Partially settled defaults and mortgage

flossieflipflop

Hello,

Just after a bit of advice.

Very brief summary - was in a debt management plan (debts accrued when I was young and irresponsible) since 2007. Debt totalled around £18,000. Paid this down to £9,000 and was in a position to offer partial settlements this month. Have agreed and paid 75% settlements to my creditors so am now free of those debts. I obviously had defaults on my account which were added in 2007,2008, 2009 and 2 in 2010 (these last 3 are currently with ombudsman as accounts actually defaulted in 2007 am waiting for decision about whether these will be dated back to 2007/2008. we have no other debt except a mortgage which has never been in arrears. All current accounts/phone etc are 'green' and up to date. we have a good joint income.

We are looking to move house and have been enquiring about a new mortgage (accepting of course we will have to go sub prime). We have 40k to put down as deposit (which will equate to about 25 -30%). The broker we have approached told us we will probably not be considered by any lender as the defaults are partially settled but we would be considered if the debts were fully satisfied.

So I was wondering whether we go into rented for a year or 18 months by which time all the defaults will have fallen off (except the 3 late ones which hopefully will have had the dates corrected - initial decision by ombudsman agreed with me, Lloyds appealed so now waiting for final decision) which would mean they would also be gone, but that's not guaranteed. (but I'm confused as only settled this month does that mean they will show on my account for 6 years from now or will the accounts completely disappear off my credit file 6 years from when default added?)

Or do we sell (we have an offer for our house), rent for 6 months use some of the deposit to make the settlements fully satisfied and hope we get a mortgage?

Does partially settled really make such a difference over fully satisfied when the debts are almost 5 years old?

Thanks if anyone can help (and if you made it this far through my muddled writing)

Dave_Ham

Almost impossible to say on the face of it, not all lenders need them to be fully satisfied.

I would suggest before you do anything, get your Experian, Equifax and Call Credit reports and put them in front of an experienced broker.

At your loan to value, I would imagine there will be options that do not include renting for a period of time.

Good luck

flossieflipflop

Thank you. I will do that. Would you advise using a broker I can meet with face to face or would an on-line/phone one be as useful?

Dave_Ham

The experience of the broker is more important than face to face in these circumstances, although this is just my opinion.

All the best

Thrugelmir

flossieflipflop wrote: »

Does partially settled really make such a difference over fully satisfied when the debts are almost 5 years old?

Yes, as this a default in its own right and will be registered as such.

The whole purpose of the credit history recorded by credit agencies is to warn other lenders of your behaviour.

flossieflipflop

Thrugelmir wrote: »

Yes, as this a default in its own right and will be registered as such.

The whole purpose of the credit history recorded by credit agencies is to warn other lenders of your behaviour.

Sorry I'm not quite sure what you are saying? I know I have defaults and these have been correctly awarded (although they do represent behaviour of 5 years ago not recently)

Are you saying the partial settlement is an additional default? And that I will be penalised twice for the same debt? I don't mean to be rude but I'm not sure what you mean by saying this is a default in it's own right

Thrugelmir

flossieflipflop wrote: »

I don't mean to be rude but I'm not sure what you mean by saying this is a default in it's own right

Not paying a due debt in full.

flossieflipflop

But I'm not disputing that the accounts are defaulted? Are you saying it will be defaulted twice? I thought it could only be done once?

Thrugelmir

flossieflipflop wrote: »

But I'm not disputing that the accounts are defaulted? Are you saying it will be defaulted twice? I thought it could only be done once?

Default is a technical term.

What matter's is that the f&f settlement will be recorded on your credit file.

So a lender will register that event as a default.

flossieflipflop

Ok thank you (I'm still being a bit stupid as I thought as they were already recorded as defaulted they were already seen as defaulted before I settled them?)
I also thought (but this is the bit I'm not sure on) that after 6 years of default being recorded the whole entry came off your file. So are you saying that the 6 year clock will start again from date of settlement?

Thanks for the advice

Thrugelmir

flossieflipflop wrote: »

So are you saying that the 6 year clock will start again from date of settlement?

Not settlement. The lender is willing to accept a reduced lump sum payment to settle the debt. The reason being that collection of debt is an expensive business.

There's no free lunch when it comes to settling debts.