Partial Settlements Frequently Asked Questions

Q

What will you charge?

A

We charge a one-off fee for negotiating with your creditors to settle your debts. The fee is calculated as 25% of the saving that we negotiate for you. By using this method it ensures that you only pay us if we manage to agree reduced settlements for you and save you money.

Because we only charge you a % of the saving, this cannot be calculated until we have received settlement figures from all of your creditors and have agreed with you which ones to pay. This means that we cannot agree the specific cost to you at the beginning of the process, so you need to bear this in mind when deciding whether to proceed with the service.

Below are some illustrations of settlements with their associated fees:

Total non-priority debt amount: £8000
Number of creditors: 6
Lump sum available: £6000
Total value of agreed settlements: £5000
Total saving: £3000
Settlement fee: £750
Total payable by you: £5750
In this example, it was possible to settle all of the debts.
Total non-priority debt amount: £6000
Number of creditors: 3
Lump sum available: £6000
Total value of agreed settlements: £6000
Total saving: £0
Settlement fee: £0
Total payable by you: £6000
In this example, it was not possible to negotiate any saving
Total non-priority debt amount: £5500
Number of creditors: 3
Lump sum available: £2000
Creditor 1 Balance: £820
Creditor 1 Settlement: £500
Creditor 2 Balance: £1550
Creditor 2 Settlement: £1200
Creditor 3 Balance: £3000
Creditor 3 Settlement: £3000
Saving (for those that are possible to settle): £670
Settlement fee: £167.50
Total payable by you: £1867.50
In this example, it was only possible to settle Creditor 1 and Creditor 2
What do we do for your fee?
  • We will calculate suitable offers to your creditors
  • We will negotiate with your creditors, both verbally and in writing, on your behalf to get the best deal for you
  • We will send you a written proposal showing how we intend to distribute your money
  • We will distribute the funds and send a confirmation letter to all relevant creditors

Q

Will this impact my credit file?

A

By settling your debt, your creditors will need to write off a portion of your debt (the difference between your balance and the partial settlement that we agree). This will show on your credit file, usually alongside a marker that says ‘partial settlement’, so lenders will be able to see that you have not paid the debt in full. This on its own may not prevent you from getting credit, but some lenders may have additional checks in place where this flag is identified.

If the account has already defaulted, settling it will not remove the default. This will stay on your credit file for 6 years from the date that the default was issued.

Q

Can my creditors pursue me for the remaining amount?

A

Once the debt has been settled by mutual agreement with the creditors, they should not pursue you for any remaining sums. The remainder of the debt will usually be written off.

Q

Can I settle my debts directly with my creditors?

A

Yes – you can do this on your own and free of charge. You are perfectly entitled to approach your creditors directly to negotiate partial settlement figures. We do appreciate, however, that this can be a daunting prospect which is why we offer this service.

Q

Do my creditors have to accept the reduced offers?

A

No – they don’t, but there are many reasons why a creditor may look favourably upon a lump sum in settlement of a debt; for example, if your repayments are quite low in proportion to the debt and it will not be paid off within a reasonable timeframe, the creditors may prefer to have a lump sum now rather than relying on a continuous low return for a very long period of time.

If your creditors are not prepared to accept a reduced settlement amount, we will talk you through your options. If you have the money available after settling other debts you may want to pay the debt in full or, alternatively, you may wish to continue paying a monthly instalment either through your debt management plan or directly to the firm.

Q

Can I change my mind?

A

If you change your mind within 14 days you can cancel and receive a full refund of any fees paid to Angel Advance for this service (we can’t, however return any funds which have been paid to your creditors). After this time, you will not be entitled to a refund of funds paid to us for this service as it is likely that majority of work would have taken place by that stage and the settlement would have been concluded, or we would be in the process of distributing funds to your creditors.