Full and final settlement gives client financial freedom from creditor

Advice NI’s Debt service recently helped a client who had been pursued by a debt collection company for a number of years in respect of a mortgage shortfall balance, which was just shy of £100,000.

The Full Picture

This client was single with two children, and worked full-time.  The debt had stemmed from a previous relationship breakdown. There was no other personal debt as the client was very good at managing her finances, but didn't feel like she could move forward with her life as the shortfall debt was always hanging over her.

How We Helped

To help the client to consider her options, Advice NI’s debt adviser completed a financial statement, cataloguing all household income and expenses and ascertaining that the client had a little over £200 surplus income every month. Most options were ruled out for various reasons. For bankruptcy, she had too much surplus income, but the client wanted to avoid this at all costs anyway. An Individual Voluntary Agreement wasn’t suitable as she only had one creditor. For a Debt Relief Order she was over the criteria for the allowable debt amount, and a Debt Management Plan would have taken over 25 years to pay off.    
Therefore, the only suitable option to explore was the possibility of a Full and Final Settlement. With help from a family member, the client managed to gather a small lump sum of £5,000. The adviser provided full advice on the process and assisted the client in presenting this offer to her creditor. The adviser made the client aware that settlements can be hard to achieve, but once the offer had been presented it was a case of waiting for the creditor’s response.
After an initial rejection and further adviser-assisted negotiations, the creditor finally accepted the offer of £5,000 as a final payment on the account.

The Outcome

The client was delighted with the service she had received and emailed to comment on the adviser's assistance throughout the three-month advice period:

“I wanted to quickly update you on the status of my correspondence with the [creditor] as your advice was so much appreciated.  They have settled with me for £5,000. I am just so thankful for all your professional advice.  You are brilliant at your job and your service should be used much wider.  I have told all my friends about how brilliant you were.”