Full And Final Settlement

[Myriad2112]

I have been on a repayment arrangement with my creditors for the last few years. Mrs Myriad has recently come into some money and I understand that instead of paying off them in full, I can make them an offer. The thing is that I don't want to make them a silly offer and be laughed at, but at the same time I don't want to give them more than I need to. What percentage do we thing is a sensible amount please?

[Buenchico]

I've had creditors tell me that they'll accept 50%, so that might be worth a try.

[IggyB]

if you have the money to discharge your debts in full then you should. It might be painful but you have a legal and moral obligation to pay for the services you receive... Though I accept this is considered an outmoded way of thought these days.

[IggyB]

But to answer the question I'd suggest 60% would make them consider the proposition.

[SirOracle]

Especially by many on here Iggy.

[Myriad2112]

Thanks for the advice everyone. I'm not sure I have a legal obligation to pay it in full Iggy, surely that's why they all accept offers.

[factor-fiction]

I'm not sure I have a legal obligation to pay it in full Iggy, surely that's why they all accept offers

I think you have both a moral obligation and a legal obligation in that you do owe the money- but as a dispensation they may accept an offer.

If they accept the offer (presumably not in the knowledge that you may now have enough to pay) then good luck to you, but of course all those people who do pay what they owe are subsidising you

[factor-fiction]

Pride seems to be an old fashioned concept as well, I think.

[bednobs]

i absolutely disagree that myraid has a legal OR moral obligation to pay off his debts with his wife's money, after all that money is hers, not his. 60% seems a reasonable figure, or why not ask them to name a figure they will accept?

[factor-fiction]

Okay, if Mr and Mrs are treated as completely separate entities, and Myriad isn't going to get any of this money.
But I don't see that he has no legal obligation to pay what he owes. The creditor may accept a settlement that would dispense with the legal obligation, but until then I think there is legal obligation to repay what's owed, albeit according to the agreed repayment plan. I am not aware of any legal right to be given a discounted settlement

[Peter Pedant]

No Babies, man up
this is called time discounting or could be looked at from the point of view of time discounting

you are owed £1000

do you want £500 now or £100 /month with no guarantee that it WILL be a hundred a month ?

it depends on how uncertain your debtor is

pride - phhaw ! money in your pocket that is what counts.


try it and see
I am assuming that you neva really owed £1000

but in fact the sum started off as £100 and there was a late fee and another late fee and a behind-payment fee and interest and no=payment-fee (it was christmas) and an interest payment and so on and so on

no one likes being in debt

pay it off if you can

[themas]

The answer is that it depends on the policy adopted by the creditor. I've known of cases where 40% (or even less occasionally) has been accepted. On the other hand, some creditors have a policy of not accepting any offers. To some extent, creditors will look at the alternative - i.e. how long will it take them to get paid in full if they refuse the offer so it is worthwhile sending with your letter a financial statement & an indication of what you think is likely to happen to your finances (not your wife's) in the forseeable future.

I'd suggest you start at about 40% & be ready to increase the offer if it is refused.

It is important to do this in writing & make it clear that the money is not yours. Also, the actual payment should be made by someone other than you. In other words,your wife should sign the cheques on an account in her sole name & she should send them with a letter from her referring back to the creditor's letter accepting the offer. You must get the acceptance in writing (& it must state it is accepted in full & final settlement of all liability you have) before you make the payment.

[sunny-dave]

But he owes the money and appears to have access to a means of clearing the debt ... so morally ... ?

[woofgang]

I agree with Dave....

[bednobs]

well i guess different people might feel differently about that. i'm sure whoever left it to mrs myraid didn't imagine she'd be paying her husband debts off with it. I maintain that he is not morally obliged to use someone elses money to pay off hs own debts

[themas]

There is a legal obligation, but it can be overturned if the creditor agrees to accept less than the full amount. Creditors are free to decide not to do so - &, as I said above, some do so decide. However, as PP said, many decide it is better to have a % of the total debt now than the - often uncertain - possibility of it being paid off over a long period. In any case, many creditors sell on debts for a small fraction of their face value, & they take that into account in deciding what they will accept. Better to have (say) 40% now than far less than 40% when it is sold on.

People get into debt for all sorts of reasons. Many of them are hit by changes in circumstances - eg health problems, relationship breakdown - & are just not in a position to pay off the debts. There is a difference between this sort of debt problem & people who just decide they won't pay. Yes, there is a moral obligation but it has to be tempered by a rational assessment of the real life situation. Creditors generally accept they can't get blood out of a stone.

In Myriad's case we don't know the full facts of how or why he got into debt, so I don't think it is reasonable to say he has a moral obligation to get his wife to use her money to pay his debts.

[Myriad2112]

For anyone that's interested my debts came about after the collapse of my business 8 years ago. I approached payplan who told me that as there was more money going out than coming in my only option was to offer my creditors a token payment. This was done along with the request to stop any interest or late charges. To my surprise all of them agreed and as all the debts have since been sold on time and time again. I am sure that by now they are worth considerably less than the original debt which is why they are all happy to accept a reasonable offer. For what it's worth, no I don't think that my wife has either a moral or legal obligation to pay off my debts so they will be lucky to get an alternative to the £5 per month that they currently do.