Making An Offer Of Settlement

kazzaj

Currently remortgaging to clear credit cards debts and wondering if its worth contacting them to make a reduced offer in full and final settlement.

If so, where do I start with an offer? How much of a reduction are these people likely to accept on a credit card debt of, say, £5000?

Thanks

Nicky_3

It would really depend on how you have conducted your account. If you pay in full every month it would be unlikely that your creditors would be willing to accept a full and final, if on the other hand you have been missing payments, your account has been passed to collections, then they would be more willing to accept an offer of settlement.

Generally anywhere between 60-80% of the outstanding amount they would consider, but as I said, it would be based on what states the accounts are currently in.

kazzaj

Thanks for that. Accounts not been conducted well and have been passed to collections agencies, with whom we have made agreements to make reduced monthly payments. I guess its perhaps worth a try then - they can always say no!
Thanks for replying

Nicky_3

Yes, under your circumstances it probably is worth making the offer. Just dont tell them that you have this money already, its better to say that you may have an opportunity to get this money.

Good luck.

kazzaj

Is it worth starting low and then working upwards. Obviously I want to get away with paying as little as I have to to clear these accounts.

delboypass

If you turn around and say that you have £3000 and the balance is £5000 then they are going to think - hey where has he got this money from. Pay us...
Depends on who else is on your creditors list as well and how much you owe them.

fast_track

Debt collectors will ask for 80% - you offer 20% then try to meet somewhere in the middle. However, by remortgaging you are turning non priority debts into priority debts. You need to consider very carefully before remortgaging. You may be looking at a huge interest rate on a secured loan. Should anything go wrong they will have your home.

kazzaj

Thanks for that people. We have considered the remortgage carefully but being as we had £150K worth of equity in the home we were able to get a good deal, even inspite of our failing credit history.

Is it really worth starting at as little as 20% of the balance owed???

fast_track

High Street banks won't look at it as they consider full and final settlements encourage "irresponsible borrowing"! - thanks Lloyds TSB. However debt collectors live in the real world - If you start at 20% then settle at 45% you are doing a lot better than grabbing the 80% they offer you initially Good luck

kazzaj

Thanks, that's helpful. I will make offers of 20% and see where we arrive. I will let you know the outcomes!
K

delboypass

but instead the debt collectors may just turn up at your home if you try to play them with too much hard ball i would have thought.

Where is the line, when debt collectors say right, lets get over to his house?