Should I accept partial settlement offer?

Bolty

I recently contacted Halifax to find out the outstanding balance on my credit card. I have been on an arrangement to pay since being made redundant back in 2007 and thankfully now find myself in a position where I can clear most of my debts. I am about £2K short from paying of all my debt and was surprised when I was told Halifax would accept a full and final offer to clear my debt.

They immediately offered me a 25% discount on a full settlement. I owe them about £6,000 so that would knock £1,500 off the debt. They also hinted they would even accept an even lower offer which would mean I could actually make myself debt free which would be lovely after 4 years of debt problems.

My question is how making a lower offer would impact my credit file long term?

As I understand it, a partial settlement would be indicated on my credit file and hang around for the next 6 years. If I wait and pay the full balance to the Halifax it will be shown as a full settlement but still be shown for the next 6 years on my file.

On the basis my credit file already shows defaults and arrangments to pay is there any real benefit of paying the full balance as my credit score is already bad and likely to take years to recover?

I do not intend applying for any other credit cards in the near future so that is not a major concern but I do intend to change my mortage in a few years and I am worried how a partial settlement would effect things compared to a full settlement.

As a bit of a background I have about 6 credit/store cards and I will be paying the full balance (£12K) on all the cards. The Halifax is the only one I would be making an offer. I will continue to use 1 or 2 cards but pay the full balance each month in the hope it will have a positive impact on my credit score long term.

I am a firm believer in paying back any money I borrow but I am confident 50% of the halifax balance is interest and penalties so I don't feel so bad making them an offer.

I look forward to your advice. Thanks.

Tixy

Is this debt already showing as a default from years ago? If so then 6years after the date of the default the record will go from your credit file. So even if it shows as a partial settlement then this would only show for the remainder of that 6years, not for another 6years from the date you partially settle.
Again if you settle in full the account woud still only show up to 6years from the date of default.

If you are doing an F&F offer then its worth a read of this to ensure you are fully covered - http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

Bolty

Thanks Tixy. The link was very useful.

I have just had a look at my credit file (callcredit) and there is a "D" for default showing against my Halifax account from March 2008 onwards. This I believe is around the date I entered into an arrangement with the Blair, Oliver and Scott to pay a set monthly amount and they agreed to stop charging interest and penalties. I am told they are collecting on behalf of the Halifax and have not actually purchased the debt. I am not sure if this is correct.

If I have read your reply correctly does that mean the Halifax account will drop off my file 6 years after the first default? There are currently D's every month since March 2008. Strangely, the credit report produced by Equifax (I use checkmyfile.com to get 3 different reports) shows the Halifax account was closed in Feb 2008 and there is just one "D" for that month and nothing since. The Callcredit report doesn't show it as closed. My Halifax online banking also shows account is closed. Do you think the Callcredit report needs updating?

Thanks for your help.