MBNA credit card partial settlement

[ccdean100]

If anyone can help with the following it would be most welcome

- I have a deadline for this of the 30th September 2014. I will keep it as brief as possible....

 

I have had a MBNA credit card for ~ 7 years with a balance of £1,800.

 

 

During this time I kept up with monthly repayments of ~ £50 a month.

 

 

18 months ago I entered a bout of ill-health which culminated in me having to resign from my job.

I went on to benefits which gave me enough to live on but not enough to keep up with the card payments.

 

 

I informed MBNA and they transferred my account to the specialist team (due to ill health).

After 7 months they informed me that the account would soon default.

I was informed that I could make a partial settlement for some of the balance.

 

 

I researched partial settlements and got the impression that they were a bad idea

- that the remainder of the debt was often sold on leading to pursuit from a third party,

and that you needed it in writing that it was a "full and final settlement".

 

 

I made an offer of £400 for a F&F settlement using a letter template from a debt advice website

(my Dad and sister agreed to help me out as much as they could financially because they didn't want DCA's knocking on my door

whilst I was suffering with ill-health).

 

 

The offer was accepted, but the letter does not state that the settlement is full and final.

 

 

I have rung numerous times requesting it be F&F and they always say that it is not possible because the full amount isn't being paid.

 

Today I rang Stepchange,

the Financial Ombudsman,

the Financial Conduct Authority and

the Money Advice Service and

read the letter out to them.

 

 

None could give me much advice except for the FCA who said whilst listening they were looking for the words "cancelled" and "zero balance".

 

 

I rang MBNA asking if I could have a letter with those words in but they said they only send out standard letter templates, not tailored letters.

 

 

The FCA also said to ask what happens to the remaining debt.

All the operatives at MBNA will say is that "it is written off" - what does that mean?

I don't understand; if the debt is written off, why can't I have it in writing that there will be a "zero balance".

If the balance isn't zero then doesn't the debt still exist?

 

Here is the letter:

Dear ....

Settling you credit card account

Thankyou for your partial settlement proposal, we're happy to accept your offer of £400.00

in partial settlement of your account.

 

This is conditional upon us receiving your payment no later than September 30th, 2014.

After receipt of the required payment, we'll close your account and register a partial settlement with the credit reference agencies.

Credit reference agency information lasts for six years,

so this may affect your ability to obtain credit in the future.

 

What happens if you don't make the payment?

It is very important that we receive payment of the above amount, in cleared funds, by the date above.

If this doesn't happen, then we'll take steps to register a default with the credit reference agencies.

 

Once registered the default information would last for six years and may affect your ability to obtain credit in the future.

 

We'd also close your account and may sell the outstanding debt to another company,

who would try to recover the money from you.

If we do sell your debt or pass it to an external debt collection agency

we will make sure the details of your financial circumstances

and recent payments you have been making are passed to the relevant company.

.... ....

 

Yours sincerely

 

Head of Collection Operations

 

I missed out some of the letter, but the above contains all of the salient points.

 

After speaking to the FCA today,

I spoke to MBNA and asked for a letter specifically containing the words "cancelled" and "zero balance".

This is what I got back (letter-headed, at least):

 

What happens when you proceed with a partial settlement?

We will:

· Register a partial settlement with the credit reference agencies for up to six years,

which may affect your ability to obtain credit in the future.

 

· MBNA as well as any other third party will take no further action to recover the remaining balance.

 

· Close your account.

 

To me, it sounds as though the debt really will be written off,

and that there is no chance of me being chased either by MBNA or a third party.

 

 

However numerous forum discussions from around the web state that partial settlements are a bad idea,

and you don't know whether you will be pursued further down the line.

I don't understand why they are so cagey about saying the debt is written off and about saying that there is a zero balance.

 

Can anyone provide a final answer to me as to whether I should go through with this settlement?

 

 

I want to settle this debt once and for all, but at the same time don't want to be taken for a mug

- if they end up chasing the rest, what is the point in paying the £400 in the first place?

I fully accept that my credit score will be affected - I know that is unavoidable.

However my concern is that the debt still exists; that there is still an outstanding balance.

 

 

I am worried that they will somehow find a way of recovering the remainder of the debt.

 

I know people will say - "Ask for F&F settlement" etc. but they categorically refuse to do that

because I am not paying the full amount.

 

 

(NB. The F&F team at Stepchange said they don't get involved with F&F settlements with banks

unless the debtor can provide half the amount of what is owed;

the current settlement I have with MBNA is just under a quarter).

 

 

It seems impossible to get anything out of them other than a standard letter

- if anyone can guide me as to how to get a letter out of them saying what is needed

to ensure this is the end of the matter it would be warmly welcomed.

(i.e. what is it that needs to be said, and how do you get them to put it down on paper

- they always say they can only send out templates; do you have to speak directly with a senior manager?).

 

Apologies for the long post - any advice is welcome.

 

Thanks,

 

Charles

[Kayyak]

Hello and welcome.

 

You need confirmation that the remainder if the balance will not be sold on or pursued by a 3rd party

and as you say the balance needs to be set to zero if you are to make a F&F settlement.

 

 

Send a letter with those requests and get confirmation before you send any money.

 

 

I'm sure you could come to another deadline with MBNA.

 

 

I have done a couple of f&f with these conditions which were agreed.

You need to be careful as I guess you are aware, they may sell on to a DCA.

 

You may want to request a CCA or claim back any PPi first to reduce the amount but £400 is a good offer if it is genuine.

F&F are good if done correctly, it can give you that peace of mind. Have a read around for some contents of letters.

 

From my experience, MBNA tend to sell debts on quickly once defaulted.

[dx100uk]

if they are accepting £400

then there is more to be had by reclaiming

 

 

get an sar off to them.

 

 

dx