To partially or fully settle?

kgall

Hello,

I have a remaining debt of around £600 on an old student account with Natwest that originally defaulted in 2008. This is still managed by Natwest (through Triton).

I am currently repaying at a rate of £25 a month. Triton have said I could also partially settle for £350. I could also afford to settle in full. As there are only 2 years left before the default is removed from my credit files would I be better settling in full or only partially? Will it make much difference to my credit score whether it is full or partial?

kgall

Anybody have any thoughts?

emweaver

If you part settle it affects your credit rating as it only shows as partly settled on your credit file so your better to settle in full if you an afford too.

fatbelly

There are two separate issues here: one is how your credit file is marked, the other is what assurance you have from the creditor that this is dead and buried.

OK, number one - the correct mark on your file is 'partially settled', according to the Information Commissioner (ICO). That's shorthand for 'fully settled by a part payment'

The second part is that you need to get something from Triton in writing on their letterhead that is watertight and not capable of more than one interpretation, before you part with any money. If they are prepared to use the phrase 'full and final settlement, that is fine. If they only bang on about 'partial settlement' and don't expand that by saying that the balance is written to zero and the account closed, then you could have problems if, accidentally or otherwise, the debt gets sold to a bottom-end debt collector.

I remember doing one of these with Triton and they were OK to deal with and their letter was fine but they didn't drop to a spectacular figure. A bit like you.

kgall

Thank you so much fatbelly, that makes a lot of sense. Will these firms (Triton) ever agree to mark the account as fully satisfied even if only a partial full and final settlement is agreed?

Also, because the default was origonaly regisetered in 2008 am I correct in thinking that if I partialy settle this will only show (and so cause me harm) for two more years?

Thanks,
K

Declaration_2

I have a default on a CC account, which was passed to a debt collector. I maintained payments on it every month, and increased the amount when asked to by the collection company. As the debt got smaller, they repeatedly contacted me and invited me to pay a !!!!!!. They even said the default would be removed from my file because it was paid. Clearly this is not true, and I pointed that out to them.

Ultimately, I decided to keep paying the monthly sum until it was all paid off in full. I felt that I had borrowed the cash, and therefore had a duty to repay it all.

Once it was paid, it showed that it was settled in full on my credit report, and the default will drop off completely in 10 months or so.

Some people argue that a full settlement is only marginally better than a partial one on the credit report, but either way, it's there for 6 years in total, and in the current climate, I think it will impair your ability to get credit while it is there.

The_Drowner

Don't want to put a spanner in the works here but isn't there somme law in place that prevents student loans from being paid off early?

Perhaps that doesn't apply here if the debt has been passed to a collection agency, but I though the government had put something in place to prevent rich kids from getting daddy to pay them off in full or ahead of term !!! it would mean that the government would lose out on the interest longer term.

DVardysShadow

The_Drowner wrote: »

Don't want to put a spanner in the works here but isn't there somme law in place that prevents student loans from being paid off early?

Perhaps that doesn't apply here if the debt has been passed to a collection agency, but I though the government had put something in place to prevent rich kids from getting daddy to pay them off in full or ahead of term !!! it would mean that the government would lose out on the interest longer term.

This is an overdraft on a student account. Not a student loan.

fatbelly

kgall wrote: »

Thank you so much fatbelly, that makes a lot of sense. Will these firms (Triton) ever agree to mark the account as fully satisfied even if only a partial full and final settlement is agreed?

Also, because the default was origonaly regisetered in 2008 am I correct in thinking that if I partialy settle this will only show (and so cause me harm) for two more years?

Thanks,
K

You could try for a fully settled mark but it's unlikely (unless you do settle in full!). As you say, this entry will drop off in two years regardless.

kembe

Hello I'm completely new to forum. My husband had been hiding debts of over £40,000 from me until recently -- some of them are in my name as well as his. We've been receiving debt advice from CAB. Our parents have lent us £25,000 and said we could get £15,000 more in September/October. The debt adviser yesterday suggested that she would write on our behalf to push for full & final settlement, offering 50% in first instance. The alternative would be for her to write to the companies offering a token repayment every month until September/October and asking if they could freeze the interest. My question is about the impact of full & final settlement on getting a new mortgage in the next couple of years as we have a young family. We are paying off first of all the debts also in my name, but I have only gone back to work part-time, and so would not be able to apply for a very high mortgage on my own. Should we try to settle now in case? Would it make much difference to my husband's (already rubbish) credit rating?

Hatecreditors.com

You have various issues concerning future mortgages. Firstly, you say you couldn’t apply for a mortgage on your own so presumably you will apply in joint names of you and your husband. However, you state that husband has a rubbish credit rating. This alone will affect your ability to get a mortgage.

Moving onto the debt, if you have been keeping up with your payments it is highly unlikely your creditors will agree to F&F settlements at low levels. Sounds mad but they are more likely to accept low F&F settlements if their debtor has missed payments or paying very low amounts as they want to write the risk off. I think that’s what your debt advisor is getting at with token payments for a few months. Using this method will result in creditors applying defaults which will seriously affect your ability to get a mortgage in the future (or rather for 6 years until the defaults have dropped off).

In addition, partial settlements are recorded on your credit file which will also have an adverse affect as the mortgage underwriter will see that you’ve only paid half the money you owed back. If you know someone who borrowed £5,000 off their mate and only paid £2,500 back would you lend them money?

Sorry to be the bearer of bad news but I think the only way of improving your chances on getting a mortgage is paying the debt in full. Having said that, you have already advised that your husband’s credit rating is rubbish so this may be pointless.

Maybe an idea to pay the debt off and try and ride it out for 6 years for the credit files to improve and defaults to drop off etc.

One final point, your parents are going to ‘lend’ you £25,000 and another £15,000. Is this a good idea? Sounds like a ‘consolidation’ type loan to me which never work.