Settling the debt

lilyp

Hi,

My partner and I have debts of around £60K and we have just taken out a mortgage of £50k to consolidate the majority of it.

It has been suggested to me that the companies we owe (HMRC, Tesco Loans and various debt collectors) will settle for less than full amount if we can offer a lump sum.

I feel terrible doing this as I believe we should pay back what we owe but it would be amazing to get rid of all of it in one go.

Has anyone done this before, does it affect your credit rating and is it legal?

DevCoder

They wont even consider F&F settlement until you have defaulted (ie mostly 6 month missed payments).

It's legal in that you can ask , they dont need to agree and it will trash your credit rating (both the defaults and the reduced F&Fs)

HMRC forget about, they can put you in prison so its very much a priority debt over anything else, pay this before any of your other creditors.

Tixy

For the debt collectors on already defaulted you might find they accept reduced full & final settlements - make sure you offer in writing (useful factsheet on national debtline website).

DevCoder

And make sure , if you are worried about your credi file, that they agree (in writing, as Tixy says) to mark it as settled.

lilyp

Thanks for the advice

How much should I offer percentagewise? Should I call before I write?

happygolucky777

Im dealing with mbna well someone who has bought my debt, i owe 5k after a year of not paying them, i recieved another threat letter, they dont even have my address by the way! After i have given them it! Anyway i asked if i can settle at a lower price, she said we normally take 20% off but will get the negotiator to ring you back to see if possible! So im waiting. You can ask yes! Lets just see what happens! Will keep you posted.

Tixy

happygolucky777 wrote: »

Im dealing with mbna well someone who has bought my debt, i owe 5k after a year of not paying them, i recieved another threat letter, they dont even have my address by the way! After i have given them it! Anyway i asked if i can settle at a lower price, she said we normally take 20% off but will get the negotiator to ring you back to see if possible! So im waiting. You can ask yes! Lets just see what happens! Will keep you posted.

Don't do this by phone alone. You need to get written confirmation from them that the payment will be accepted in full & final settlement before you pay and that your credit file will be updated to show you don't owe any money on the debt. And you need to keep that paperwork, otherwise if they or anyone chases for the debt in a couple of years you will have no proof of the settlement.

shedhead55

HMRC should be your priority over all others, depending on the amount owed and how long it has been outstanding they will usually not hesitate to bring bankruptcy proceedings, even if it would not appear to make commercial sense. Furthermore it is unlikely they will settle for anything less than the full amount, which will include interest for the time it has been outstanding.

cats2012

I think you need to clarify whether you are already defaulted on all of this debt. I'm assuming you are, but as you've just taken out a £50k mortgage and asking about your credit file I'm not 100% sure...?

If you've not defaulted a) people most likely won't accept a partial settlement anyway and b) it will trash your credit rating .

geoffky

Tell them your parents or friends have offered to lend you the money and it is time limited...