Second time lucky?... (& some advice on defaults please)

milkybeer

I joined here quite a while ago now but didn't stick with it. However, today is a new start and I am determined to be debt free (hopefully within 6-8 month).
Firstly a little a background on my debt. My major debt is with my mother. She paid off all my credit cards so I could be debt free, however, once I had most of them paid off I accrued debt on a couple of them. Not the best way to go I know. So out of guilt more than anything else I need to pay my mum off first. I owe her just over £1500.

My debts are with:

Capital One – now passed over to FCP. I defaulted on this with Capital One back in October of last year but have made regular payments of £20 per month to FCP. My outstanding balance is £642.99. I hope to make an offer of Full & final settlement. Can any suggest te lowest figure they may accept?

I also have an nightmare that came back to haunt me, an unpaid contract with O2. I thought I’d cancelled way back in 2008 when the service they provided me with can be best descibed as atrocious. 5 replacement handsets before acknowledging the handset had a manufacturing fault, no refund or discount on bills whilst I was without a phnoe. However, try as I may, I cannot get out of this, or get the default they placed on my file removed. I owe them around £400. It is now with Lowell and I am making a massive monthly payment of £1. This was agreed when I couldn’t afford more but now it’s out of principal cos I hate them! However, hating them and being stubborn is not going to get rid of my debt so I will have to up my payment. I have requested they send me a up to date igure of what is owed.

I have a £1000 overdraft with Natwest back from my student days which I have failed to reduce in time so now get charged interest. On the plus size, it was £3000 so it’s slowly but surely getting there. It’s currently costing me around £12 in interest per month to maintain this overdraft.

Finally, I have a credit card with Barclaycard. This is my only ‘Good credit’ so to speak. I often pay my balance off in full, never miss payments, even if it’s only a minimum payment. I currently owe £350 on this.

So, if I don’t include my student loan (which I don’t although probably should) my debt is around £4,000. I have sent myself a 6months target to pay this off but have a holiday booked right in the middle of the next 6months which I haven’t accounted for.

OK, so that’s the background bit with my debt. And I’ve set up standing orders, done budget sheets, sent off for up to date statements for everyone.

What I need most help with is my credit rating. Although it doesn’t seem it at the moment, my spending has massively decreased, all my debts were racked up as a student & whilst travelling. I am now (on the whole) a good budgeter and spender. I am hoping to save up for a deposit on a house. HOWEVER – PROBLEM – My credit rating is in shreds.

I have 2 defaults on my account. One from 2008 and one from 2010. Do they stay on my account for 6 years? Is there any way to remove them before then? I also have several accounts that have been ‘settled’. Is this bad for a credit rating? If i ‘settle’ my 2 defaults (capital one & O2) will my defaults be removed and my credit rating increase? Realistically it will be a couple of years before I am buying a house so do have the time to try and repair my credit rating (suggestions accepted). However, I am now 27 and cannot be waiting 6 years for my default to be removed to purchase a house.

I am trying to educate my self whilst clearing my debt so any advise, help, words of support will be greatly appreciated.

Phew!! Felt good to get that off my chest!!

Oh, and also hoping to take part is some of the challenges. I seem to remember doing a pound one a few years ago

Tixy

Defaults will stay on for 6years whether settled or not. If they are settled they should be marked as such and this is a little better on your credit file (although obviously still not great).

Settled accounts that never defaulted probably don't have much impact on your file?

Capital one - a default from October is not that long ago, but if you are doing a F&F always start low and you can go up if you need and can afford to. Maybe start at 25%.

I would guess the 02 debt/lowell would also likely accept a F&F - probably quite a low one again as you are only paying a quid.

One thing to be wary of is although you want to repay mum first if any creditor decides to take you to court then the judge would expect you to be repaying your credit debts before you mum. A creditor could decide to take you to court at any time, a risk can be especially if they think you can afford more than you are paying.

You won't get the defaults removed before the 6year period is up, it is technically possible to buy a house/ get a mortgage with defaults. But you won't get the best rates and will probably need an even higher percentage deposit than others are doing at the moment. Will you realistically have your debts paid off and a say 30% deposit saved up in as little as 2 years?

Hope this has answered a few of your questions, and hope you find keeping budgets and joining in the challenges etc helps keep you motivated. No chance you can cancel the holiday in the meantime? or sell to a mate to go if you could transfer it over etc?

milkybeer

Thank you, Tixy. That's all very helpful. Pretty much as suspected with the defaults but worth checking if there were any loopholes.


Can't cancel/tranfer holiday as it is to visit my sister who lives in Australia and I havne't seen for months so it's a must do thing unfortunately.

All my debt are 'under control' as such so there shouldn't be much chance of anyone wishing to take me to court. Although I may have just riled up 02 as when looking through old correspondence I have noted inconsitencies in their charges to me (ie different figure for them same thing on different statements) and request they look into it and we have a bad history. I think their customer service is appalling.

I have decided to do the £1 a day challange and use the money saved at the end of each month to pay towards one of my debt til they are all paid off, then once I am debt free, I'll save it for a year and treat myself with something special for being debt-free for 1 year. Fingers crossed I make it.