sometimes more. As you are already in a DMP with BC and MBNA they may send your debt to a debt company sooner rather than later. It is a gamble BUT there are advantages to this strategy. Firstly once the debt is passed on there is little if any chance of any more charges being added to the account, while it remains with the credit card company there is an annual risk that they will withdraw their goodwill gesture of with holding such charges. Secondly DCCs are easier to deal with even tho their gorillas may sound as grumpy as BC's or MBNA's, they accept low payments provided they are regular. Thirdly the debt becomes an interest free loan so you can save your capital and gain interest on it further reducing the value of your debt as interest accrues. Finally if you have savings and have learned the lessons of being in debt you will use your savings to augment your income at those times when you outgoings temporarily exceed your income and you will not have to borrow any more money.)

If you have 50% of the balance owed to MBNA as a cash lump sum it may be your best course to offer it to them BUT you have GOT TO assess your debt as a whole and not simply address the debt with MBNA. Do not borrow to achieve this sum.

You should know that all record of debt stays on your credit record for six years after the debt is repaid, regardless of how you repay it.

If you only owe money to MBNA then my advice is relevant but if you have several accounts which are causing you trouble you must consider your debt as a whole. Debt is for the long term and picking and choosing is not an option , you need a co-ordinated plan based upon your financial circumstances and not one based upon appeasing the last aggressive phone call you just had.

0781 655 2934

The other question about the effect on your re-mortgage. Your current lender will have a good view on your management of the current mortgage arrangement so they should be your first port of call. Adverse credit mortgage lenders might be fewer on the ground in future ( Paragon, Kensington, etc.) but their main problem is the number of CCJ's you have as well as any opportunity to repay debt from the remortgage. Your current debt will remain on your record beyond the three years you are worried about but if the economy is doing better and lenders are more relaxed about their circumstances two defaulted credit cards are not much to worry about.