50% reduced payment offer - should I accept?

pistachio123

I ran up a lot of debt during the pandemic as I was self employed as a limited company director, worked in the performing arts and therefore lost all my clients as the first lockdowb started, and apart from a couple of ad hoc jobs was claiming UC (without housing element) for the next two and a half years. I managed to not miss any mortgage payments (including a six month holiday from payments) but ended up with a total of £32,981 in credit card debts, which I defaulted on, currently as follows:

Debt collection agency 1: £10,482
Debt collection agency 2: £13,966 (£7,752 + £6,214 - two accounts)
Credit Card 1: £6,814
Credit Card 2: £1,719

I am currently paying nothing to the credit cards who have not contacted me for a long time, and are not charging me interest. The two agencies charge no interest and I'm paying the first off £1 per month and the second £40 (£20 for each account) off monthly. I have done a CCA request with both the agencies, and both were able to produce the agreement.

My only other debt is my mortgage which is up to date: £174,709

I've had a full time job for three years now, and my salary, which is about 25% lower than before the pandemic, is £32,500

I have been offered a 50% reduced payment to settle the debt with Agency 1, and it seems to me to be a good offer, but I want to know if they are likely to make a better offer later and should I wait, or take this opportunity now. I have enough savings, built up since I got my current job, to pay it with the 50% reduction.

Any advice would be much appreciated.

Grumpelstiltskin

Go back and offer 20%, if they say no leave it for a while and see if they offer a better reduction. Remember they probably paid 12% for the debt.

fatbelly

Yes, that's their opening offer. Make a counter-offer, which will probably be declined.

Then you may wish to talk to them to see what figure they will accept.

Worth spending a bit of time on a 10k debt

Rob5342

Grumpelstiltskin said:

Go back and offer 20%, if they say no leave it for a while and see if they offer a better reduction. Remember they probably paid 12% for the debt.

Or in other words they are offering 316% profit for themselves, so offer them 66% profit.

50% isn't a bad figure, but don't accept it without spending some time trying to get a better one.  

tigergambit

If the debt collectors are PRA you should consider making a counter offer around £2150. Nice vague amount and wait them out.

NotArobot24

pistachio123 said:

I ran up a lot of debt during the pandemic as I was self employed as a limited company director, worked in the performing arts and therefore lost all my clients as the first lockdowb started, and apart from a couple of ad hoc jobs was claiming UC (without housing element) for the next two and a half years. I managed to not miss any mortgage payments (including a six month holiday from payments) but ended up with a total of £32,981 in credit card debts, which I defaulted on, currently as follows:

Debt collection agency 1: £10,482
Debt collection agency 2: £13,966 (£7,752 + £6,214 - two accounts)
Credit Card 1: £6,814
Credit Card 2: £1,719

I am currently paying nothing to the credit cards who have not contacted me for a long time, and are not charging me interest. The two agencies charge no interest and I'm paying the first off £1 per month and the second £40 (£20 for each account) off monthly. I have done a CCA request with both the agencies, and both were able to produce the agreement.

My only other debt is my mortgage which is up to date: £174,709

I've had a full time job for three years now, and my salary, which is about 25% lower than before the pandemic, is £32,500

I have been offered a 50% reduced payment to settle the debt with Agency 1, and it seems to me to be a good offer, but I want to know if they are likely to make a better offer later and should I wait, or take this opportunity now. I have enough savings, built up since I got my current job, to pay it with the 50% reduction.

Any advice would be much appreciated.

The £1 payments you are making keep those debts alive, I would stop paying those and let the companies know you will not be making any payments in the future.

For the two other debts,it is going to depend on when you last made a payment to them or last acknowledged the debt.  These debts are sold for between 3% and 5% in most cases. 

At 6 years the debts will be statute barred unless they take you to Court before the 6 years, they will only do this if you engage with them.

If you do nothing they have nothing, do not give them a budget or answer the phone to them or reply to messages from them.  If you wait long enough you will get 90% off but by that time you might as well wait for the 6 year statute bar.

My experience is that it is better to just not engage, any impact to your credit record already happened when you stopped paying for them, I assume the agency debts defaulted (you would have been sent a default notice saying who it was sold to).

Unless you signed a personal guarantee then these debts are unsecured consumer debt, so very hard to enforce. 

Even if they got a CCJ you can ignore it for a further 6 years. 

They can't seek a charge on your home and you can just keep renewing mortgage with your existing mortgage company.

Showing any sort of wealth or spending online might make them think it is worth going for a CCJ before the 6 year limitations