Should I part settle debts?

Katymillward

Hi,

I am with a debt management company currently paying debts I owe which add up to approx £7,000. I want to get this paid as quickly as possible and I have been considering offering the creditors a part settlement amount as a final figure of course. Has anyone had any dealings with this? My debt management company said if I offer a part settlement that it will still stay on my credit file for six years. Is this right, do you get penalised for offering what money you can to pay your debt off quicker?

I just want to be debt free as quickly as possible to have financial freedom, I won't be applying for credit in the future, just maybe a mortgage in 5-10 years time.

Any help from people that have been through similar would be great. I don't fully believe the debt management company as they want my custom.

Kind regards, kate

Tixy

Your debts will stay on your credit file for 6 years from the date each shows as defaulted.

Early settlement won't change that, partial settlement won't change that.

If you partially settle then usually your creditors will make that clear on your file - so it will state that you only partially settled.

Sounds like you are not with one of the free debt management organisations. Assuming you are not, a good way to start clearing your debts quicker would be to switch to one that is free.

How much money do you have set aside to try to settle your debts?

Lensman_2

Good advice from Tixy.

If you do want to settle these debts then you are looking at a Full and Final settlement process.

This needs to be done in writing and the creditors have to agree to certain terms before you accept and pay.

People sometimes have luck with 20% being accepted, but that is the normal starting point with 40% - 75% actually being achieved.

It it completely worthless unless you have it in writing that it is a full settlement though. Otherwise the remainder gets sold on and you get chased by another DCA in a year or so for the rest of it.

Tixy

Oh and if its not a free DMP company then don't do your settlement offers through them, they will take a cut. Do them yourself (useful factsheet on national debtline website about Full & Finals).

Lensman_2

Thanks Tixy.

I dug a link out for you Katy:
http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

Katymillward

Thank you all for the great advice. I pay currently £250 per month and as it stands would take just over three years to pay everything in full. It's not a long time however it is horrible having debt as its like a weight on your shoulders. I will give it a lot more thought and communicate directly with the creditors and get everything in writing.

Better_Off_1983

Is there a fee with the debt management company?

owen_money

Lensman wrote: »

Good advice from Tixy.



It it completely worthless unless you have it in writing that it is a full settlement though. Otherwise the remainder gets sold on and you get chased by another DCA in a year or so for the rest of it.

Is it worthless? I did a partial settlement with MBNA, and it was marked as so because that is what is was. I have it in writing that they will not pursue the outstanding amount and that the account is now closed. My credit file shows that it is closed as well, how can they chase a debt on a closed account? Has anyone ever been chased for the so called outstanding amount from a DCA a year or so later? I asked this questions on here a few months ago and no one said that they had been. I've heard a lot of talk about that you would get chased, but it seems no one actually has experianced it, although a lot of people have done partial settlements. In general I think its just conjecture and not fact.

If I am wrong I will come back and say so, but I bet a pound to a pinch I'm not wrong

Tixy

I have seen a few cases where people have posted on here who have been chased after 4 or 5 years from paying a settlement even, on debts they believed had been settled.

In the cases I can recall these were people who had agreed settlements over the phone and so didn't have any paperwork to back it up.
And of course their credit files didn't show the debts at all, as the defaults were so old that the debts had long since dropped off.

Its why its vital to keep the paperwork showing their agreement, and ideally copies of your credit files.

I can't recall any case of someone having it on paper as a parital settlement and then being chased years down the line (but I wouldn't want to say it hasn't ever happened).

fatbelly

Owen - you did right to get your deal confirmed in writing. Here's a thread from someone who didn't

Help me to cut Lowell Portfolio 1 Ltd out of my life!!!

owen_money

I did a lot of research on here first and made sure the offer was in writing, which is the key thing. My debt was still with the orginal creditor, MBNA, if that makes any difference, who maybe have a better reputation the a smaller DCA.
From what I can gather F&F used to be offered, but now only partial settlements if the full amount is not paid.

I dont want to appear cocky, but I do get a bit miffed when comments are made regarding F&F / PS and indeed any advise to by peope who dont have experiance and just act on what they have read elsewhere.
Saying that, from the posts I have read from Tixy and Fatbelly they always offered sound advise and know their subject. Keep up the good work guys