Making An Offer Of Settlement

Nicky_3

My personal opinion, but I think offering 20% is not a good idea, if you want to banter, I would start at 50%-60%. You have to be realistic about these things. Normally when doing full and finals you offer the cred a percentage of the debt and they give you a decision as to whether they will accept it or not.

I have done full and finals for people, and usually its around 60%-80% that they are willing to accept. Plus, if you offer 20% and they dont think thats enough, then they are not exactly going to think you can really pay 80%, otherwise, why didnt you offer more in the first place? I would be a bit wise and start at minimum of 50%-60%.

kazzaj

Yes good point, and 20% is a bit of a cheek I guess to be honest. Any discount I can get is a bonus at the end of the day.

Dammam

I'd go along with the above. Don't start at 20%, be realistic. Begin at 50% and they'll probably end up settling at around 70%. Tell them you're considering remortgaging but you have only got a little equity in your property and need the agreement of ALL your creditors on a full and final settlement. As you're turning all your unsecured debts into one secured debt on your home, you cannot entertain making partial settlements as the mortgage payments will put you at your absolute limit. They will tell you no way at first, but stand your ground, give a few extra % here and there and eventually you'll come to an arrangement.

Delboypass, it's extremely unlikely that they will send any debt collectors around; even less likely if the OP is in negotiation with the firm. My own debts ran for over 5 years and passed from original lender to debt collection agency to 2nd debt collection agency etc - the only debt collectors I ever encountered were the Bailiffs coming for council tax arrears (ironically, I wasn't at fault - the Council had not processed their paperwork when I was made redundant).

I myself took the remortgage route to paying off my debts - touch wood it has worked out well and everybody is happy. Some people here frown upon full and final settlements as a form of "getting away with it". I felt this way myself, but look at it from the other side, when you're in debt and most in need of good rates, the banks aren't slow to pile on their extra %'s for problem lenders and pile in with the bank charges etc - they more than make up their money on us. My last remortgage was 8.75%!

Out of interest, who are the debt companies you will be dealing with?

kazzaj

Will actually only be paying an extra £50 on the mortgage than we are paying now, so will be better off.
Dealing with AIC for an RBS card, Bryan Carter for Cap one and Blair Oliver etc for Halifax. Do you know of them?

hopefulfooluk

FWIW here's a list of my full & finals:

Natwest (AIC) - Accepted £3500 on £5900 balance
I.F - Accepted £12000 on £21000 balance
Clydesdale - Accepted £400 on £800 balance
Lloyds - Accepted £3000 on £4200 balance
Volkswagen Finance - Accepted £4700 on £5500 (secured!) balance

I have tended to start low, as the others suggest, maybe 45%, and work up. Sometimes they'll accept straight away, other times they will say "I'm only authorised to accept more than X" to which you say "hmm, okay, my absolute max is Y" which they'll duly accept as there is a bit of leeway.

Good luck,

Chris

YorkshireBoy

kazzaj wrote:

Will actually only be paying an extra £50 on the mortgage than we are paying now, so will be better off.

On a month by month basis yes, but over 25 years?

Just to play devil's advocate, and pose some issues your crediters might raise...

1. If you have £150K equity in your property, is it "morally right and fair" to try and reduce a £5K debt by 40%?

2. Can you downsize to release some capital from which you could repay your debts?

3. Can you "afford" to borrow more on your mortgage to pay off the cards in full?

kazzaj

But as they are unsecured - the creditors have no idea how much equity I have in my property and I have no intention of telling them.
We swill be switching our mortgage again in two years and hopefully by then will be able to secure a much better deal. Downsize - we hardly live in a mansion as it is - 4 bed bungalow - nothing flash - lol
Thanks to everyone for their help tho
K

Dammam

The only ones I "dealt" with are Blair Dobie (Oliver?). I use the word "dealt" loosely, as it was during my denial stage and they passed the debt on to someone else. Never got a visit from them though.

Yorkshireboy - the moral argument is a valid one. Personally, I think it can be morally justified if the lender learns from previous mistakes and becomes more responsible with their money - almost like an adult education course sponsored by the banks. Also, the debt companies would have paid nothing like the full amount to buy the debt - they know the score as much as we do.
Also, £50 over 25 years is a lot - but like all loans you have to balance what's financially viable at the time to get yourself straight. OP is confident that the £50 is manageable over the long term and worth it to get their affairs in order. Once you get the debts out of the way, the moneysaving hints on this website are much easier to get moving on (I couldn't switch my suppliers until I paid Gas & electric arrears!)

And as OP says, DON'T tell collection agencies how much equity is in the house - it's really not their business. Make out that you're up to the hilt with the mortgage but MIGHT be able to squeeze this much more out to pay, say, 65% for full and final settlement. They'll then pretend to ask their supervisor if they can go that low etc etc.
It's a game, but it's one which you can learn important lessons from.

kaly_2

and it was really useful. I asked a similar question a while back and received some useful replies.The National Debtline website provides advice on how to make an offer and sample letters to use for the creditors. I haven't yet written off to them. My debt is approx 40k and my dad is able to raise about 10k but this is obviously only 25%! I've been putting it off out of fear really, scared that any offer will be refused as this is my only way out. so please let me know how you get on. Good luck.

kazzaj

Well should be in a position to make some offers in the next week/ten days - will keep you posted on how successful I am.
For all those who have responded with some positive help - thanks.
I would also like to say that finding yourself in the position that you need some help from a message board to deal with the unholy mess you have got yourself in is bad enough, without some people coming on and having a go!! I am sure I speak for everybody when I say that given a choice, we would not have got ourselves into this position, but once it starts, it seems impossible to stop the rollercoaster.
Thanks again for the positive help that is out there.
xx