Implications of F+F settlements with creditors

skintchicken

Hi all

I'm in quite a lot of debt but yesterday received some great news regarding a refund I am due for a PPI claim - this can potentially pay off almost half of my debt - yay! Thank you ML and MSE for info!!

I mostly owe to credit cards and catalogues and to get the most out of this money I was thinking of making some full and final settlement offers to them however I am worried this will have a negative impact on my credit score if they accept?

I've seen the template letter to use so I'm okay in that department it's just the true implications of doing this that I'm unsure of?

I am signed up to Credit Expert and my score is slowly improving hence I don't want it to go the other way.

Is it a good idea to try a settlement or am I better to pay off what I can with the money I receive and then continue paying the rest off as normal??

I want to try for a mortgage in the next year so it's important I'm wise about this!

Sorry for the long explanation...any advise is appreciated!

Thanks

Tixy

Are the debts you are planning to F&F on debts that already have defaults on your credit file? How old are the defaults?

Most creditors will only agree to mark your file as partially settlement if you pay a reduced F&F. This will impact on your file and show other creditors that you did not pay off the debt in full. But its worth remembering that if you already have a default its probably not going to look any worse than the default is already making it.
And of course the whole account entry / default / partial settlement etc will only be visible on your file for 6years from the default date. So if for example a default is already 4years old then the partial settlement will only actually be visible for 2years.

skintchicken

Thanks Tixy

One credit card I was on an arrangement to pay for 12 months which has just ended but I made every payment, the other 2 credit cards have been paid on time, one catalogue I've been late once or twice and the other catalogue has been paid on time so I guess the only default would be on the first credit card I mentioned...

Sounds like maybe I would be better to continue paying?

Tixy

Very unlikely they'll agree to any discount on any of the cards that are up to date (or odd missed payments).
They might on the one with an arrangement to pay - but even then if its not actually registered as a default - which it doesn't sound like it it - and if you are now paying interest again etc it doesn't sound likely they will accept a reduced figure either.