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
First – do you have any better options?
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, think if you have any better options first. Here are four possibilities:
- 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.
- 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.
- If you have been making very low payments for a lot of years, not just a few, AND the debt is a loan, credit card or catalogue that has been sold to a debt collector, read When and Why to ask for the CCA agreement for a debt. That may mean you don’t have to offer any money at all.
- Was the debt never affordable? Or was your credit limit set too high? Look whether you may be able to get affordability refunds.
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 als0 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.
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. Here is a reader asking about his case, and my reply.
In this situation, the best thing is usually to set up a Debt Management Plan(DMP) or making £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 weren’t kidding and that you really do have difficulties.
It is also often much easier to get a F&F offer accepted after your debt has been sold to a debt collector, so that can actually be good news when it happens.
It’s not high enough
This partly depends on how long you have been making no or reduced payments – the longer 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 others 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 a PPI refund or redundancy pay – 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 can show you have negative equity, many secured lenders or creditors who have got a charge on your house will usually reject an offer.
Conclusion
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; or
- waiting a while then repeating your offer.
But don’t forget that a settlement may not be your best solution, so check out the other possibilities.
Could you really stop using a credit card?
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.