Part Settled v Settled

cjgoodsell

I am on a DMP recently i have been reviewing my debts and I pay £200 off a month to a group of Debts.

Today I decided to call the ones that I owe under £500 on (3 of them). They have agreed an offer that i could probably easily pay off this month out of my bonus.

The problem I have is it would show part settled. Now is that a good thing or a bad thing on small debts?

I was thinking maybe best to just pay those off in full as and when so they show settled and then continue paying the 2 bigger ones of 3k and 5k each then hopefully the extra bit I am saving from the small ones will go towards those so they start reducing quicker.

My debate is which is better (if any are) to show Part Settled on a small or big debt?

Tixy

Well partially settled is obviously not as good as settled accounts but - do these accounts have defaults registered?
If they have defaults registered then your credit file is pretty much already wrecked for the 6years it will take for your defaults to be removed. If you partially settle a debt with a default that partial settlement will only show for the remainder of the time until the default is removed.

So some would argue that a partial settlement is unlikely to make your file look worse than it already does.

cjgoodsell

They all have defaults against them, but they were registered in 2008 so half way thru so in theory only 3 years to run so probably not worth it and the big ones were in 2006 so they drop off next year then.

So thats a point the big ones is the ones I'm concerned about so - I'm looking to repair my credit file and save for a mortgage will that mean when they are gone the chances of getting a mortgage could be better when they all have dropped off even tho I may not of settled them?

Tixy

Yep, once your defaults and the accounts have been removed your chance of a mortgage would certainly significantly increase, of course you'd still need to declare what debts you have on any mortgage application, which would be taken into account when considering affordabiity etc..

cjgoodsell

thanks,

but thats a grey area on declaring them tho isnt as it not on your credit file anymore... but you have to be stupid not to declare them coz it could come back to bite you...

Tixy

Just because a debt isn't on your credit file doesn't mean that you shouldn't declare it on a mortgage application, I wouldn't say its a grey area. Just the same as if you owed a personal debt to someone (a friend/relative etc that didn't appear on your credit file) its still a debt and should still be included.