1st credit - help needed

momo1975

so i could actauly not reply to thier latest letter and ignore it indicating that they have not replied to my 'final settlement' cheque and when they do if they do write in the future asking for more money i can say that they didnt reject my payment (even thou cashed) as final settlement?

Mikeyorks

The legal position is set out fairly well in this HMRC page. And whilst I've picked a bit relating to Interest objections .. it applies equally to other aspects of debt :

http://www.hmrc.gov.uk/manuals/dmbmanual/DMBM405080.htm

Salient extract :

A customer may send a payment 'in full and final settlement' of a liability and then claim that taking of the payment shows acceptance of the conditions and that HMRC has no right to charge interest.

Legal precedent shows that where a payment is sent with some condition attached to it, for example it is in satisfaction of some larger amount, HMRC do not need to:

• keep it on the terms on which it is sent; or
• return it.

The payment can be retained, the conditions refused and the balance due requested. The courts have confirmed the position that, in law, payment of a lesser amount does not satisfy a larger debt.

jonesMUFCforever

I agree with Clapton and Mike.
If you want someone to accept a full and final settlement you have to make the offer and the lender accept it BEFORE you send any money.
Anything else and they will cash the cheque and quite legally and legitimately chase you up for the rest of the funds owing.

Sorry Nick but you are wrong IMO.

NickX

OK guys, thanks for your input.

I have done some research on this issue, both to assist the OP and for my own information, and I will concede that it is not "cut and dried".

I do not believe that I was wrong in what I said, and I have direct experience of a similar situation where the cashing of the cheque was deemed as accepting the "full and final settlement" offer.

However, looking through past cases, it would appear that the law is not clear and some cases have fallen in favour of the debtor, some in favour of the creditor. The article below may be of interest :

http://www.vinden.co.uk/newsletter/details.asp?NW_ID=12

It would appear that the result would be very much dependent upon the circumstances of the particular case, and I quote from the article above :

The legal principle that has to be considered here is referred to as “accord and satisfaction”. In summary, for an agreement for one party to pay and for another to receive a lesser sum than that which would otherwise be due under the terms of a contract, there has to be agreement (the accord) and crucially some further consideration (the satisfaction) moving between the parties.

Mikeyorks, thank you for the HMRC info, this actually doesn't surprise me. HMRC are about the only creditor who have special powers. When I pay my VAT each quarter, I send a cheque and post date it to the end of the month when the VAT is due. They are able to cash this cheque in advance without any problem with the cheque being post dated. No other creditor can do this. They also have the power to remove funds directly from a debtors bank account and can invoke bankruptcy proceedings much quicker than anyone else. Basically, the Government or HMRC are the people you should pay first, they can make life very difficult. It doesn't surprise me at all that they can "overturn" a "full and final" settlement offer, and I think in the case of HMRC I would not advise fighting it.

jonesMUFCforever, my research actually says that although generally you should agree the "full and final" settlement before sending the money, there are cases where this has been done but the creditor has still been able to backtrack and make efforts to collect the full amount, and the courts have come down on the side of the creditor. So this is no a guarantee.

With regard to the OP, I think he will have to make his own decision based on the research that has been highlighted. IMO he has justified the offer that he made, and I believe they accepted it by cashing the cheque. I wouldn't back down too quickly, but it is down to the OP to decide how confrontational he wants to be.

For everyones information, I once had a customer struggle to pay me. After much persuasion, they send me a cheque for half the amount and said it was a "full and final" settlement. Because I saw half the money as better than none at all I cashed the cheque. I then spoke to my solicitor about chasing the other half and my solicitor (practicing for 35 years) said that because the payment was clearly marked as "full and final" settlement I couldn't chase the other half now.

Perhaps the OP could let us all know how it goes - I would be genuinely interested.

cheeks

It may be a good idea to go to the 'citizens advice bureau'. I used them several years ago when my ex-employer was claiming i had been over-paid maternity pay and had threatened me with bailiffes and court cases. The CAB were fantastic, while i was in her office the lady rang the debt collection agency and basically told em to bog off and then she drafted a letter explainig my case. She sorted it all for me. I can't praise them highly enough. They can also arrange a free hour consultation with a solicitor if it is a complicated case. I hope you get it sorted out x

NickX

cheeks wrote: »

It may be a good idea to go to the 'citizens advice bureau'. I used them several years ago when my ex-employer was claiming i had been over-paid maternity pay and had threatened me with bailiffes and court cases. The CAB were fantastic, while i was in her office the lady rang the debt collection agency and basically told em to bog off and then she drafted a letter explainig my case. She sorted it all for me. I can't praise them highly enough. They can also arrange a free hour consultation with a solicitor if it is a complicated case. I hope you get it sorted out x

I agree with this - CAB are excellent with disputes and debt problems and do have access to professional legal advice.

CLAPTON

Nick
not wanting to be argumentative but I dont agree with your understanding about post dated cheques either....I don't believe that post dating a cheque places any legal restriction on when it is cashed and in any event banks usually ignore them.

NickX

CLAPTON wrote: »

Nick
not wanting to be argumentative but I dont agree with your understanding about post dated cheques either....I don't believe that post dating a cheque places any legal restriction on when it is cashed and in any event banks usually ignore them.

Hmmm, well I run a small business and if a customer post dates a cheque then the bank will not accept the cheque until that date.

It does appear that there are different rules for different people.

johnllew

NickX wrote: »

Hmmm, well I run a small business and if a customer post dates a cheque then the bank will not accept the cheque until that date.

It does appear that there are different rules for different people.

It depends if they notice; in 2007 received a very small Co-op divi by cheque with clearly the wrong year on it - 2008 - it was cashed without a problem. Also, I have been told by Lloyds TSB that early in each new year, they often cash cheques with the previous year's date on it; they recognise such mistakes and it's too much trouble to refuse the cheques and insist on replacements.

NickX

I am sure it is true that banks do cash incorrectly dated cheques if they don't notice.

In the same way it has been reported that they cash cheques with the wrong signature on (this was shown on the BBC).

However, I don't believe they should be doing this and are actually breaking the law.