F&F Settlements

[SnoogyWoo]

Hi Guys,

Me and my partner have approx £50k debt between us on loans and credit cards. We defaulted about 2 years ago after my partner got breast cancer and we had just had enough struggling to be honest. Since then we have been on debt management paying about £400/month which has been affordable. At £400/month we are unlikely to ever pay it back but it keeps them off our backs. We recently had a letter though from one of the companies of which we owe £5.5k to offering us a F&F of £2.6k.

It got me thinking, what is the lowest percentage these companies take as a settlement? Do they all do it?

Reason I ask is that I could potentially raise a £15k-20k loan from my employers company interest fee and pay it back with the £400/month I currently pay to the DMC. If I could do a deal for 30-35% of the full amount then I could be debt free in 3 years ish.

What do you reckon?

[Ruby]

Re: F&F Settlements

Are you paying a fee to your DMC?

[SnoogyWoo]

Re: F&F Settlements

Yes, included in the £400 is about 10% to them.

[Ruby]

Re: F&F Settlements

Right - wrong answer!! How many companies do you (partner included) owe money to?

[SnoogyWoo]

Re: F&F Settlements

Haven't got a statement to hand but 10-12.

[FlamingParrot]

Re: F&F Settlements

Are the debts still with the original creditors or have they been sold to DCAs?

DCAs would normally have paid no more than 10% of the original amount, sometimes even less, so they are more likely to accept lower settlements. Ideally you should start much lower than what you'd like to end up offering.

As far as Debt Management Plans (DMPs) are concerned, you shouldn't be paying for that service when there are charities that do it for free and you can even do it yourself.

[SnoogyWoo]

Re: F&F Settlements

Are the debts still with the original creditors or have they been sold to DCAs?

DCAs would normally have paid no more than 10% of the original amount, sometimes even less, so they are more likely to accept lower settlements. Ideally you should start much lower than what you'd like to end up offering.

As far as Debt Management Plans (DMPs) are concerned, you shouldn't be paying for that service when there are charities that do it for free and you can even do it yourself.

Most of them are with DCAs now. I have a credit card with Tesco and still get the statement from them so I think that means I am still with them.

I know what you are saying about paying them but they have been great and at the time I could not have handled it with everything that was going on with my partner and other stuff.

[Ruby]

Re: F&F Settlements

Okay. Was in the same situation as you ten years ago.

Firstly the DMC are charging you £480 per year for something that you can do yourself and save that money. Any decent company that REALLY has your best interest at heart will not charge you money. You were mentally vulnerable (with your partner having cancer) and the DMC have preyed on that. Its time for you to start the new year as you mean to go on - stronger! I found it quite easy to actually contact each company and come to an arrangement directly. Whether it is a token payment per month or a reduced settlement figure it depends on each company you deal with. All companies in this day and age are up for a bit of haggling. If you can raise the money from your company then you are in a very strong position to potentially wipe out these loans directly with the companies involved this year and be debt free and save at least £480 x years.

For haggling purposes start at 20% of debt value. The worst they can say is no. I would put the offer in writing rather than by just phoning them with the offer. Please read as many threads as you can on this site to help you and keep us posted.

[SnoogyWoo]

Re: F&F Settlements

Awesome, thanks Ruby. I am currently trying to take charge of all aspects of my life and move forward! At least it sounds viable.

I guess I will talk with my company and see if I can have an amount as needed. I can then go to the companies and when any of them reply accepting I can get the money within a day. All this stress affects you mentally as you will know, if I get it sorted then I will be in a better place to be more effective at work.

[Bill-K]

Re: F&F Settlements

Hi SnoogyWoo and welcome to you. In addition to the above, it may be possible to reduce the debts if you were mis-sold Payment Protection Insurance on any of them. Have you checked for this ?

[SnoogyWoo]

Re: F&F Settlements

Hi Bill, yes I had no PPI on any of my loans/cards. I always resisted.

[labman]

Re: F&F Settlements

Agree with most of the above.

You should definitely change to a self managed DMP. NEDCAB is the best out there currently to help you through this process. Just Google it. Alternatively go with Payplan, Stepchange (formerly CCCS), etc...... there's loads out there who'll do just as good a job or better for nothing.

Make sure ALL creditors have frozen ALL interest and charges.

F&F's are much more easily managed with a DMP, so that is good news. Personally I think 20% is too high. There is a formula for calulating what you should offer which I can dig out if you'd like. You need to be very careful with any F&F that it kills the debt, and doesn't leave you in a position where the balance is sold on elsewhere. It is impossible to get a 100% watertight F&F as they are based on Common Law of Contract, but you can get it close.

Don't borrow money where you have to pay interest if interest is frozen in the DMP - you'll lose money.

They are really pretty simple, unless the creditor is awkward. This wouldn't happen with you as you're already a proven client.

Put the 10% fee aside towards any F&F pot, don't spend it.

[FlamingParrot]

Re: F&F Settlements

The calculation is based on the formula below:

AA (amount available for F&F) x OB (outstanding balance on each account) ÷ TD (total debt)

As an example, if you owe £50k and you have £15k available for F&F, assuming account 1 (A1) has an outstanding balance of £5.5k:

(15,000 x 5,500) ÷ 50,000 = 1,650

You'd offer £1,650 to creditor X for account 1.

If you are planning to offer F&Fs to all creditors then it may be worth making a list of creditors and offers to show they are being treated fairly.

Before making any payments, make sure you have written acceptance of your offer from your creditor and written agreement to update your credit files. When it comes to making payment, you should send a third party cheque or get a family member or friend to make the payment on your behalf. This will help minimise any disputes that may arise.

As noted above, the £480 a year you're paying for debt management could go towards your F&F instead.

[Ruby]

Re: F&F Settlements

Thanks Labman for further explanation. Snoogywoo did mention initially he could get the loan interest free from his company. Would be interested in hearing more about the formula you have for negotiating F & F settlements......

I have currently a 50 K (supposedly secured) loan which has now been sold to a DCA. They have from the very beginning said (verbally) that they would accept a 10% discount for F & F settlement.

[Ruby]

Re: F&F Settlements

Flamingparrot our threads have crossed over! I am confused! would you be able to work mine out for me?