That’s a whopping 73% of the balance written off! I am totally amazed by this, it will really help me out of my sticky situation.

This debt has been in default for almost two years, and I’ve had to endure a lot of phone calls and letters from Barclays and their debt managers during the process, so it’s not like it’s an experience I would want to repeat anytime soon, nor recommend anyone else to go through this situation!

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The first Barclaycard was settled in October 2009, it had a balance of around £4,700 and was settled for £1,500 – they wrote off £3,200.

The second settlement was done just last week. The balance was £3,200 and was settled for £1,000 – they wrote off £2,200.

In both instances, I was dealing with Calders Financial who are a debt collector who work on behalf of Barclaycard. I have spoken to some debt advisors who inform me that they operate from the same offices as Barclaycard.

What I have found is useful is to let them know that you are speaking to an IVA practicioner about doing a full and final IVA. If you stress that their debt represents less than 25% of the creditors by value, they soon realise that if there is a creditors meeting and it is decided by the larger creditors to settle for a small amount, they will have to accept that. This seems to motivate them to settle the debt for a reasonable figure while you are on the phone with them.

Having said that, I have just spoken with Calders Financial about my third Barclaycard and they have offered me a settlement of £1,000+ on a balance of £2,300. I explained to the lady on the phone that I settled another Barclaycard just last week for roughly 30% so she would need to be in that ballpark. She refused, so they will continue to get £1 a month until they come to their senses or I do a full & final IVA.

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• Welcome

The guy I spoke to was pretty smarmy and wanted to pretend like he was doing me a favour when he offered to discount my £1700 debt with Barclays by roughly 25%.

I rejected the offer, pointing out to him that I already settled another debt with Barclays back in October 2009 for 25% of the debt owed – that’s right, a £2,200 debt was settled for £550, they wrote off £1,650 – so you can see why I wasn’t terribly impressed with his offer of a 25% discount.

He did grumble about how if I couldn’t settle then they would need to come to an agreement with me about a monthly payment. I told him that I was already paying as much as I could afford – a whopping £1 a month – he told me that was not enough.

I told him that was all I could afford, he then got a bit angry and said I didn’t have any option then but to consider settling. I explained that this was not viable considering they have set the precedent by settling a similar debt for 25% rather than 75%, so they would have to consider that their ceiling in any negotiations with me over this debt.

He then pointed out that if I couldn’t settle or pay more then they would have to take legal action. Roll on another CCJ, whoop-di-do!

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It is very important that in any communications with your creditors you remain pragmatic and unemotional. It’s very easy to advise people to do this, but it’s not so easy to put into practice. From my own personal experience, dealing with my “bad debts” this last eighteen months has transformed my outlook from someone that did deal with it on a very emotional level, to now someone that is very unemotional.

If you can learn to detach yourself from the emotion of the situation, you are able to think much more clearly and able to make better decisions as a result. Once you do this, you are much better able to face the reality of the situation, which in many cases is facing up to the fact that you cannot afford your debts, but you do need to sort the situation out so that you may move on in life.

Once you realise that you cannot afford to repay your debts in whole, and you want to be pro-active in clearing (settling) the debts, you need to understand this very important fact – it costs your creditors money to pursue your bad debts. So the longer the account(s) are in arrears and therefore not generating any interest (income) for your creditors, they will be keen to recover as much money as they can from you and lend that out to better credit risks where they can make an income again.

When you speak with your creditors about a full and final settlement, you should always have a maximum figure in mind that you wish to pay as settlement, but you should always aim to settle for less than this if possible.

Your starting offer should always be lower than your maximum settlement figure, so for example if you owed £10,000 on a loan, and your maxium settlement figure is £4,000, start out by offering £2,000. It’s low, but it’s significant enough that the debt collection team will realise it’s a genuine offer. Expect this offer to be rejected, so ask for a counter offer, then you are into a negotiation.

The last bit of advice I can give is that you should always be prepared to walk away should the debt collection teams’ best offer be above your maxiumum settlement figure. Remember, the longer the debt is bad, the more likely the creditor will be to want to settle, and for a lower figure as time goes by.

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Apparently this is referred to as “Zombie Debt”  - I guess because it reappears years later after you thought the account had been closed.

I have looked into the legal precedents of this and found that there is case law that has set the precedent for cases such as this, in so much that if you have agreed to pay a reduced figure in full and final settlement of a debt, then the spirit of the agreement is that you as the creditor will not be obligated to pay the remainder of the balance, once the creditor has received the agreed amount under the full and final settlement.

My instinct tells me that there are just some rather careless or naive people out there that have not got a written agreement with a creditor prior to settling a debt, and as such have proceeded to repay an amount, typically less than the balance, in good faith that the payment was a full and final settlement.

Clearly if there is no written agreement, I can see that it would be very easy for a creditor to assume that the payment is simply part-payment of the debt and therefore the balance remaining would still be owed.

I would suggest that if anyone is considering going down the route of offering full and final settlements to creditors, ensure that you have a written agreement with them that your offer less than the balance outstanding is as full and final settlement, with the remaining balance to be written off. Alternatively if you are not confident of negotiating with your creditors, speak to a professional debt advisor and get them to negotiate the settlement.

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I myself am in the process of writing off a portion of my debts. Thus far I have already written off two of my creditors for just under 30% of the balance outstanding. This process so far, if you start at when I first failed to pay my creditors the required monthly payment under the agreements – July 2008 – will have taken almost eighteen months to get part way through.

I still have a number of creditors to negotiate settlements with, and I expect that it may well take until June 2010 for all of my debts to be settled. It will have taken two years of contstant creditor hassle, including phone calls, letters, solicitors letters, CCJ papers, debt collectors (once) and default notices to get from being in a fairly hopeless situation to being debt free.

It’s not an easy process, you need nerves of steel and the ability to not cave in or get intimidated by your creditors. If I had my time again I would have used a professional debt advisor to help me with the process. If you want professional help, speak to these guys, they have friendly, national advisors that are able to take all of that hassle and stress away.

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The letter was very brief, and here is what it said:

Thank you for your payment.

Your debt is now considered to be satisfied and we can confirm that no further action will be taken against you.

Any Standing Orders or Direct Debits you have set up in favour of this Account should now be cancelled with your bankers.

This was in refernce to a personal bank account that I had a £2200 overdraft owing on, which went into arrears in July 2008 and subsequently defaulted on later in the year. I settled this debt at 25% of the outstanding balance, yet when I speak to Barclays about my other account with them they claim there is no way that they will settle on this account as it is against company policy - not sure if I believe them…

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I promptly rang them up and spoke with them about the account, and they informed me that they had taken over my old Sky card, and issued me with a new number, which was why I didn’t recognise it.

I spoke with them about the balance and the account, explained that I couldn’t afford to make anywhere near the agreed payments, explained all I could afford was a token payment etc etc.

The chap went through a budget with me, and I explained that I did have access to funds for a full and final settlement, which was to be a gift from my family, so not my funds.

We went through my offer, he didn’t accept it but agreed that he would pass the account over to the debt collection dept, and then transferred me through.

When I was transferred through, it transpired that the connection wasn’t a very good one and he hung up.

I then took the initiative and rang Calders Financial, who are the debt collection agency for Barclaycard, and spoke with them about the account. Strangely enough I spoke with the same woman I agreed my previous full and final settlement with Barclaycard, and she was very good in that she remembered me.

We came to the conclusion that as I have two remaining accounts with Barclaycard we may as well look to settle both today. She went through the figures with her computer and came back and offered exactly 30% for each balance. This was ok, but we felt we should be able to get down to nearer 20%.

We haggled a bit, she went and spoke to her manager and then came back and said that she was terribly sorry but the two accounts we had been discussing had not actually been passed through to Calders at that time, which meant they were not quite ready to be settled yet.

This I found quite interesting as it gave me some useful information, in that as soon as they do get passed to Calders, I will be in a position to start the negotiating at 30% and drive the price down.

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