"Written off as bad debt" - Letter

gerrybhoy1974

Evenin' all,

I just received a letter from MBNA stating that "your credit cards are due to be writtenn off as bad debt this month". It goes on to say that "as a final attempt to demonstrate our good faith to resolve this debt, MBNA is offering you the opportunity to save 60% by settling your account"...

I dealt with someone just before christmas and they said if i paid a nominal amount to keep the account ticking over (it is about £50 over 2 cards MBNA Virgin, and MBNA A&L) they would be willing to half the outstanding balance. I told them that i'd have a bonus coming in April that i'd be able to pay it off then.

This letter means that I'd pretty much owe them £800 for a £2100 debt. It also says that it will register on my credit file as a 'Partial Settlement'..

A bit long winded but my question is what does 'written off as bad debt' entail?...does it affect my (non existant) credit rating worse than 'partial settlement'.

Would be grateful if anyone could help me shed some light.

Regards
Gerry

Robert_Sterling_3

I think that unless you pay in full in due course your creditworthiness will be impaired for the next six years.

gerrybhoy1974

Hi Robert, thanks for your reply. I know it will be affected whichever way, it already is to be honest. Just wondered if there was any great difference between them writing it off as a bad debt or me paying part of it and they cancel the rest.
Does 'written off as bad debt' mean that I owe them nothing, but a 'blacker' mark will be registered on my credit file?.. or does it mean that they will then pass the debt to someone else to pursue? cheers

fermi

I assume you have defaulted the account already? If so that will stay for 6 years from the default date whatever happens now.

If they write it off their books as a bad debt then MBNA will normally sell it on to a debt collection agency who will then pursue you for the full balance.

It will stay as unsettled on your file until cleared with them. They like MBNA might be amenable to a partial settlement, but you would be starting negotiations from scratch and they can be a right pain.

If you settle with MBNA then they should mark your credit reference files as a partial settlement, but show that there is also no balance outstanding to be paid. It's important to get confirmation in writing that the sum is accepted as a final settlement on the account which ends your liability for any remaining balance.

If you can afford to settle with MBNA directly before they sell it on, then I would be inclined to. As long as you can get it confirmed in writing that all liability is ended. A debt collector may eventually settle for a smaller %, but as said they can be a complete pain.

gerrybhoy1974

Hi fermi, yes it has been on an 'arrangement to pay' for the last 2 years almost. Interest frozen and making small payments. I think its probably as good a deal as I will get on it, would like to just get rid of it once and for all and it ticks another 2 cards off my debts.. Only 1 LTSB card of 2k to go after that.

fermi

In that case you already have a default registered. The damage is done. Once it has been defaulted the difference on your record between "partially settled" and just "settled" is minimal to be honest.

If it was me and I could afford the 40% or whatever to pay MBNA then I would be tempted to get rid of it now.

If you do that then get any offer in writing and check the wording of it through with someone experienced who can confirm that it completely ends all liability for the debt. Perhaps give one of the free debt advisory service like National Debtline (Tel free on 0808 808 4000) a call and run the wording past one of there advisors.