Settling DMP and affect of defaults

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Ffitz_2
Ffitz_2 Posts: 1 Newbie
in Credit file & ratings
Need a bit of advice - I have a debt management plan from June 2010 the remaining balance is just over 4K. I have been very luckily offered a loan from a relative to clear this in order to rebuilt my credit rating with a view to getting a mortgage in the future. I will still be making the loan repayments but the main objective of this is to improve my credit rating. I have lots of defaults registered on my credit file. My question is with the defaults and DMP my rating is awful so I thought I could approach the creditors and ask for a 'full and final settlement ' in order not to pay the full amount off. I know this will show as "partial repayment" on my credit file for 6 yrs but is this any worse than already having "default" showing? The loan covers the full amount of debt so I can pay all my creditors in full if needed.

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  • sourcrates
    sourcrates Posts: 28,888 Ambassador
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    Hi,

    Only difference it will make is to your pocket.
    Settle for as little as possible.

    Get EVERYTHING agreed in writing before parting with any money.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • National_Debtline
    National_Debtline Posts: 7,998 Organisation Representative
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    Hi Ffitz and welcome to MSE,


    First of all the debts will show for 6 years from the date of default (whether they are settled or not). When you settle them the status will change from it being an outstanding to a settled account and the default will still show.


    A partial settlement is better than an outstanding defaulted account but a full settlement is better than a partial settlement. A partial settlement shows that you have paid an agreed amount but that is not the full amount of the debt. That is not as positive as showing you paid the full balance but credit files are complicated and your overall rating can be affected by things such as whether or not you are on the electoral role, your age and your credit history. Good luck,


    Laura
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
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