Settling Debt

A question about : Settling Debt

Having come into some money through the sudden death of a family member, i would like to use this to attempt to clear debt i currently have with 3 creditors.

There isnt quite enough there to cover the debt completely but after talking to a work colleague, he has advised me to call them and make an offer of as much as i can in return for them clearing the remainder and closing the account.

Is this possible?
Or am i being a littl niave?

Many Thanx
Bubble.

Best answers:

• Are you behind on your payments? Creditors will only think of F&F settlement if you are.
  Also it will be marked as partially satisfied on your credit report which is not good.
  If you do agree F&F with any creditor then get it in writing and make sure that it's the end of the debt and that the company doesnt sell on the remainder to a DCA.
• Hi Bubble2012, thank you for your query regarding settling debt.
  What you are suggesting is something called a full and final settlement and creditors are often willing to accept a reduced offer as a lump sum but it will depend on the status of the debt (they are unlikely to agree to it if you are up to date with your agreements- but ask for a settlement figure anyway as it may be with the interest refunded on the account you will be able to afford the whole amount), your circumstances (including if you are a home owner or in work -if no to both of those you have a better chance of getting a full and final settlement agreed) and what payments you are making at present. When negotiating it is very important to get the agreement in writing before making any payments. To be legally binding a full and final settlement really needs to be in the form of a deed or the negotiations and payment made by a third party such as a relative but if you have proof of the agreement in writing and a creditor then decided to chase the remainder of the debt you could make a complaint to the Financial Ombudsman Service. It is very important that you request your credit reference is updated to reflect the account has been settled. There are factsheets on full and final settlements and template letters on www.nationaldebtline.org.uk. If you decide not to go down the route of a full and final settlement I would suggest you pay off the debts which are charging the most interest first.
  Hope this is of assistance.