# Negotiating settlement figure



## scarednow (25 Nov 2010)

Hi

Regular reader and infrequent poster.

I am in quite a lot of debt, down to overspending and irresponsible spending in the last 3 or 4 years.

I am looking to negotiate settlement figures with each financial institution that I owe money to and have a few questions.

1) Do I have to be in arrears (debt passed to collection company) to negotiate a 'lesser' settlement amount?

2) Will this go on my ICB record (which is already tainted anyway!)

Just to add one point, many thanks for your help on this matter and in anticipation of the reply 'you owe the money and should pay it'. The government / greedy incompotent bankers / investors do not have morals when affecting mine and my childrens quality of life, so the least amount I can pay off to get these debts off my back, the better

Thanks again


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## RIAD_BSC (25 Nov 2010)

1) Yes, almost always
2) I believe so, as it would constitute a technical default, even if agreed


I am not giving the moral reply (I empathise with you that such replies are not helpful), but are you currently able to make your repayments, even from your savings? It is an important question, because if you are currently making (or are capable of making) your repayments, you have no hope of getting any of your debt forgiven in a settlement.

Again, nothing to do with morals, but why would the banks write off a portion of your loans if you can afford to pay it? Even if you have now geared yourself to a level you are uncomfortable with, but can still get by, then you've no leverage that I can see. If you can't make the repayments, that's a different matter. 

If you have the cash to "settle" some of the loans, then the bank will judge that you have the cash to make the repayments from youyr savings for the time being. They will clearly distinguish between can't-pay and won't pay.

One exception: If you have a giveaway tracker mortgage, but have the money to clear the capital sum off, you might have a chance. If it is costing the bank more to fund your mortgage on the money markets than it is getting off you in interest, they might listen to an offer - it could save them (and you) money. However, I have only heard rumours of this happening, and have not seen any concrete examples myself.


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## scarednow (26 Nov 2010)

Thanks for your reply, much appreciated.

We can, in fact, afford to repay all loans at the minute.

I am actually asking the question in anticipation of a change in our circumstances, which will result in a considerable reduction in our household income.

So, can I just check the advice if/when we cant pay the full amount. 

Would we be better paying the interest only on our debts and waiting for a letter to renegotiate, or would I be better approaching the bank myself?

Thanks for yor help


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## Bronte (26 Nov 2010)

scarednow said:


> We can, in fact, afford to repay all loans at the minute.
> 
> 
> So, can I just check the advice if/when we cant pay the full amount.
> ...


 
If you are not in arrears and able to pay off all your loans you can forget about negotiating a settlement. 

As for your second point, unless you have very good reasons for doing so you'd be crazy to play such a high risk game of poker with the bank. 

Yes banks are settling, it's not common knowledge how much they settle for but where there is nothing they'll take the minimum offered. That doesn't sound like you.

I'm guessing you have some savings to do this settlement. Don't have it in the same bank and don't now move that whole amount to other banks. Financial institutions are not stupid. 

You should do the money makeover. Maybe there are things you are not seeing as a way out of your predicament. 

Your last sentence on your thread is offputting, maybe you could delete it.


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## Time (29 Nov 2010)

Off-putting to the moralistic posters sure.


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