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 be thinking “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 10%” 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.
So if 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, and then use that to decide what to do next.
Your creditor thinks you can afford to pay more each month
If you enclose an Income & Expenditure statement with a F&F offer, the creditor can see your full situation. This calculator has an option to print off a version to send to your creditors. If your health is poor, you should 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 JSA / ESA / 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. And if you have only missed a few months 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 (which may involve only making £1 a month token payments) and revisiting the idea of a F&F offer in six months or a year. At that point your creditor will have realised that you weren’t kidding and that you really do have difficulties. It is also often easier to get a F&F offer accepted after the original creditor has sold the debt to a debt collector , so that’s not the “bad news” you might think it is.
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. It also depends on how large your monthly payments are – if the full debt will be repaid in 3 or 4 years, then your creditor isn’t likely to accept a 20% F&F.
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%. Of course it would have been better to sort out all your debts, but clearing some of them out of the way will mean the remaining ones are faster to repay.
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 reclaimed PPI or it is redundancy pay – then explain this in your F&F letter, so your creditor will realise that they may as well accept as there isn’t going to be any more on offer. If the money is a gift from a relative you could say “I am being offered this money by my brother if it will assist in securing a settlement of my debts”.
(NB If you have been made redundant and are going to find it difficult to get another job, then think about your essential bills – mortgage, food, utilites etc – before using your redundancy money to clear unsecured debts.)
They know you have assets
If you owe a lot of money to a creditor, specially if the creditor is your bank, then they may have decided to look into your finances in some detail and realise that you own a house with a lot of equity in it. 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 very rare for a creditor to accept a partial settlement on a secured loan. Even if you can demonstrate that you have negative equity, most secured lenders or creditors who have got a charge on your house will usually reject an offer.
Summary
Your 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.
How a F&F affects your credit record
How PPI can get you out of debt!
Can you get a mortgage if you are in a DMP?
David says
Hello,
I am currently in the process of negotiating a F&F settlement on a group of loans I currently have (no payments missed yet but I am out of work and about to miss my next payment). I have two questions;
1) Does the magnitude of the settlement or of the loan size impact your credit score (e.g. settling 25% vs 50% of the loans, also is there a difference in writing down 20k vs say 40k of a loan)
2)I worked in Finance and hope to get back into finance, will future employers be able to see this on my credit report? If so what will they see?
Thanks in advance!
Sara (Debt Camel) says
Hi David, I think you may be being a bit premature with this. Your creditors are very unlikely to accept a full & final settlement if you haven’t yet missed a payment. See https://debtcamel.co.uk/full-final-settlement-rejected/
David says
Ok thank you I’ll ask my advisor about this.
Regarding impact on credit scores above, is there a varying not impact?
Sara (Debt Camel) says
AFAIK your creditors cant see what your final settlement payment was, they just see the balance is now zero and the debt is marked as partially settled/partially satisfied.
Shoaib says
Hi Sara, reading your comments to individuals’ specific issues have helped me a lot in managing my own debt situation. I have a question about full and final offers:
– I entered into a DMP in Jan 2012 with seven of my creditors, with defaults registered by each of these creditors or or around June 2012. I understand the defaults will disappear on or around June 2018, being six years from the date of default. I still owe £30k to my creditors and therefore have a long way to go to complete DMP as I currently pay only £100 a month. I am also slowly saving some money each month to be able to make a F&F payment to each of my creditor some time in the future. Could you please advise me whether I should make F&F offer either before June 2018 or after ie does it make any difference to my credit file when I reach a F&F settlement with my creditors?
Sara (Debt Camel) says
It doesn’t make any difference when you make these offers. To the creditor it is irrelevant if they are on your credit record or not – the debt will never be statute barred as you are making payments. For you, if the offer is before the 6 year point, they will still drop off your credit record at 6 years; and if it is after, they will not reappear.
I hope you have considered alternatives such as insolvency, because these long term DMPs looking for partial settlements may not work well if a creditor goes for a CCJ.
Helen says
Debt camel,
I have £5,859 on credit card and been paying £1 a month for nigh on 3 years which I arranged with them myself due to no money. I am not registered anywhere and havnt been for the last two years as no home. I am now working but use this money on accommodation to survive aswell as staying at friends houses. How much would I need to offer aFull and Final settlement on this debt. I struggle everyday having this hanging over my head.
Sara (Debt Camel) says
There isn’t a set figure. After 3 years they may accept 15 or 20% if you supply an income & expenditure sheet.
But I’m not sure this sounds possible for you? And wouldn’t it be better to use this money for a deposit for somewhere to live? I think it might be a good idea to go to your local Citizens Advice and talk not just about this debt but about housing and benefit options.
If you can’t afford / they won’t accept a f&f then have a look at a debt relief order for the debt, see https://debtcamel.co.uk/debt-options/guide-to-debt-relief-orders/. CAB can arrange one for you if necessary.
Zad says
Hello there,
I had an account with Three mobile provider Due to non payments they have defaulted my account,
I offered them that I can pay the outstanding amount in full if they can take the default off , They says they wont but can change it to Settled instead of default.
Can you please guide me that how good or bad is a”Settled” account and how will it effect on my rating ?
Thanks a lot.
Sara (Debt Camel) says
A settled default is better than an outstanding one – your credit rating will start to improve slowly from this point but it’s not going to get to Good until the default disappears 6 years after the default date.It’s not worth borrowing the money to make this settlement. If all you can afford is too pay it off in 6 monthly installments, then offer that.
However, the main reason to want to settle the account is that if you don’t there is the chance that the debt will go to a debt collector who may go for a CCJ. See https://debtcamel.co.uk/defaulted-account-credit-score/ for details.
ffshope says
Hi, I handed a car back in 2010 and there was a balance remaining after the sale of the vehicle. I made an offer of a £50 per month payment plan than I religiously stuck to, followed by increasing it over the years to £100 per month. I checked my credit file (with all 3 credit reference agencies) and I this vehicle is not on there at all, no trace. I checked last week and there is still nothing there. I have a very good credit rating, no defaults etc but what I want to know is, if I offer a full and final settlement can they then create a credit file item and state it wasn’t settled in full? Last thing I need is something new appearing now and then stating it is partially settled as it wouldn’t be worth me doing it.
advice welcome please asap as I contemplating partially settling or just leaving the payments running.
Sara (Debt Camel) says
It would be unusual for a record to be added this late. If it was, then the default date on should be back in 2010, not now … so it would disappear from your credit record 6 years after the default date.
You don’t say what the remaining balance is, but if you are currently paying off 3100 a month, they may not be prepared to accept a low offer to settle.
Anita says
Hi, could you please give me some advice? I have started the process of offering my creditors full and final settlement offers. I have been in a debt management plan for 3 years with pay plan and paid £100 per month to the plan. However, due to a change in circumstances which has seen a decrease in my income I now see myself unable to continue with my payments to the plan. I have contacted each creditor with my pro rota offers,explanation of my change in circumstances, advising that my lump sum and the figure gifted has been given to me from a family member and included an income and expenditure sheet showing no further money available to pay my creditors. None of my creditors have accepted my offers so I am now in the process of making counter offers in the hope of reaching a final settlement. My concern and enquiry relates two things – my current credit file with experian and noodle which does not show every creditor on my debt management plan – non of which are over 6 years old, most are 3-4 years old, so I wonder why this could be. Secondly what should I do if my creditors refuse my counter offers, when they can see I have no means to make any further payments to them. My home is in negative equity and I have no savings etc.
Please can you advise me as I am worried sick.
Kind regards
Anita
Sara (Debt Camel) says
Hi Anita, have you checked all three credit reference agencies? See https://debtcamel.co.uk/experian-or-equifax-which-is-best/
What do Payplan say is your best option if the F&F offers are refused? they are in a better position to consider the alternatives as they know all about your situation.
Anita says
Pay plan have not offered to help me TBH as the amount I am offering to my creditors in full and final settlement is £4,000 to be pro rota amounts 12 creditors total debt £15,000. Pay plans settlement team will not act on my behalf as they like to make offers of 80%. I have therefore wrote to them all myself.
I have enrolled with Noodle and Experian for credit referencing. Just confused why not all debts are reported?
On another note I I have just been reading your blogs on affordable lending 10 of my debts in my
Current DMP are to pay day loan companies, which we had to use when my husbands business failed during the resession. We lived off them month by month during theses difficult years and when I was discharged from my bankruptcy, as pay day loans were the only way we could survive. I hate that we still have debts after all we have been through. I just want to get my debts clear and put our mortgage back on repayment at a rate that is affordable also.
Thanks again
Sara (Debt Camel) says
There are three credit reference agencies and lenders can choose who to report to. This article goes into more detail: https://debtcamel.co.uk/debt-not-on-my-credit-file/
My reference to Payplan was in answer to your question about what you do if the creditors all refuse your F&Fs. Payplan know more about your circumstances and should be able to talk through your options such as token payments to your debts or bankruptcy (if your house has negative equity it can sometimes be possible to keep the house.)
If you have debts to 10 payday lenders though, I think you should be looking at whether you could make “affordability complaints” to the lenders. Repeat borrowing from the same lender may well mean you have a good case – and if bankruptcy was still showing on your credit file that would also support your complaint. If a complaint succeeds, your current balances may be written off/reduced and any refund could be used to settle other debts. That would mean the money from your relative could give a higher offer to your other creditors. It takes time to make these complaints, so a token payment DMP (https://debtcamel.co.uk/token-payment-debt/) may be your best option whilst you are complaining.
Fiona says
Lowell have just refused a full and final offer of 450 on a debt ccj of 817.
I’ve not made one payment.
Please advise.
Sara (Debt Camel) says
It’s possible for a F&F to be accepted on a CCJ but it isn’t common. I am afraid you will probably have to start making monthly payments to this CCJ. If you can’t afford the monthly payments the court has set, talk to National Debtline 0808 808 4000 they will help you look at your income & expenditure and explain how to vary the court order if necessary.
Pete says
I have a total debt of 160k over 20 creditors, all went to default and most are held with debt agencies. I have been paying regularly for 8 years a total of 370 a month ranging from 5 to 40. I have managed to borrow money from family to offer them all 20% what do you think the chances are of them accepting this? Am I wasting my time?
Sara (Debt Camel) says
It’s certainly worth a try, even if you can only get a few settled it’s a step in the right direction. With that much debt though if it doesn’t work some form of formal insolvency (bankruptcy or an IVA) is usually best.
Diane says
Hello Sara,
Up until recently, I had a DMP with PayPlan. This has been running for over 4 years. PayPlan announced out of the blue that the DMP was no longer viable, and they would not be working for me any more. I was made redundant in 2012 and have not found work since. (due to my age I suspect, and that there is very little work available where I live). Therefore, my DMP payment was only £5 per month, which PayPlan divided between my (4) creditors. My overall debt was £6500. A relative offered me £2000 to help pay off the debts. I wrote to all 4 creditors, offering them a full and final settlement. I looked online to see how to go about this, and divided up the offers on a pro rata basis. 2 of the creditors have accepted my offers, and 2 have not. The 2 that accepted were no trouble (bar a bit of haggling!), and have been paid. The other 2, wrote and asked to have an income and expenditure statement. I sent them both a copy of the last statement that PayPlan prepared. They have now written back and refused my offer, saying that they want me to continue making a token payment for another 6 months, when they will review my financial situation. What should I do? Do I write/phone them and ask them to reconsider? In 6 months time, I’ll be 6 months older, and stand even less chance of finding work! The amounts they are owed is very small. If I pay them back at £1 per month, I’ll be long dead before the debt is paid! This situation is just silly, surely they realise it would be more sensible to accept my offer? The cost to them to administer these debts will be far more than they are receiving from me!
Sara (Debt Camel) says
I suggest you make token payments for another 6 months and then repeat your offer.
Mark says
Some advise please. I have been in a payment plan with barclaycard for 4 years paying down a credit card that was in arrears from my failed business. Without me realising( complete oversight) I had 4 missed payments earlier this year. This had never happened in the 4 years since I entered the agreement. The debt was originallly 10k but is currently at 4.5k This only came to light when a company callled Link Financial sent me a letter that they were now in control of the debt…..barclaycard had sold it on to them( barclaycard had not updated my new phone number from the previous communication and had not sent me any emails to alert me that payment wasn’t being made). I am now showing late payments on my credit file which I am asking to be removed due to the reasons above. At the same time I’m asking link to settle with me as a full and final payment as I think I can borrow some money to pay this off( around 2k). It’s causing me a lot of stress so any advise would be much appreciated?
Sara (Debt Camel) says
If the debt repayment was being taken by direct debit and barclaycard stopped AND you had given them a new phone number and they have your correct address, then you would normally have a good case for late payment markers to be removed.
BUT in this case I am wondering why the debt wasn’t marked as defaulted 4 years ago? If you are asking them to “correct” your credit record, this may well be the result.
Interest is presumably frozen on this debt, so it only makes sense to borrow money if you can get a pretty significant discount such as 50% in a full and final.
Mark says
Because the account was in theory frozen and not being used they never bothered to update my new address which I moved to over 2 years ago. I called them to update my phone number but that hadn’t been added to the account it turns out. My credit account is showing missed payments( which they are saying is not marked as a default)? But the debt now also shows as Link Financial and not Barclaycsrd. I’m confused by it all now…..With your comment do you feel that they will not agree to settle with me then??
Sara (Debt Camel) says
No, they may well accept a F&F, I am just saying that it has to be a low one – if they offer something like 80% it’s not worth borrowing money and paying interest for.
Mark says
I offered then £2300 and they have refused saying they want the full balance. Can I assume it’s not worth taking further?
Ian todd says
Hi. After missing some payments on my car, it has gone to a different do finance company. I owe £10,000 but the value of the car is £8,400. They want full payment or are going to repossess it and sell it at auction. I will then have to repay the shortfall. My dad is willing to lend me £8000. Will they accept it as full and final payment?
Sara (Debt Camel) says
Hi Ian, it’s often impossible to say whether a F&F on a secured debt will be accepted. Can I suggest you discuss your situation with National Debtline 0808 808 4000. There are several different types of car finance around – it will hep if you have the finance documentation and any recent letters emails to hand when you phone ND. They can help you look at what your options are.
jamie says
Hi. I am 27 have been stupid with money when younger and I have 5 credit cards totalling £14,000 and a default for £707 with Lowell (From a provident loan) which has a default date of Oct 2012. I have moved into my partners house and am starting to pay off my debts and with hard work can be debt free in 2 years as I want to get a house by the time I’m 30 with my partner.. I want to pay off the Lowell debt as I don’t want a ccj….does it matter if I make a full payment or a full and final settlement payment…I have been offered 50% from their last letter, should I take this or pay in full? And will this fall off in Oct 2018 for sure if I make the payment?
Many thanks
Sara (Debt Camel) says
The lowell debt will disappear in Oct 18 whether you pay it in full, partially or ignore it… but ignoring it risks a CCJ. If they have offered 50% then there is no downside to doing this, because the debt will be gone from your credit record by the time you apply for a mortgage.
Jamie says
Thank you, much appreciated. One more quick question, my overdraft is 2,800 with a charge of £1 per day under 2000, and £2 a day over this. Is it better to pay off overdraft and then credit cards ? Thank you
Sara (Debt Camel) says
If you are going to be paying them all off so its just a question of the order, then it depends on the interest rates on the cards and the overdraft. £2 a day on a blanace of £2500 is about 15% – are your credit cards more or less expensive than this?
R says
Hello,
I’m hoping to get some advice and clarity please.
I have £18000 debt spread over 4 debt collection agencies (all of which with the same bank however). I have made a pro rata offer to all 4 offering 33% of each debt. I have 1 company come back to say they would accept 40%. I am still waiting to hear from the other 3. Thing is, at this point, I don’t have the extra money and it has taken me 3 yrs to get to this stage. Over the past 5 yrs I’ve been living abroad so have had little or no contact with the agencies. I haven’t made any offers of payment in the past. Not even the £1 a month. Currently I am unemployed and I have gone into great detail explaining this. For them to ask for extra seems totally ridiculous after my in depth description of my situation. I also told them that I have no plan of rrturning to the UK and that this offer of f&f was becuase morally it’s the right thing to do.
But, at the same time I totally understand that they are a business. Should I reply now and stick to my guns (I can’t raise any more money just now)? Or do I wait to see what the others say? Maybe if others refuse, just payback a couple of debts just now and the others later? Or should I stick to my guns with all 4?
Really appreciate any inside knowledge/advice you may have. Being outside the UK with UK debt has made it very difficult for me to get the advice I’m after. The advice I’m going on up to this point had been from Internet research.
Thanks so much
R
Sara (Debt Camel) says
If you are unemployed, I suggest you shouldn’t be offering any money at all until your future earnings are more clear. You may need this money to live on if things don’t go well. I suggest you reply saying that you are withdrawing the offer and will reconsider your situation when you are back in employment.
R says
Yes, I see where you are coming from. However these savings I have, have always been for these debts. I have retained 2 months living expenses and I have been in touch with job seekers allowance. They have said that while those savings are in my account, I will not be eligible for benefits.
I really feel this is a great time for me to make those offers.
I have some good news, I just recieved an email to say 1 of the debts has been written off due to its age. Can’t believe it!
The other question I had for you was regarding a loan from the Bank of Scotland. They are now handling the recovery of the funds and have told me they won’t drop below 65%. Well, 1st it was 75% then they dropped ir to 65%.
They have also told me that the will not correspond with me via email as it’s not secure…? So the only way is over the phone or post. Post will take weeks maybe even months as where I am, the post is once a wk only. Are they being unreasonable with the 65% and no email correspondence?
I have written a letter explaining everything as well as done a financial statement for them. You might find this funny. They also told me that they would not be able to accept a payment from abroad as they’re international account is “not working” so what I would need to do is send it back to the UK to a family member (which I don’t have in the UK) and for them to then pay it for me. Sounds like mumbo jumbo to me. Lol
Thank you again for your quick response and your advice. It is very much so appreciated.
R
Sara (Debt Camel) says
I don’t understand how you can claim JSA if you are out of the country. If you mean the JSA equivalent wherever you are, I can’t say anything about that. If it was JSA, then a) you can have up to 16k in your account and still claim JSA and b) there can be problems with a claim if you reduce your capital like this to get under the limit, you would need detailed benefits advice before doing this.
R says
Oh yes, it is JSA where I am, not the UK. Thanks for your help. I will definitely go get more detailed benefit advice.
Regards
:)
Gina says
Hi, I have a CCJ on my credit for £5800 with 5years left to go and I want to pay it off. do you think the company would accept a 50% as full and final settlement? I have not made any payment before and have never contacted them since the CCJ. I am currently pregnant and a mother of one I cannot commit to any payment plan, because I do not have a steady income and due to financial issues, I am planning to live UK after having my baby.
Sara (Debt Camel) says
Is the money coming from you or from a relative / friend? Are you sure it wouldn’t be better to leave the UK, get settled and then see if you have money left over to offer to this?
Caz says
Hi. I am currently on a DMP and have been for the last 6 years. My debt still owing is 7500 between 4 creditors. My last statement said it would take another 9 years to pay this back! I’m paying & 100 a month between them. If I was to make a F&F, realistically, how much do you think they will accept to clear them with me being on the DMP for so long already?
Sara (Debt Camel) says
It’s really hard to say – you aren’t making just token payments so they probably won’t take a very low offer. You could start by offering 25% perhaps?
Would it be realistic for you to pay more each month?
I guess you are using a commercial debt management company that charges you fees. If you were to switch to Stepchange, all your £100 would go to your creditors so the debt would be gone in a bit over 6 years…
Blondiiee says
Hi
I have various credit card and loan debts, all are over 6 years old and no longer showing on my credit file and all being paid by a token amount of at least £5 per month.
There are however 3 that the lenders placed with solicitors or dca and charges were raised against our property that total about £35k.
We are in a position to offer them 30% as full and final settlement…… are they likely to reject just on the basis that there is a charge against a property.
Sara (Debt Camel) says
They may well reject them I am afraid. But it’s worth a try. If they do reject, use that money to partially settle the other debts.
S says
I have been on a DMP for 6 years – the last 18 months with PayPlan we owe £20k and have been paying £598 a month. At this rate the DMP will be finished in December 2019. We went on a DMP after my husband couldn’t work owing to ill health and now I have lost my job. Of our 10 creditors, 7 are with Paragon and total £18k. Do you think Paragon will accept an F&F of £9k versus their monthly payment of £530 a month. I’m not sure when I will find regular work but am temping so want to reduce outgoings.
Sara (Debt Camel) says
Is this 9k from a redundancy pay out? Are you renting or do you have a mortgage?
S says
Redundancy payment
Sara (Debt Camel) says
I think you should talk to Payplan and get your DMP payments reduced to an affordable level given your current circumstances. Then wait a few months and see if you find a new job or not – you may need that redundancy mone for everyday living! Also if your creditors have been getting lower payments for 6 months they may be more likely to accept a full and final settlement.
S says
Ok, thank you
kate says
Hi, I have a charging order on my property via MBNA, from when I had a mental health break down and lost my job in 2012. The debt is just under £9,000 (according to my credit report I defaulted in Jan 2012). I also have several other debts from credit cards and arrears on my mortgage. (all from the same time period) I am paying £1 a month to two of the creditors (including mbna) for some reason I haven’t heard anything from one of my debtors (Barclays bank £2843) they didn’t reply to the token offer which was done two years ago and I haven’t received any communication with them. My parents are willing to lend me some money if it will clear any of my debts. My MBNA is my largest one, are they likely to accept a full and final offer if there’s a charging order, or would I be better paying off my mortgage arrears, or seeing if I can get a F & F on my Barclays credit card (£4935\0 Thank you in advance
Sara (Debt Camel) says
Hi Kate, that is a pretty complicated situation there. I think you should talk it through in detail with a debt advisor. You could go to your local Citizens Advice or ring National Debtline. They will want a full list of your debts and also go through an income & expenditure sheet with you as this can affect what sort of F&F offer is acceptable.
Rob says
Hi Sara, I have 5 creditors which all defaulted in the first 6 months of 2012.
Here is the info below. I am planning on sending full and final settlement letters to hopefully partially settle them all with savings kindly offered by my parents. It’s been a tough give years in which I have been paying roughly £1 – £5 each. I only explained my circumstances to my parents a few months ago. My defaults should be dropping off my credit file by the end of next summer. I am with Payplan but the settlement team wanted me to enter an IVA – which I refuse to do!
1) Balance owed – £1,763 Offering – £540 (30% of balance)
2) Balance owed – £2,398 Offering – £720 (30% of balance)
3) Balance owed – £3,823 Offering £1530 (40% of balance)
4) Balance owed – £7,984 Offering £3195 (40% of balance)
5) Balance owed – £8,681 Offering £5210 (60% of balance)
Do you think my chances are low?
Sara (Debt Camel) says
Hi Rob,
what nice parents :)
Why aren’t you planning on offering them all the same % ? Then you can write the same letter to all, lisiting your creditors & what you are offering. that way they know you are playing fair.
Is £1-£5 all you can really afford? If it is, enclose a new income & expenditure sheet with your offer. And ask your parents for a letter / email you can also enclose. showing the money is coming from them, not your secret stash!
If you can only afford that much , after all this time it may well be that 30% is acceptable to all of them :)
Rob says
Hi Sara,
Thanks for your quick response!
From doing a little research, the one I am offering 60% to apparently don’t normally accept any less than 100% of the balance owed. The reason I have offered two at 30% each is because they sent letters last year offering a 70% reduction on each balance. I have just divided accordingly to hopefully spread the amount with more to the larger balances.
I paid £1 a month to each creditor for 2 years or so and it’s more like £5-£10 per month each again now.
Another grey area is this… If I settle on year 5 of 6 from the date of default will these balances and settled dates and values vanish on the 6th year anniversary of default? Funny enough ***plan have said this is incorrect and I will have to wait 6 years from the partial settlement/full settlement date. Again looking for a large fee from a possible IVA if they fool me into believing this is the only option for me!
Sara (Debt Camel) says
Assuming your research is based on what people say on the internet, this can’t be relied on (I do appreciate the irony of the fact I am another person on the internet!)
Debt collectors are MORE likely to accept an offer if it is clear that you are offering the same percentage to all your debts. Offer them all 30% and see what happens!
Whoever you spoke to at Payplan was wrong about your credit record. Those debts are going to drop off 6 years from the default date whatever you do – pay the debts in full, partially, carry on with low payments or (foolishly) stop paying them.
Rob says
Thanks Sara. I will give it a whirl! Have a great weekend :-)
Lucia Cook says
Payplan told me the same about defaults reappearing if you do partial settlement! I told him he was wrong and he said well I must have the wrong info. Laughable! He also told me 30% won’t be accepted and to do 70%! Erm, no, I’ll try my luck.
Jane Clack says
Hello, it is absolutely true that the default will fall off your credit file 6 years after the date it was put on.
I think they may be able to put partial settlement on when you do that but to use this as a reason to look at an IVA is nonsensical. An IVA will sit on your credit file for 6 years from the date it starts so going for a full and final settlement seems an obvious choice to me as a Payplan adviser as even if it is partial settlement the debt is cleared and you do not have the worry of circumstances changing and an IVA risking failure.
Jane Clack says
Incidentally, I know a man who will be able to give me a definitive answer on whether any new status of partial settlement will sit for 6 years – I shall be grabbing him at the bar :)
Rob says
Hi Jane, thanks for your response. Interesting to hear that you are a payplan adviser and confirming the opposite. The thought of another 11 years with a black mark against my name is ridiculous. Cheers, Rob.
Jane Clack says
The partial settlement will be linked to the default so will fall off at the same time so go for it! I checked with the man at the bar who works for Experian.
Lucia says
Hi Sara, Payplan have arranged to send out our offers based on 30%. We owe around £32k. We’ve been in the DMP for 10 years and all defaults have dropped off our reports.
Most creditors have come back with a counter offer of 70-90%. Payplan seem to be suggesting we settle on these amounts! Would it be worth me writing back to them all stating that we can at the very most go up to 40%?
Rob says
Hi Lucia,
I’m no adviser but from experience with payplan they always suggest offering 80%. As I have found out this week – DMAs will accept as low as 30% of the outstanding debt so it seems crazy to pay more. I expect payplan receive a small amount when they encourage you to pay more..
Rob
Rob says
Hi Sara,
This week has been good and then it went bad :-(
Cabot accepted a reduction of 70% on my debt. I have paid this off today and it felt great :-)
I have since heard from PRA group who will only offer 10% reduction as their counter offer. Better than nothing!
This is where it goes downhill… Lowell Financial have told me that both debts actually didn’t default five years ago… Help??? I owe them about 12K between the two accounts sold to Lowell. My biggest fear is I was 100% sure that they had defaulted and I don’t have 12K to settle, The lady on the phone said because the accounts didn’t actually default I need to pay 100% but on the plus side this would mean I had a ‘Settled Nil balance’ showing on my credit report for two separate accounts. Surely this would mean that I would then have to wait 6 years from this settlement date until those poorly managed debts vanish off my credit file for good :-( I’m hoping someone can tell me some good news now…
For some reason Experian’s system seems to be down this week and I can’t get an up to date credit report to check the default situation out.
Thanks in advance
Rob
Sara (Debt Camel) says
who was the original creditor for these non-defaulted debts and how old are they?
Rob says
Hi Sara, It was Creation Personal Finance. Both were sold to Lowell after so many months in 2012. It’s hard to see at the moment as I can’t get access to a pdf latest experian report.
I have DM marks against my credit file for 5 years. All my debts had payments lowered in January 2012. Most defaulted straight away or within a few months of each other.
My problem is now… Where do I go with the DM marks, can I ask for these to be changed? Backdated Defaults etc. Lowell were telling me it was a positive factor that I haven’t defaulted on both accounts.
Sara (Debt Camel) says
Ok you have a problem that sometimes happens with DMPs, see https://debtcamel.co.uk/dmp-end-will-credit-improve/.
You can go back and ask Creation to add a default date before they sold the debt to Lowell. If they do, Lowell will have to add the same default date. See https://debtcamel.co.uk/debt-default-date/ for details.
The reason I asked when the accounts were opened is that it may be worth asking Lowell to produce the Consumer Credt Act agreements for the debts. The older they are the harder this may be… pre 2007 accounts are especially difficult. If they can’t produce these, the debts cannot be enforced in court so you don’t need to pay them anything! See https://www.nationaldebtline.org/EW/sampleletters/Pages/Information-about-your-agreement-under-the-Consumer-Credit-Act-(sole-name).aspx.
T Broughton says
I have 2 debts owed to NatWest one for £7000 and one for £12000. Both are subject to charging orders. I currently pay £1 a month to each. I would like to pay both these off in a F&F settlement. This debt has been on going for a number of years. A member of family has offered to lend me some money to pay these two debts off if I can negotiate a payment to each account. I was thinking of offering 30% off each debt initially do you think this could be enough ?
Sara (Debt Camel) says
To get an offer like that accepted on debts with a charging order, you will probably need to supply an income & expenditure statement showing that you can’t afford to make reasonable monthly repayments.
Debbie says
Hi, I have been on a DMP for almost 11 years now. The company I’m with is called money plus who took over from churchwood financial who stopped trading. I have a total of nine debts totalling £19500.00 the largest being £15500.00 with cabot. £4000 of that amount was added on in 2010 as interest. the rest of between £1400 / £80 the lowest. some have already made me settlement offers which have been very good . I pay money plus £80 a month and they take half of that as their fee, at the rate I’m paying it will take me 40 years to pay off the debt.
my question is my parents have offer to give me some funds £8000 to pay all the debts off with a f&f settlement. the funds are not available yet but I’m in a panic about how much to offer , what to say, weather to do it by phone or write. I was going to approach cabot, first as this is the biggest and the one that worries me. there is a big chance I will be out of work at the end of the yer and ill health will make it hard for mr to get another job easy. I’m 51 years old and live with my parents. can you please advise .
many thanks Debbie
Sara (Debt Camel) says
My first thought is that if you are staying with your parents you probably don’t have any assets. In this case you would be much better off going bankrupt. You have done your best to repay your debts, they are impossibly large and you need a clean start. The money that your parents have offered would be better used to first pay your bankruptcy fees and then to help you with a deposit and to be able to pay say 6 months deposit up front you want to leave home and rent. Please don’t dismiss this option – bankruptcy is not nearly as scary as people think, it is now all done online, you don’t have to go to court, your name is not published in the newspapers, after 6 years your credit record is clean and you will be able to get a mortgage… read https://debtcamel.co.uk/debt-options/bankruptcy/ and have a cold, hard think about how to get you in the best place for the rest of your life.
If you don’t want to do that, then the second thing you should do is ask every creditor in your DMP to send you a copy of your Consumer Credit Act agreement. If they can’t do this, the debt is unenforceable in court. In this case you can simply stop paying or (less nerve-wracking!) offer them a very low F&F settlement – say 5% or £50 which ever is larger and point out that the debt is unenforceable and if they don’t accept this F&F offer you will be ceasing to pay them anything.
This may be sounding like dodgy advice from a dodgy internet site. It isn’t – here is the well-respected National Debtline page which explains about asking for CCA agreements and what happens if a creditor can’t find one. It has a template letter for you to do this. Note that you have to send a cheque for £1 with each request: https://www.nationaldebtline.org/EW/factsheets/Pages/getting-information/credit-agreement-advice.aspx.
With such old debts, there is a good chance that several will not be able to produce the CCAs. You are then left with making F&F offers to the rest. These offers should be in writing, they should say that you have been offered the money by your parents if it will let you settle your debts. After so long I suggest you should offer them 20% – most of them will probably be delighted to accept. Also mention in your letter that you have been in a DMP for 9 years, you are unable to increase your monthly payments and if the offer is not accepted you will be considering bankruptcy.
Debbie says
Thankyou Sara for your quick reply, it has certainly given me something to think about. I don’t want to go on the bankruptcy side of things but want to pay something to my creditors and now have a idea what offers to make and how to go about it, I have been trying to get hold of the original contract from the large cabot loan as I’m very ocd with paperwork and have no copy of the paperwork anywhere. money plus chased it for me but refuse to send me copies. the reason I asked is I questioned the amount of the loan and time it was taken out for. 80 months. I know I took out the loan but question figures ect. I just don’t seem to find anyone to send the info to me, this loan would now be 11 years old if not more.
Sara (Debt Camel) says
re the Cabot loan – you could ask Moneyplus for your account/reference number with Cabot. Or you could just phone Cabot and ask… https://www.cabotfinancial.co.uk/. Then you need to write the CCA request letter and send the £1 that I linked to.
You should do this with all your debts, even if you have a copy of the agreement yourself. If they can’t produce it, they will be MUCH more prepared to accept a low settlement.
Debbie Poyzer says
Thankyou again Sara,
do catalogues have a copy of a CCA as I cannot remember ever signing anything, is it worth sending letter to them also, as three of my creditors are catalogues. ?
Sara (Debt Camel) says
yes they should have a CCA otherwise the debt is unenforceable. Old catalogue accounts are some the most common ones where the debt collector can’t produce the agreement… well worth a try.