A reader asked what she should do as her reasonable Full & Final settlement offer had been rejected.
It’s going to seem obvious, but the creditor rejected the offer because it didn’t seem reasonable to them.
You may think “I paid off the amount I borrowed ages ago, their interest is too high” or “They probably bought this debt for pennies, so they should be happy to accept 20%” but that’s not the way your creditors think. They are running a business which means they want to get the most money that they can from you.
When your F&F has been refused, you need to look at your offer through the eyes of your creditor and think why they would have rejected it.
You can use that to decide what to do next.
Contents
Why was it rejected?
Your creditor thinks you can pay more each month
You may know you can’t but you have to prove this, not just say it.
Do enclose an Income & Expenditure statement with a settlement offer, then the creditor can see your full situation. This calculator has an option to download a version to send to your creditors. It also converts things from weekly or annual to monthly and suggests some expenses you may forget about as you don’t pay them every month.
If your health is poor, think about enclosing some information about this – say a copy of a hospital appointment. It’s all evidence about your situation.
If your only income is from benefits, enclose a letter about your Universal Credit, disability benefit or Pension Credit to prove this.
Also mention any priority debts such as energy bills, council tax or rent. But really if you have any priority debts you should be using any spare money you have to clear those, your non priority debts can wait.
It’s too soon for this offer
If you have just lost your job, you may know that you won’t be able to find another one at the same money and your situation is just going to get worse. But creditors will rarely accept F&F offers before you have defaulted on your debts.
When you have only missed a few payments they are unlikely to accept a low F&F.
In this situation, the best thing is usually to set up a Debt Management Plan(DMP) or make £1 a month token payments. You can then revisit the idea of making a settlement offer in a year or two.
At that point your creditor will have realised that you were serious and that you really do have difficulties.
The debt is still with the original lender
This is a variation on “it’s too soon”. A debt collector that has purchased your debt will not have paid much for it. So they are MUCH more likely to accept a F&F offer than the original lender.
Here you normally just have to carry on with the low monthly payments (or set up a payment arrangement if you haven’t yet done this.)
People often hate the idea of their debt being sold to a debt collector, but it’s often a good thing. The sooner the debt is defaulted and then sold to a debt collector, the sooner a F&F may be accepted.
It’s not high enough
This partly depends on how long you have been making no or reduced payments. The longer the time, the more likely your creditors are to accept a low offer.
How large are your monthly payments? If the full debt will be repaid in 3 or 4 years, then your creditor isn’t likely to accept a 20% F&F.
When the debt is secured on your house, a creditor is unlikely to accept a low offer.
One option here is to make a larger offer to one or two creditors. So if all your creditors refuse a 30% offer, then you could consider offering a couple of them 50%. Clearing some debts will mean you can repay the rest faster.
It’s not clear where the money is coming from
If the money for the F&F offer is coming from a “one-off” source – perhaps you have had an affordability refund or redundancy pay or a bonus – then explain this. Then your creditor will realise they may as well accept as there isn’t going to be any more on offer.
When the money is a gift, explain this. For example, “I am being offered this money by my brother if I can use it to settle this debt”.
NB Using redundancy pay to clear debts may not be a good idea, see 4 steps to take if you lose your job. Think about delaying your settlement offer until you have found a new job.
They know you have assets
Your bank may know a lot about your finances. And another creditor may have looked in some detail and know you own a house with equity. That doesn’t mean they will never accept a F&F, but it is unlikely that they will accept a really low one.
It is rare for a creditor to accept a partial settlement on a secured loan. Even if you have negative equity, many secured lenders or creditors who have got a charge on your house will reject an offer.
What should you do now?
How can you get the F&F accepted?
Your settlement options come down to some combination of:
- repeating your offer with more information about your situation and/or where the money for the offer is coming from;
- offering more to a few creditors rather than a little bit to a lot of creditors; or
- waiting a while then repeating your offer. Especially if the debt hasn’t yet been sold to a debt collector.
You may have wanted to get this debt settled, but it’s a bad mistake to offer more if it’s not affordable.
Don’t ever borrow money and pay interest to make a settlement offer. You may think 50% off is great, but if you take on a new loan it’s probably going to be at high interest because of your current debt problems… Repaying a defaulted debt will NOT improve your credit score. And most defaulted debts have interest frozen. So don’t turn an old problem into a new one.
Even if you can borrow the money from family at 0% interest, think about your other options first.
Other possibilities – may be better!
If this is a loan, credit card or catalogue, think about asking the creditor to produce the CCA agreement for the debt. This is MUCH more likely to work if the debt has been sold to a debt collector. Sold more than once – even more likely. Very old – even more likely.
Was the original debt unaffordable? See the article for the type of debt for an explanation.
Here your complaint goes to the original creditor and they will then sort out the debt with the debt collector if it has been sold. If you win an affordability complaint, either directly with the lender or at the Financial Ombudsman (many lenders reject good complaints!) the default will be removed from your credit record too.
If you have been making very low payments for years and that won’t change, because of your age or health, it may be better to ask for a write-off.
You may qualify for a Debt Relief Order which would clear this debt and other problems such as arrears on bills. Talk to a debt adviser about this.
Steps to avoid having a prepayment meter
When can you get a default deleted?
How much will my score change if…
Hbeiber says
Hi , no mention at all of seven day offer
Sara (Debt Camel) says
Well it’s up to you if you can be bothered to go back and argue about this. If they say now it was a time-limited offer but that wasn’t made clear to you at the time, you could.
Lucy says
Hi
I have a joint unsecured loan for £12700 with my husband. Was part of a mortgage taken out in 2006 but we had to sell in 2014 with negative equity. Last payment made in June 2014 and recorded as defaulted on my credit report. No CCJs, we made an offer of £3k in May 2017 that they turned down. No correspondence from them at all until May 2020 informing us we’d get a letter with a new Ref number. So, debt sold on I assume.
I requested a CCA which they have now provided so we’d like to make a f & f offer. I know you don’t have a crystal ball but would they accept an offer of 10%?
Both our jobs are questionable as COVID-19 continues and we have 2 small kids and are in rented accommodation
Any advice gratefully rec’d
Best wishes
Lucy
Sara (Debt Camel) says
What happened to the negative equity? What other debts do you have? Where us the F&F money conjugal from?
Lucy says
Hi Sara
We sold the flat which covered the mortgage but the loan was part of the borrowing to buy the flat if that makes sense? We don’t have any other debts. My dad is lending us £2500 for f & f offer
Lucy says
They have just turned down our offer after providing all evidence that we have no money to enter into a monthly payment plan. What would you suggest we do!
Sara (Debt Camel) says
It would seem that your options are:
1) offer a token £1 a month to the debt if you can’t afford any more, see https://debtcamel.co.uk/token-payment-debt/. Plan to reoffer the F&F every year until they give in and accept.
2) both get a debt relief order, see https://debtcamel.co.uk/debt-options/guide-to-debt-relief-orders/. This is a form of insolvency like bankruptcy. talk to National Debtline om 0808 808 4000 about this, the pros and cons and whether you are eligible for a DRO. If you aren’t it would be bankruptcy instead
3) do nothing. If/when they start threatening legal action offer the F&F then and say you will be going for a DRO/bankruptcy if it is refused.
Did you make it clear the money for the F&F was coming from a relative not from you?
The advantage of going for a DRO/Bankruptcy now is it gets it all over and done with. If you had done this in 2014 the debt would be long gone and your credit record would be clean. It also saves your dad £2500…
I think it would be good for you to talk to National Debtline now. letting this sort of thing drift on is stressful and often you have to go for bankruptcy in the end anyway.
Lucy says
Yes I told them the f& f was coming from my dad. I’m going to see if I can stretch the 40% offer. Really don’t want a DMO or bankruptcy as our jobs would be affected. How long does a partially paid stay on your credit file?
Sara (Debt Camel) says
Is the debt currently showing on your credit record? It shouldn’t be…
Lucy says
Yes, it’s showing as a default account. NRAM also did a hard debt collection search last month
Sara (Debt Camel) says
A default date should have been added in 2014, or possibly early 2015. If it is much later than that, ask them to backdate the default.
A partial settlement market doesn’t affect your credit score. A partially settled debt will drop off at the same time a fully settled debt would – 6 years after the default date or, ir there is no default date, 6 years after the settlement date.
What are your jobs as very few are actually affected by a DRO?
Steve says
Hi Sara
I have been in a DMP since 2011 for 4 old credit card debts and have been making the regular monthly payments since then. Due to their age the debts and default notices no longer show on my credit report. Now due to COVID-19 and its impact my employer has proposed a firm-wide pay cut, and has just completed a voluntary redundancy process. The relative lack of take up on this has meant they are now looking at compulsory redundancy, and all staff are potentially at risk of this. Just the proposed pay cut will make it impossible to make the regular DMP payments. Due to the financial position and the resultant stress this is causing, I took steps and after requesting / obtaining the original CCA’s, I submitted F&F offers to the creditors as my mother has offered to provide funds for this. Today the first response came back – my offer was rejected, and their counter offer was for 95% of the remaining balance. My fear is that the other creditors will follow suit in a similar manner.
Any advice on next steps gratefully received.
Sara (Debt Camel) says
That was unlucky, to have all 4 debt collectors find a CCA agreement from before 2011.
I suggest you wait 6 months and reduce your DMP payments if your income is reduced. then you can make a lower offer and may have it accepted.
Paul says
Hi there,
My wife and I have had a joint business overdraft debt of £23,000 with Santander since our company went into liquidation 8 years ago. Unfortunately, we had signed personal guarantees and so we were liable for the debt ourselves. We have been in a payment plan for those 8 years and have been paying £15 per month towards the debt for the last 6 years or so. We recently contacted Santander Collections & Recoveries by letter to ask if they would kindly consider a partial settlement figure of £900 (by way of a gift from my mother), to rid ourselves of this debt once and for all. We provided them with our current income/ expenditure details. Also informing them we have other debts and are still in arrears with our mortgage.
The Santander Head of Collections & Recoveries, G P Rymer, replied yesterday by letter stating they were unable to accept our reduced payment offer and that we continue making our agreed payments. We are gutted as they didn’t come back to us with an alternative settlement figure.
I understand that we are indeed liable for the debt but my question is do you think we could respond by asking them to reconsider their decision, or let us know the bottom line they would be willing to accept, if anything ?
It would help if you could advise of any similar scenarios and their outcomes.
Thank you.
Sara (Debt Camel) says
To answer your questions, yes you could ask them to reconsider but it is unlikely they will for several reasons. This debt cannot become statute barred as too old as you have been making payments towards it. It is a large debt so the creditor could if they wanted go to court for a CCJ and charge over your house. It is a business debt so scenarios about consumer debts are simply not relevant.
But why are you worried about this? Why not sit back and carry on paying £15 a month? Any spare money from your mum would be better used to help with the mortgage arrears or any high interest debts you have.
How large are your other debts? Have you taken debt advice?
Pezzza says
Thanks Sara. Not particularly worried, I can see what you’re saying, we can still afford the £15 monthly payment, we just wanted it cleared and off our heads after having it for so many years. At this rate it would take more than 120 years to clear!
Do you think it would still be classed as a business debt when we signed ‘personal’ guarantees for the overdraft?
Yes, we took debt advice from StepChange at the time we lost the business but decided to handle the problems ourselves rather than enter a DMP.
Yes, we’ve had a few other debts from when we lost the business.. personal credit cards, a few of which we have just partially settled and the last one which we have requested CCA for. We pay £1 per month towards it. The Santander debt is by far the largest though.
Because we feel we are making headway with the other debts we were keen to tackle this one as well, albeit a little cautious for reasons you mentioned, ie. a charge over the house.
Lastly, there is one old British Gas debt for around £400 which we pay £1 per month for. It was passed to a company called BPO a few years ago. Is this a debt we could offer a partial settlement to for a minimal amount?
Thanks again.
Sara (Debt Camel) says
Do you think it would still be classed as a business debt when we signed ‘personal’ guarantees for the overdraft?
yes.
I suggest you sit back, carry on paying off your other debts and the clear those mortgage arrears and make the offer again in a year.
Pezza says
Okey doke, thanks Sara
Lisa says
Hi Sarah I am looking to make a full and final settlement offer to moorcroft the balance outstanding is £14,800 from an original £25k loan dating back to 2009 they are managing it for Lloyds tsb. In the sample letter it states If you accept this offer, please confirm that you will mark my credit reference agency file to show that the above account has been paid and closed. However this debt dropped off my file years ago.
Should I just omit this line or leave it in. I don’t want it back on my file.
What do you advise please?
Sara (Debt Camel) says
That is a lot of money you are offering – can you afford that much? How much are you paying each month?
Lisa says
Sorry my message has not explained the facts very well my parents are offering me £2,100 as a gift to offer as a f&f settlement. My monthly payments are currently £21.00 per month on a dmp. It would take nearly 10 years to pay that amount off and I don’t think paying £21 per month I will ever clear the debt as I would still have over £12k left to pay after 10 years. It will take 60 years to pay back in full and I’d be over 100 by then if I live that long!
Sara (Debt Camel) says
ah right. so it isn’t you offering the amount, it is a relative.
I suggest you add a statement to the F&F offer letter explaining where the money will be coming from and that it will only be offered in final settlement of the outstanding balance.
You can change “If you accept this offer, please confirm that you will mark my credit reference agency file to show that the above account has been paid and closed.” to “This debt has already dropped off my credit record. I understand that if you accept this offer the debt will not reappear.” if you want. But it isn’t strictly needed as they can’t put the debt back on!
Lisa says
Thank you sarah I’ll put it on I think.
I’ll let you know how I get on. Thank you for your help it is really appreciated and a wonderful site for reference/help.
Debi says
Hi Sara I have had a reply to a F & F offer that I made to PRA but it was low I knew that it would not have been accepted but they have come back with a counter offer of 2686 on a 7665 debt I want to make another offer as I cannot afford to pay that but Im not sure what to offer. My mum has offered to help me which will give me half of their offer shall I make the offer in another letter as I suffer from anxiety & don’t want to speak over the phone and how should I word it.
Please advise me.
Sara (Debt Camel) says
You can just say in an email there is no way you can afford that, your mum has offered you £1250 so would they accpt that?
But really can your mum afford this? You can simply reply there is no way you can afford that and you will carry on paying £12 a month which is all you can afford.
Debi says
Hi Sara
Yes mum can afford it but not that I want to take it they have sent me a income & Expenditure form too if I want to carry on with the £12 do I have to fill that in.
Sara (Debt Camel) says
if you want to carry on with the £12 a month it will help if you complete that. If you aren’t sure what to put down, phone National Debtline on 0808 808 4000 and they will help you with this.
Rodger says
Good morning Sara.
I have a question. My son is currently in an IVA with 35 months to go.
I recently gave my daughter £25,000 and want to give the same to my son, but I don’t want it to go to his creditors.
He recently made an F&F offer which was rejected (I thought that was madness since the offer was slightly more than they will get if he carries on paying the monthlies of £160)
My question is. If I wait until the IVA is completed and then gift him the money, can the creditors still claim some or all of it?
Sara (Debt Camel) says
If his IVA completes (not just he makes the last payment – it gets through the final review and he gets the completion certificate) then you can give him the money.
But why not make another offer in a year’s time?
Briggi says
Hello
Can i firstly say how helpful this site is
I have just made an F&F offer of the full remaining payments left on my IVA ie 40 x £80 = £3200 , Hanover have replied that it is ‘too low’ ?
Total payments are over 72 months.
It’s so hard to speak with them as they use call centres all over the world.
Should I speak with Citizens Advice?
My sister was going to pay the amount for me.
Thank you
Sara (Debt Camel) says
Do you have a house with equity?
Is your income going to increase? Or are you worried you won’t be able to afford the £80 payments going forward?
Briggi says
Update – Hanover have emailed to say they are using the figure of the total amount of debt to base whether they accept the offer not the payments left to pay, is this what happens?
There has been no meeting but they said offer would be rejected.
Sara (Debt Camel) says
That is a very stupid thing to do. I suspect they are trying to bluff you into increasing the offer.
It is actually your right to insist that the offer is put to your creditors. Obviously it is nicer if Hanover makes this offer saying “we think this should be accepted” but you can insist that the offer is made.
You could decide to do that now and fall back on just making the regular payments with help from your sister if the creditors reject it.
Surj says
Hello,
Thank you for making this website, it’s an incredible resource.
I have a query. I defaulted on an Amex in 2015 and it was referred to a collection agency. It was rather quickly returned to Amex and they put me on a monthly payment plan, which I was paying. I then moved house and during the move I ended up missing a payment by one day…they then refused to take my payment. My fault I know. I didn’t hear from them after that aside from the odd random statement.
Fast forward to now… and my second mistake has become apparent; I was looking through my old letters and found an unopened letter from August 2018 which was a very good settlement offer, 70% off – to note, the address was spelled wrong on this and there was no door number either.
After reading your article on CCJs, I’m worried I may receive one. The default is no longer on my credit report and the last payment I made was in October 2016 which means it will become statute barred October 2022?
Do I contact them with a similar (or lower) settlement offer?
Thanks.
Sara (Debt Camel) says
Do they have your current address?
Surj says
They don’t, no.
Sara (Debt Camel) says
Then that is your problem. The lender, or (more likely) a debt collector they sell the debt to, may go for a CCJ and send the papers to your old address.
It is a difficult decision whether to contact them and make an offer – which will effectively mean the debt will not become statute barred – or hope it never pops up.
And do you remember if you were ever sent a Default Notice? If you are unsure, then it may not be clear that the debt will be statute barred late next year either.
You could talk to National Debtline on 0808 808 4000 about this situation.
Surj says
Thanks for the quick replies.
I understand. I was sent a default notice in July 2015 – I still have this. I was not sent another after my last payment however.
Sara (Debt Camel) says
ok, then I suggest you talk to National Debtline about this.
CI says
Hi Sara, We currently have debts that were with banks and are now with Cabot, Westcot, PRA with one credit card still with M&S bank. The debt sits at £62000. We have been paying £1 per month since and the debt is no longer showing on our credit reports. In 2019 I received an offer from both Cabot and Wescot of 70% reduced settlement but unfortunately was unable to accept. My father has offered to gift us £15000 after selling his house to pay off these debts. I have offered 20% to all mostly by email and await a response but called cabot today as I didn’t have an email. After spending 2 hours on the phone they finally rejected my offer. They said that they would need a much higher figure, at least double to which I asked if they would accept the amount offered to me back in 2019 but they have refused. Instead they want me to enter into a 4 year payment plan of £100pm which I have refused. I have told them that I need to wait until I have spoken to all other creditors but that I may need to consider bankruptcy, however I really don’t want to do this. Why would they offer an amount in 2019 and then double it in 2022??
Sara (Debt Camel) says
because you coming back to them suggests that you may now have more money available… Is £1 a month all you can afford now? When going back with offers, it always helps to show you can’t increase your current payments.
Can I ask if your father is fine financially? he has another house to live in? can he really afford this?
I assume you are renting? Do you have any assets to protect (not normal things like clothes, furniture, white goods, PC etc). Honestly you will be a lot better off if you go bankrupt now (your nice dad can give you the fee), and wait for a year. If after that you have been discharged with no monthly payment set, then your dad can give you the rest of the money then.
Another option is to talk to an IVA firm about a “single payment IVA” where you pay a lump sum at the start and at settles all your debts. The advantage of this is that it is legally binding on all your creditors if a 75% majority vote to accept it. So Cabot can’t be a pain. The disadvantage is that it is a form of insolvency just like bankruptcy, it will be on your credit record for 6 years and you don’t get to any cash… so really bankruptcy is much better.
Another option is to ask all the debt collectors to produce the CCA agreement for the debt and if they can’t, just stop paying… see https://debtcamel.co.uk/ask-cca-agreement-for-debt/. How old are these accounts?
Malik says
Hi Sara, I currently have 5 credit card debts with PRA and Intrum. 2 overdraft defaults 1 with Santander and 1 with hoist originally lloyds. I have been paying them initially £1 and now £5 a month since 2017. Total debt for all is around £32k. My question is if I keep paying them min amount will the debts remain on my credit file after 6 years or will it disappear? . Hoist has offered me 40% discount and I can pay it in 3 months. It will be marked as partially settled. I can afford to pay it in 3 months with help from family. Can they sell it the remaining debt on to someone or it’s ok to settle as partial? Please advise. Thank you
Sara (Debt Camel) says
Have all these accounts had defaults added?
Malik says
Yes they were defaulted and sold to debt collectors. 2 credit cards from Barclaycard. 2 MBNA and 1 lloyds.
Sara (Debt Camel) says
“if I keep paying them min amount will the debts remain on my credit file after 6 years or will it disappear? ”
They will all drop off 6 years after the default dates whatever you do. But that doesn’t mean you can stop paying them then, as https://debtcamel.co.uk/debt-not-on-my-credit-file/ explains. Or you may get a CCJ.
“Can they sell it the remaining debt on to someone or it’s ok to settle as partial? ”
No they can’t sell it if it has been marked as partially settled. You can ask them to confirm this if you want to be sure.
You could also read https://debtcamel.co.uk/ask-cca-agreement-for-debt/ – if any of the debt collectors for your defaulted credit card debts (not the overdrafts) can’t produce the CCA agreement for the debt, it is unenforceable in court and you can just stop paying.
Malik says
Thank you, appreciate your help. I will try to settle the overdrafts with settlement offer I received.
DenL says
Hi Sara
I wrote a while ago and you gave me some very useful information but things have now changed.
I owe £12,300 to Barclaycard, in default since August 2018. I have not made payments towards the debt or set up a DMP. It was incurred due to long term unemployment. I have informed Barclaycard of my position and various health issues. In December they wrote saying they had transferred (sold?) the debt to LC Assets with Link Financial to manage it. Link wrote asking me to contact them re payment. I asked for proof in the form of a CCA, obtained from Barclaycard after a month. This is not the original as it is on Link financial paper and although it has the date of opening the account (26/6/07) it has my current address not the one i lived in at the time. Is this legitimate?
In terms of my assets i do not own property and currently rent. Although I have worked on and off since then I am now unemployed again and am unsure if I will be able to return to work due to my age and health issues.. I am now 62 and although in receipt of an occupational pension I will not get my state pension for another 3 1/2 years so will be struggling financially. Currently my income does not cover my expenditure. My only savings are a recent inheritance. I may well need most of this to cover the income shortfall until I retire fully. I am thinking of making an F and F of say 30% just get this debt sorted. Does this seem a good option?
Sara (Debt Camel) says
re the CCA – I am not sure that is ok, but it isn’t something I give an opinion on – talk to National Debtline on 0808 808 4000 and/or post on the Legal Beagles forum https://legalbeagles.info/forums/forum/money-debt/consumer-credit-act about this.
It sounds like a pretty poor option to me. You say you need that money for everyday living.
How large is the inheritance?
Have you checked what benefits you are entitled to at the moment?
DenL says
Hi Sara
Thanks for your response. I will contact Nat Debtline re the CCA thanks. The inheritance came to about 40k so is well above savings threshold for DSS type benefits. Sounds a lot but its my only asset. I had housing benefit when unemployed before so will see if I can get that again, I would doubt it though.
Sara (Debt Camel) says
Then if the CCA is fine, then settling the debt is a good idea.
You won’t be able to claim means tested benefits with more than £16,000 in capital. You can no longer apply for housing benefit, you would need to claim Universal Credit.
I am afraid you may need to spend the inheritance on living until it drops to under 16k – talk to Citizens Advice for maore about benefits and how having money in the bank affects them
DenL says
Hi Sara
Ok many thanks, I will check on the CCA and if it is ok I will make an offer I think. I see what you mean about the savings, will have to do bit more research on benefits etc.
Once again, thanks for your help.
nicki says
Hi, My mum has has sold her rental property as she no longer wishes to be a landlord. I have a old joint mortgage debt of £34,000 with whistletree both myself and my ex partner pay £100 per month. My mum has offered me 17,000 to offer a F&F, however whistletree have asked for 3 months bank statements and an new I&E with this offer. My statements will show I can afford to pay them more per month and they would still have to pursue my ex for the rest if the money owed. If they accepted my offer it would still take 16 years for them to recover the rest from my ex, but if they say I can pay more say £200 plus my exs £100 per month then it would only take 10 years to pay. What are the chances they would reject my offer based on this? This debt has been going on since 2012 and is no longer on my credit file, My mum will only give me the money to settle this debt and I have no other debts. Thanks
Sara (Debt Camel) says
Are you paying an energy bill at the moment? If so, how much will it be going up in October and January?
nicki says
my energy is fixed until June 2023. I pay £140 per month for joint energy. My financial position is pretty good apart from this old mortgage debt. Which I would obviously like to get rid of so then I would be debt free. I just don’t want to be told I will have to pay the majority share if they reject my offer as my ex partner is better off financially than myself but only pays the bare minimum off this debt. Thanks 😊
Sara (Debt Camel) says
I see your point, but if the creditor wants to see your statements and you refuse, they may well reject the F&F offer and still ask you to pay more. You can point out that your energy bills will be going up a lot next year when your fix ends,.
The offer looks good to me but some creditors can be quite irrational. I can’t guess what the chance is of it being accepted.
It is a shame you did not go bankrupt in 2012 and get a clean start at that point.
nicki says
I’m happy to send my statements but I’m not happy with the risk that they will refuse my offer and say I need to pay more monthly. If I do nothing I will still carry on paying the £100 per month but it will be for the next 16 years, Its a tough decision. Thank you for your input 😊
Sara (Debt Camel) says
I don’t think doing nothing is an option. If they think you won’t show them your &E because you have more income , they may ask you to pay more and think about getting a CCJ if you refuse.
nicki says
Hi, They haven’t requested anything from me, I rang them to ask if I wanted to make an F&F offer in future what would I need to do and that’s when they said the steps I need to take including sending the statements. So If I do nothing my payment plan just carries on as normal. In the 10 years I’ve been paying it they have never asked for any statements or proof of income my payment plan just roles on year after, I’ll have a think of what’s best to do in the long run, before I go making any offers or contacting them again.
Bella says
Hi Sara,
Q; Should I make F and F settlement offers to lenders while I have affordability complaints outstanding with the FOS?
Context; I have debts that currently amount to over £16k, between 8 lenders. I have a default against each one, all applied around 2016/17. I have one CCJ against three of the debts (they were sold to the same collector) that is three years old. I am paying a low amount pcm in a DMP, which is due to complete c.2036. All defaults and the CCJ are due to drop of my credit report within three years. My goal is to clear my debts and credit record by 2026.
I recently made affordability complaints to all 8 lenders. Not one upheld my complaint (though one lender did make an offer which I accepted). The 7 other complaints have all gone to the FOS, and after reading many similar cases on here, I am confident they will be upheld in the end.
While the complaints are with FOS should I send F and F offers to the lenders? I would not be borrowing or getting into any further debt to do this. If they are accepted, I can become debt free but what will happen after that if the FOS upholds my complaints? Does the money get refunded to me personally, since there would be no debt to reduce it from?
Or, do I wait to see the outcome from FOS and then consider F and F offers on any remaining debt?
If your advice is to go for F and F offers now, any idea what % I should offer? At a push I could probably clear 50% of all debt, but maybe 30-40% more comfortably.
Sara (Debt Camel) says
are you currently making any payments to these debts? are the payments affordable?
Bella says
Yes, I am making monthly payments through my DMP. £136pcm across all lenders. Total debt stands at c.£16k.
Sara (Debt Camel) says
My inclination would be to let the affordability complaints run through and see what remains after that. I feel this is simpler. Of course if a debt collector offers you a settlement at an OK rate you may as well accept.
What happens if you settle a debt and then win that complaint… An example may make this clear:
You borrowed 1000, have paid 700 so far to the original lender and to the debt collector. The current balance remaining is 800. You offer 400 to settle it and it is accepted.
If you win the complaint, the refund is calculated at (700 + 400) – 1000 = 100.
If you had not made the settlement, the interest would be removed, leaving you owing a balance of 1000 – 700 = 300. But of course you still have the 400 in cash that you havent settled the debt with so you can then clear the balance and be left with 100. so no change.
EXCEPT that in that second scenario, you can then try to settle the reduced balance and may get a bit more off – this may or may not work.
Every months payments either increases your refund or reduces the remaining balance, so you arent worse off making these payments.
Bella says
Thanks Sara, I understand what you’re saying. I’ll hang fire for now.
Vicky says
Hi Sara,
I have received a letter from Drydens Fairfax Solicitors that states that there is a final charging order on my property from Arrow Global Guernsey Ltd with the original creditor being MBNA. I previously had CCJ’s which I had thought were settled and with it being well over 6 years nothing is on my credit file. The outstanding amount is £3660, they say their client is willing to accept £2928. I cannot afford to pay either amount although I could do a final settlement offer of £1200 having sold an old toy recently. It may well be they wouldn’t accept that anyway but a little further in the letter it says ‘if paid by way of a settlement within 90 days, no further action will be taken to pursue the remaining debt. Registry Trust will not be updated and therefore the Judgement will not be marked as satisfied, however if the default is reported on your credit file it will show as partially satisfied. ‘ I’ll be honest I read this paragraph and wondered if there was much point in making a final offer settlement if it won’t remove the charge anyway. Can you advise?
Sara (Debt Camel) says
so you thought you had settled this CCJ? or you don’t remember it? what date was this CCJ?
you can’t normally get a charging order without having received paperwork – is it possible you haven’t opened this?
Vicky says
I don’t remember it, I had others which I paid off about 3-4yrs ago and they fell over my credit report just over 2years ago but I don’t know about this one. I think because it has a charge against my proprty that they must have it right but I’m just not sure.
Sara (Debt Camel) says
If you make an a offer it should be on condition that the charge is removed from your house.
It isn’t clear to me whether it’s worth asking the solicitors to produce the papaerwork for the CCJ and the charge. it is extremely unusual for someone to get. Charge over their house and be unaware of it. I suggest you talk to National Debtline on 0808 808 4000 about this.
Paul says
Hi Sara
Hoping you can help again.
I have been in a DMP with payplan since 2010, I have so far paid back £21k and still have £ 10K left to pay back. I am currently in the process of selling my house which will leave me with a lump sum of around 65k I wanted some advice on what I should offer my creditors as full and final settlements. Most of the debt was run up by my ex wife in my name and I am still paying it off 10 years after we split. I would prefer if possible not to have to pay the full amounts back. My current plan is not due to finish until 2042 so do you think a small percentage would be in their favor to settle early?
Sara (Debt Camel) says
Have a lot of the debts been sold to debt collectors?
Is this lump sum after the costs of buying somewhere else?
Paul says
Hi
The lump sum is before I have bought.
Link Financial Ltd – £5765. They took over debt from Barclays 2016
Lowell Financial Ltd – £3486 – took over debt from capital one in 2021
Equivo Limited – £1114 took over debt From tesco 2021.
I am not sure if I will be able to buy another house straight away or wait for credit file to repair. Had to sell current property due to divorce settlement.
Sara (Debt Camel) says
Which of these debts still show on your credit record?
Paul says
None of them show on my credit report (checked on both clear score and credit Karma).
Sara (Debt Camel) says
So you have other problems on your credit record? You talked about waiting for it to repair.
One thing that is probably worth doing as the accounts are pretty old and have been sold is to ask for the CCA agreement, see https://debtcamel.co.uk/settlements-old-debts-cca/
Paul says
Thanks Sara, I have completed the forms from national debt line and sent them off.
My credit report shows late payments from my mortgage as I changed to interest only while a I put my house on the market.
Last question do you think it’s worth sending a cca request to hellidor? I had a together mortgage withN/rock and added the loan into DMP in 2014 (loan taken with mortgage on 2007). Helidoor took over in 2019. I had assumed I would have to pay it back in full when I pay mortgage off.
Sara (Debt Camel) says
how large was this Together Loan?
Paul says
I believe it was 20k taken out with northern rock 2007, I added it to dmp in 2014, hellidoor took it over in 2017. With approx £7700 left outstanding.
Sara (Debt Camel) says
In that case you can try asking for the CCA agreement. I don’t know if they will be able to produce it but it seems worth a try
Paul says
Thanks again will try it nothing to lose. Not sure if this the right thread to be asking this question? Have you heard of the case that solicitors Harcus Parker are taking to the high courts on behalf of mortgage prisoners concerning company’s like N/rock? If you have do you think it is worth signing up to them on a no win no fee basis to try and put a claim in?
Sara (Debt Camel) says
They seem to have two sorts of class action going. A very specific one for Whistletree customers – that sounds a lot like some cases that are currently being won by other solicitors and at the Financial Ombudsman eg against FirstPlus/Elderbridge. And the more general one – I don’t know on what basis they are arguing that case so I have no idea how likely it is to succeed… I also don’t know what their fee arrangements are alike – it may be great if you get a lot taken off your mortgage but not if you then owe the solicitors a large chunk of that.
Paul says
Hi Sara, sorry for so many questions but I am really trying to sort out all my credit issues and I feel I am starting to make head way. Checking my credit files and it shows on them all an outstanding debt to Helidoor (my together loan from mortgage). I put this in to my DMP back in 2014 so the 6 years have passed since it first defaulted. My question is should this still be on my credit file as it’s over 6 years since default? If it shouldn’t be on there how would I go about getting it removed?
Sara (Debt Camel) says
is there a default date showing on the credit record for this debt?
Paul says
No it shows Delinquent on credit karma and special arrangement on clear score.
Sara (Debt Camel) says
The problem is that a debt only drops off after 6 years if a default date has been added, so these never will… see https://debtcamel.co.uk/debt-default-date/ for how to ask for a default to be added. I have no idea if heliodor will be difficult about doing this, if they are you can send the complaint to the Financial Ombudsman, where some of these succeed.
Is your mortgage still with them or have you managed to get a better rate elsewhere?
Paul says
Hi, my mortgage is still with them but I am hoping to pay it off shortly as I waiting for house sale to go through. One of my concerns was when trying to get a new mortgage that I will be held back if they see the together loan in special arrangement (I assume it won’t just disappear from credit file when I pay the loan off).
Sara (Debt Camel) says
I think you need to talk to a mortgage broker about this and what a new lender will be able to see.
Paul says
Hi Sara,
Do you think I should go to Nram first to ask them to add the default as I first defaulted with them in 2014 before Helidoor took over the together loan in 2019? I am worried that even though I first defaulted 9 years ago Helidoor will only add the default from 2019.
Sara (Debt Camel) says
NRAM says this https://www.nram.co.uk/homeowners/transfers/heliodor-transfer
So that suggests they may still update your credit record. If they do, then Heliodor has to copy what NRAM has done.
B says
Hi I’m hoping you can help me please :)
I’m currently on a dmp with step change, a family member has offered to gift me 50% of my owed debt to offer a F&F.
Is this something that is often accepted?
The debts have been running since around 2017 and have been in default since then.
Sara (Debt Camel) says
Have most of your debts been sold to debt collectors?
Do you have any debts outside the DMP?
B says
Most have apart from 2-3
However currently I won’t be able to pay them off for another 20 odd year.
No debts outside of dmp no x
Sara (Debt Camel) says
It is good news that most have been sold as they are more likely to accept an offer than the original creditor.
However with 50% being offered and you making such low repayments, I would hope there is a very good chance of everyone accepting.
You could ask StepChange to make this offer for you. But it may be simpler to just ask your creditors yourself. See https://debtcamel.co.uk/debt-options/less-common/full-final/#How_to_make_the_offer. Change the tamplate letter to say that the money is coming from your father (or whoever) if it can be used to settle the debts. And that is this offer is not accepted your StepChange DMP will continue for many years as you are unable to increse your payments to it.
You could also consider offering 40% to everyone which would allow you to offer a bit more to anyone who doesnt accept.
Chris says
Hi,
I’m with stepchange DMP (for about 5 years) and pay £130 per month for 6 debts of unsecured credit cards and loans. The original amount was approx £44k and now sits at around £34k.
My partner is selling her house and moving in, she has offered 20k to repay my debt. Most of my debt is with PRA group one with Westcott and one with Cabot.
I was original paying £200 but have reduced to £130 due to increased mortgage and energy bills etc. Although when my partner moves in I will have more disposable income.
Do you think £20k would be a reasonable offer as my debt is due to be paid off in 2045.
I’ve not missed a payment, which may go against me for settlement and read online PRA don’t accept lower offers.
I could afford to pay more each month when my partner moves in but will still be paying it off for awhile.
Any advice, thanks.
Sara (Debt Camel) says
When does your current mortgage fix end?
Chris says
Hi,
It’s on a variable rate already, my partner is looking at buying into the property and potentially clearing the mortgage.
Thanks
Sara (Debt Camel) says
OK then the letter to your creditors offering the F&F needs to say that the money is being offered by a family member if it will let you settle the debts because your mortgage is on a variable rate and you may be unable to maintain your current DMP payments, which have already been reduced, if base rates rise further.
Chris says
Hi,
Just an update, all creditors have offered 20% discount.
One of them is asking if this is a gift from a relative or loan. Why are they asking this, am I subject to tax on receiving this money?
Many thanks
Sara (Debt Camel) says
No there is no tax involved. If it is a loan, it’s doubtful if this is in your best interest. I don’t know if that’s why they are asking.
stuart says
is it possible to make a full and final offer without stating the price, eg say to creditor ” how much discount will you offer if i could clear the debt today, rather than muck about offering a % which is either too high or too low, and then having to try the same thing months later and again and again.
Sara (Debt Camel) says
Well you can, but you may not get a low answer.
How long has your DMP been running? Have the debts been sold to debt collectors? How much are you paying A month to your dmp and is this affordable? Where is the money for a settlement coming from?
stuart says
18 months on DMP, one debt is a catalogue, not sold on, paying £5 a month, its affordable, balance £46, called them today, they offered £36 as a F and F offer. to clear it, i await for it in the mail in writing. the money is coming from a tweak in this months budget., they never asked where the money is coming from!
Sara (Debt Camel) says
Yes they won’t care for tiny amounts, this is a nuisance they are happy to get rid of.
Debt collectors fir larger sums may be much more fussy.
stuart says
when you say more fussy, do you mean they want proof where the money is coming from, eg a written letter from a relative as the donor, or do you mean fussy in a different way?
Sara (Debt Camel) says
Possibly proof, possibly won’t accept a low amount without seeing an income & expenditure statement.
Elaine says
Hi – have £8k in CC debts with DCA, who put on hold due to my severe financial hardship. Last payment/contact was 5 years ago and I’d forgotten about it.
Circumstances changed. I just bought a house, with 5% deposit (so hardly any equity). Within days of buying the house they just got back in contact and asked for payment. I have no money now, as I’ve maxed out on the mortgage. Done CCA and they provided it.
– Do they know I’ve bought a house?
– What are my chances of getting a F&F settlement if they know I’ve bought a house, even though there’s no equity in it yet?
– Will they ask for proof of mortgage, valuation and bank statements etc, as I have no spare money now so I don’t know what to do?
Sara (Debt Camel) says
– Do they know I’ve bought a house?
they may just be getting in contact because it has been a long while.
However if they check your credit record, the mortgage will show there so they can work it out from there.
– What are my chances of getting a F&F settlement if they know I’ve bought a house, even though there’s no equity in it yet?
Where would you get the money from? It would depend what you offer probably.
– Will they ask for proof of mortgage, valuation and bank statements etc, as I have no spare money now so I don’t know what to do?
At the moment they probably just want you to make a monthly payment arrangement
Steve says
Hi there. I have a few defaulted accounts.
I have done self arranged agreements with them all.
They are with debt management agencies.
One is for an ola loan at 20k. The other is an old credit card at 7k.
If I am gifted money from family. How much should offer the 2 firms as a settlement. I was thinking 15-20% of the amounts.
Currently making token payments of £22 and £5. And have been doing so for 2 years now. With a projection to complete them both in nearly 100 years!!
Are these settlement offers reasonable?
Sara (Debt Camel) says
have they been sold to the debt collectors?
I haven’t heard of ola?
Steve Banner says
Typo.. ola = Old loans.
Yes they are both with debt collectors. Pra group and link financial.
Sara (Debt Camel) says
Thanks. So you have been making token payments for 2 years – is that all you can pay or has your situation improved? Are you buying or renting? Do you have health problems? Did you actually default 2 years ago or was that earlier?
All this sort of thing matter when a lender is considering accepting a low offer to settle a debt.
Steve Banner says
No health issues just too much debts ledto the default in summer of 2022.
I do have a mortgage
I have the opportunjty to now be gifted money from family to clear the 2 defaulted debts. But as they are old I assume I don’t have to pay full value.
Sara (Debt Camel) says
has your mortgage increased? or do you have a fix ending soon?
Steve Banner says
Remortgaged end of last year. Went up £400 a month . But fixed for 5 years now.
Sara (Debt Camel) says
So is it fair to say that you cannot pay any more than the current low payments and it is unlikely this will improve for the next 5 years?
It is right that many debt collectors will accept a lower offer, but settling for 15-20% after only a couple of years would be unusual unless you had health issues. expect to have to go through an income & expenditure sheet with the lenders before they deicde whether to accept this.
Steve Banner says
Ok fair.so my main Q is… given my circumstances. What is a reasonable % offer to propose for settlement?
( based on your experience and knowledge).
They obviously can accept or reject. But what is a reasonable offer to table?
Sara (Debt Camel) says
I don’t know what your circumstances are – would an I&E show you can only afford what you are paying now?
There isn’t a simple answer such as 70% after 2 years, 60% after 3 years etc. It all depends on the facts of your case.
Pete says
Hi Sara,
Thank you for your hard work and time put aside to create this website.
Myself and family are looking to support my mom with outstanding credit cards debts and one CCJ through full and final payment. My mom is 68, has equity in her home, has been making token payments with all for some 15 years and took out the debts between 1998 – 2006. There are 24 credit card debts totalling £50,000, none of the debts are with the original lender, most debts have been sold twice over.
We want to pay F&F and have been advised by National Debt Line to pay/offer pro rota and fairly. We appreciate not all will accept an offer but the aim is to reduce the debt by as much as possible. If some accept an agreed amount at say 50% and we pay them off, would it then be fair to offer the remaining an increased offer or, would this be seen as treating those who initially accepted 50% unfairly?
Thank you for any advice offered.
Sara (Debt Camel) says
Have you looked at asking the debt collectors to produce the consumer credit act agreement? If they can’t the debt is unenforceable in court and she can simply stop paying. You can do this for all credit cards debts unless there is a CCJ.
pete says
Hi Sara,
Thank you for the quick reply.
We haven’t, we’ve generally been advised by Citizens Advice Bureau to pay the £1 token payment under all circumstances. This has been the position for previous 15 years and has been fairly smooth process in all – at not a great cost (apart from stress). This approach worked for us until now.
However, my mom has now had enough of the burden of debt over so many years and would like to be rid of them. My dad passed away recently and my mom wants to move closer to her brother in Norwich, hence the attempt to pay the debts off, sell the house and help my mom get to Norwich. This may help with the motivation to my original question of negotiating a full and final settlement – ‘If some cards accept an agreed amount at say 50% and we pay them off, would it then be fair to offer the remaining an increased offer or, would this be seen as treating those who initially accepted 50% unfairly’?
I don’t think my mom after all these years would be brave enough to simply stop paying. If a CCA can’t be produced, could this be a position to negotiate a better deal for F&F settlement, or is this not a good idea? If my mom did simply stop paying and sold the house, if a CCA is later produced at court, is there a risk my mom could be asked to pay back the full amount having been in receipt of house sale proceeds?
Sorry three question in one reply there, appreciate the help.
Thank you
Sara (Debt Camel) says
Will the money to make the settlements be coming initially from you? Or does your mum have it in her savings?
Peter says
It will come from me.
Sara (Debt Camel) says
In that case there is no real need to worry about being fair to all the creditors. You could Offer her the money to clear just one of them and the others have no real reason to object.
Your mum’s letter needs to say “I am 68 and can’t afford to increase the payments I am making to my debts. This has been increasingly worrying me since my husband died in [january]. My son has offered me some money if it will help clear the debts.” Do not mention selling the house or wanting to move.
I suggest you offer 20%. These are very old debts.
Peter says
Thank you Sara,
Would you request a copy of the CCA at the same time, could this be a position to negotiate a better deal for F&F settlement, or is this not a good idea?
These debts have been sold 2, 3 or 4 times over in some cases.
Thanks
Sara (Debt Camel) says
Asking for the CCA only helps if your mum is prepared to stop paying. You may think a creditor will accept a lower amount if there is no CCA but they know that if they simply refuse many people will just carry on paying….
So I wouldn’t bother if you are happy to settle at 20%. If a credit for refuses, then think about asking for the CCA but only if you can support your mum through paying nothing.
Pete says
Thank you for guidance Sara, very helpful and really appreciated.
Oliver says
I’ve got 3 PRA credit card debts. The CCAs are all there and look to be ok. Total £25.5k my parents have offered up to £10k one off if it clears them so about 40%. I haven’t made payments since 2021 since Covid wrecked my finances which I told PRA all about and prior to that they only had 10-25 a month from me for about 2 years, so I think they should be willing to accept something low – what do you think?
I am keen to settle before they start any court action, as I have to answer a LBC for 2 of them, just option C requesting more detail for now.
Sara (Debt Camel) says
This depends on what you can afford to pay a month. Do you have any spare income?
Oliver says
Nothing meaningful spare, just token payment amounts.
Sara (Debt Camel) says
Are these your only debts? No loans, overdrafts, car finance…
Are you renting? private or social?
Oliver says
Renting privately. Yes these are my only debts, taken out nothing since these defaulted
Sara (Debt Camel) says
have you considers a Debt Relief Order as an alternative to making settlement offers? Then your parents money could be used to help you if you need it over the next few years.
Talk to National Debtline on 0808 808 4000 about this. If they think a settlement offer is better, they can help you get an Income & Expenditure sheet you can show to PRA that will help any offer by proving you cannot make any realistic payment to these debts.
pete says
Hi Sara,
You’ve previously provided me some advice on my moms debt situation thank you, see above thread June 10, 2024 at 6:27 pm and following messages for background.
We’ve be working through making offers with some success and paid some creditors off already, money has come from as a gift from myself.
We’re currently negotiating with the largest creditor’s debt handler – Cabots Financial. We’ve been informed, if an offer is accepted, the account will be closed and no further liability. However, as the debt will not be paid to the full amount, the Credit Agency’s will be informed and they will likely record it as a partial settlement only. Cabots have informed me this is not something they can control and down to how Credit Agency process of recording.
Would you know how this this affect us, is this something to be concerned about?
I’ve always been advised not to accept partial settlement but wasn’t sure whether this applies to credit agency also?
Sara (Debt Camel) says
I’ve always been advised not to accept partial settlement
Who said this?
A partial settlement is what you are proposing. It is very unlikely that Cabots will agree to report this is a full settlement, there is no reason why they should.
It won’t affect your credit score, se https://debtcamel.co.uk/ff-credit-record/
Cassie says
Hello
I have a debt within a DMP.
It was with Natwest but now it is with Wescott Credit services who on their website say the only manage the recovery of the loan they don’t own it. And they haven’t purchased it. It’s currently 4189 so I was going to offer something from my birthday money to get it down.
Can I still offer a settlement off or will this reflect badly from Natwest and effect my mortgage?
Sara (Debt Camel) says
how old is this default?
Clare says
I have 4 x Charging Orders (Restriction Ks?) in my name against a house owned on a joint mortgage. None of these now show on my credit file as they date from between 2013 – 2018. I haven’t been paying anything for years as we couldn’t afford to. We had mortgage arrears and other things going on. I’ve tried to remortgage but was declined due to affordability. So we are staying out and on a terrible mortgage rate so they have no hope of getting their money anytime soon.
Debts range from £7000 to 3300 across the four.
If I can get £1500 from my parents is it worth a try doing a F&F? If so for how much? I was thinking of saying I’ve been turned down for a mortgage so can’t move and don’t have enough income to pay them off so this is the best chance and if they don’t accept I’ll offer it to someone else? What kind of % might work? One of them did offer me a F&F but I wasn’t in a position to accept. I should add I suspect one of not two could probably be challenged on affordability because one of Vanquis and they kept increasing the limit despite us having mortgage arrears etc.
Sara (Debt Camel) says
do you have any equity in the house?
Clare says
Yes more than enough to pay these off