Full Settlement vs Full and Final Settlement - will it damage my credit history more?

edinburgher

After cutting back my expenses dramatically over the last nine months and closing down all savings accounts to throw at my debts, I'm getting close to the point where I think I might be able to settle my final debt (credit card bill, overdraft will be getting paid off at the end of the month).

Due to the fact that I have to pay off the remainder of my overdraft this month and a few other significant one time costs I won't be able to really get down to the credit card debt until October. I'd like to have things wrapped up so that I can begin life again next year from my 27th birthday, which is at the end of March.

By October I'll be paying £100/mth towards the bill, which will stand at ~£2700. Over the next 6 months I should be able to reduce the outstanding amount to £2200 and should have ~£1300 in savings. I have reason to believe that the DCA I'm dealing with (Blair, Oliver and Scott) will accept this offer of ~60%, as they've offered me 35% off the total in the past.

Basically I'm looking to pay off this debt while spending as little as possible. Before everyone tells me that I'm shirking my responsibilities, I never reclaimed bank charges (I suppose I was punishing myself for getting into debt in the first place :mad:) and I've been making regular payments for 4-5 years now.

What I need advice on is whether or not a partial settlement will disrupt my credit history further? I have a registered default which is due to come off my credit history in 2012 and I would like to know whether a new default will be noted for a partial settlement, or if the record of the partial settlement will sit on my credit history for another six years. As I see it, if my account is marked partial settlement' it should still be cleaned from my credit history in 2012 as the date the account first fell into default?

fermi

edinburgher wrote: »

As I see it, if my account is marked partial settlement' it should still be cleaned from my credit history in 2012 as the date the account first fell into default?

Correct.

Obviously, a partial settlement doesn't look as good compared to a fully settled account. Then again, the default will still be there either way which effects your credit rating much more until it disappears.

edinburgher

Correct.

Obviously, a partial settlement doesn't look as good compared to a fully settled account. Then again, the default will still be there either way which effects your credit rating much more until it disappears.

That's great thanks Fermi. I'm not looking for access to credit any time in the near future, so I'm not too bothered about the fact that a partial settlement might not look as appealing as a full settlement to potential lenders. As you say, both look pretty bad :eek:

GeorgeUK

You can only have one default per debt.
I believe creditors will be looking more at your current credit worthiness rather than how you deal with older debts, so debts 1 year old may still have a slight influence on your credit score, but i doubt if after 2 years they would have any significant impact at all. As Fermi says, it is the default being there that will have the biggest impact.

When/if making the F&F offers, state in the letter that the offer is taking into account unlawful bank charges. This may make them more open to a lower offer.

edinburgher

When/if making the F&F offers, state in the letter that the offer is taking into account unlawful bank charges. This may make them more open to a lower offer.

Thanks GeorgeUK, I shall consider this. That said, I don't really want to open that can of worms and would happily let my charges fall by the wayside and draw a line under the whole affair as long as the DCA plays nice when I contact them!