Credit Card - Full & Final Settlement

Greeners65

Having got into a very sticky situation with my finances, (and a divorce !!!) I'm now in a position to clear all my credit cards to zero.

Is it worth me contacting the companies to see if they will reduce the balance for final payment or are they pretty much fixed ?

Thanks

YorkshireBoy

How much do you value your credit rating (for the next 6 years)?

Greeners65

YorkshireBoy wrote: »

How much do you value your credit rating (for the next 6 years)?

Why would paying them off in full effect my credit rating ?

Tixy

Paying off in full is not the issue, its if you pay a reduced full & final settlement - which would be marked on your file by the lender (shows that the debt was partially settled for a lower amount that the balance).

Lenders only consider reduced settlements for people in arrears, or already in arrangement plans / have already defaulted on the debts. If you have kept up to date with payments there is no reason or incentive for them to reduce the balance that you owe.

Willing2Learn

Greeners65 wrote: »

Why would paying them off in full effect my credit rating ?

Because you said in your first post you want to negotiate with them and "reduce the balance for final payment" you are suggesting not paying them in full.

The current balance on your credit report would show as "satisfied" instead "0". There also would be a marker on your report against the account with the words "Partial Settlement".

Both of the above would remain on your credit report for six years after the account is closed and would negatively impact upon future applications during this time.

oscar52

Greeners65 wrote: »

Why would paying them off in full effect my credit rating ?

No, but paying less than the full amount would. If the company reduced your final balance, as you ask in your first post, your crdit file would be marked as a short / partial settlement.

Greeners65

Thank you all for the information, it makes perfect sense so I'll save the phone calls and get them paid off.


:D:D

Willing2Learn

You could also negotiate lower interest rates or an affordable payment plan or a forbearance program instead of partial settlement.

stephane_2

Willing2Learn wrote: »

You could also negotiate lower interest rates or an affordable payment plan or a forbearance program instead of partial settlement.

Wy would they lower the interest? Why would they negotiate an affordable payment plan?
As said previously, if not in arrear in payments or defaulted there are no reasons as to why the lender would agree on any of those.....

Willing2Learn

Willing2Learn wrote: »

You could also negotiate lower interest rates or an affordable payment plan or a forbearance program instead of partial settlement.

stephane wrote: »

Wy would they lower the interest? Why would they negotiate an affordable payment plan?
As said previously, if not in arrear in payments or defaulted there are no reasons as to why the lender would agree on any of those.....

My understanding was that all credit card companies have teams that authorised to find potential workable negotiated solutions when customers contact them who are in genuine hardship and have the supporting evidence.

I've never been in the position of the OP, so have no experience of how best to resolve this type of problem, but just did a quick google search

I can't post any links as I am new to these boards. However, just for example, Nationwide have on their website the following:

Help with your Nationwide Credit Card
We are here to help you – if you are behind with your Nationwide credit card payments, you should call us as soon as possible.

Before you call us – if you haven’t done so already, complete an Income and spending form – we need the information to make sure we give you the right type of help.

We will – give you clear and straightforward information, agree an appropriate action plan with you, review your situation regularly and aim to agree payment arrangements with you according to your circumstances. If we can’t help we will explain how to get free independent money advice.

If you are facing temporary or short term difficulties We can consider agreeing a repayment schedule with you.

If you are facing permanent or long term difficulties – we will review all of your finances to agree a repayment plan that works for both of us.

If you use a money adviser, debt adviser or a debt management company – with your permission we will work with them to help resolve your difficulties.

If you or your money adviser are preparing a plan to repay your credit card - we can suspend any collections activities for 30 days to allow a debt repayment plan to be developed based on your ability to repay, and can extend this for up to a further 30 days if real progress towards developing such a plan is being made but work has not yet concluded.

Where genuine financial hardship is proven (after investigation of your income and expenditure, assets and liabilities) – we can consider reducing interest and charges applied to your account.

Please note – if paying a reduced payment means that the total amount unpaid is equivalent to one monthly payment, this will show on your payment record registered with Credit Reference Agencies and may affect your future credit rating.

Apologies if I have misunderstood the various things I have just read across a number of sites. I do not intend to mislead anyone. Just don't see the harm in asking a credit card provider whether current terms could be varied if there is evidence that a customer is in great financial difficulty.

meer53

The OP isn't asking for help in making repayments, they're asking if the CC issuer will accept less than they owe. The OP isn't saying they're in financial hardship, quite the opposite. They're in a position to pay them off.