Full & Final Settlement

[smr]

Hi
Can anyone tell me - are creditors open to offers of full and final settlements of debts owing without going down the IVA route? If so, is this legally binding or can they come after you later on down the line for the balance assuming they agree to a discounted settlement figure?
Sharon

[Andrew Graveson]

Hi Sharon,

Depending on the circumstances they can be very open to such offers or make them themselves to their clients.

In practice you would not pay the amount requested until you have it on paper from them that they will accept this in full and final settlement.

Secondly you could mark the cheque posted in payment with the account number and that the fact that the cheque is provided in "full an final settlement" of the account.

If this were done I cannot see how they could later request further payment.

Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[Oliver]

Yes they are. These arrangements are often more suited to people who have a lower number of creditors as those with a large number often can find it hard to get agreement from all parties whereas an IVA is legally binding on all creditors if accepted by 75% of the lenders pro rata to the debt held.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[smr]

Hi
Should I write to them with a suggested sum or should I ask them for a settlement figure ?
Sharon

[Andrew Graveson]

Hi Sharon,

If you are sure that this is the right way forwards....

After you have settled on the amount that you are prepared/able to offer to all of your creditors as a whole you could write to them with an offer.

On the letter demonstrate that you are being fair to all creditors by offering them an amount that is fair, pro rata, to the amount of debt for each account.

Set a deadline for response before the offer will be withdrawn. These situations can take some time to resolve so adding a little extra momentum to the process will do you no harm.

Have a "Plan B". Do you know what you will do if some of your creditors say no?


Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[smr]

Hi Andrew
If some of them say no - then I'll continue to pay them the amount they have agreed to currently. I have informal arrangements with all of them at the moment, however based upon the values will take me a lifetime to pay off. We are trying to sell our property and should have enough equity to be able to clear debts up to a certain value. After that we are downsizing to a more affordable mortgage level - assuming we get one !
Sharon

[Andrew Graveson]

Hi Sharon,

I'd suggest you add the information about the monthly amount that you are paying to them today to your letter, and state how long payment in full will take. This will contrast sharply to a significant offer that's available today from you.

Your new mortgage application could be helped by F&F settlements with some or all of your creditors.

Lenders are interested in whether the mortgage is affordable for you. If you have cleared some unsecured credit commitments any new mortgage will be more affordable in the lenders view.

Good luck with all of this.

Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk