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    • sezzles1967
    • By sezzles1967 17th May 17, 10:53 AM
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    sezzles1967
    Do I pay off my debts?
    • #1
    • 17th May 17, 10:53 AM
    Do I pay off my debts? 17th May 17 at 10:53 AM
    I've recently divorced and have a lump sum of cash following sale of my house.
    I have 13K worth of debts in my name which are being administered through Step Change.
    I have bad credit rating, but would like to put that right and be in a position to apply for a mortgage in a couple of years instead of wasting money on rent (currently paying 1200 a month rent for 3 bed).
    My question is, do I just pay all the outstanding amounts or do I request a settlement figure which may be a better deal?
    I was told that if you accept a settlement deal this affects your credit rating and doesn't have it marked as "paid in full"
    any help would be appreciated as im not sure what is the right thing to do.
    Many thanks
Page 1
    • poppasmurf_bewdley
    • By poppasmurf_bewdley 17th May 17, 12:50 PM
    • 5,059 Posts
    • 5,202 Thanks
    poppasmurf_bewdley
    • #2
    • 17th May 17, 12:50 PM
    • #2
    • 17th May 17, 12:50 PM
    Whatever you do, your credit rating is currently trashed. And it will remain so for the next six years. As time goes by it will get better, but you may be disappointed if you apply for a mortgage in a couple of years time.

    Whatever method you choose to try and settle, it will be on your credit file for six years, so you may be better to go for partial settlement now as it will make little difference.
    "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery." Mr Wilkins Micawber in David Copperfield by Charles Dickens.
    • enthusiasticsaver
    • By enthusiasticsaver 17th May 17, 2:13 PM
    • 4,856 Posts
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    enthusiasticsaver
    • #3
    • 17th May 17, 2:13 PM
    • #3
    • 17th May 17, 2:13 PM
    I think getting a mortgage in a few years is a little optimistic if you are on a dmp but I am no expert. When I worked in mortgages years ago you had to be default free for 6 years so I guess it depends on when you defaulted and how long before you clear it.

    I think if the settlement is marked as full and final then it does not stay on your credit file so that is what you need to offer. You may have to fill out income and expenditure forms though and they will then judge whether or not to accept. I would start off by offering 60% of the total debt outstanding and see what they come back with. That would save you around £5k if accepted.

    When eventually you come to apply for a mortgage the bigger deposit you have the better so I would keep as much of the equity back as possible.
    1 week to go until early retirement. Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
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