Pay off full amount or make a deal?

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Hi all, hoping someone has the knowledge to advise me on this one!

So I have a number of Credit cards, without looking at my notes, roughly I have 5, ranging in debts of £400 to £1900.

I'm determined to become debt free and have only just started (even made myself a diary!)

Anyway, I haven't paid off any in a couple of years, but I'm unsure on which is the best route to go down:

1, Pay them all a tenner a month (I cant afford anymore than that)
2, Save up, contact them when I have a lump some and request a settlement figure. (I have letters offering me figures) I understand this will stay on my record for 6 years.
3, Save up and pay them the full amount I owe.

What do you all think is the best route to go down. If I save up and pay them in full, how long do I have bad credit on my records or is it cleared when I pay them? If I pay a settlement figure, is my bad debt gone after 6 years?

Many thanks in advance!

Comments

  • Cycrow
    Cycrow Posts: 2,639 Forumite
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    if you can only afford £10/month, then how you can afford to save up anything ?

    I assume they are not currently chasing for the debts and that they have been defaulted?

    If they are not chasing them, it might be better to simply save up and pay them off in a lump sum. The damage to your credit file will have already be done.

    But you do run the risk of them taking you to court
  • John1993_2
    John1993_2 Posts: 1,090 Forumite
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    One good idea is to see if you can increase your income. Are you working a standard 37 hour week, if so could you take on work at the weekends, for example, or get overtime?

    At the same time, you shoud post a "statement of affairs" on the Debt Free Wannabee forum, and people can suggets ways that you could cut back on expenses, to help you pay things off more quickly. Just setting things down in writing will tend to help you yourself to spot areas where you could make cuts.

    Good luck, you've taken a step in the right direction by posting here.
  • SammyJo1206
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    I can afford to pay them all £10 a month each, or alternatively save £50 a month until I have a lump some to pay them. Thats the bare minimum I can afford, I'm hoping that certain months I may have more.

    Yes they have defaulted as I don't get much hassle/letter/calls from them, but they are there, and I have every intentions to pay them off! (GRRRRRR).

    So, correct me if I have this wrong please, technically the damage is done, so if I pay a settlement figure I'm not making my situation worse or last longer?

    I currently work full time, plus I work part time at home, days off are far and inbetween at the moment! Any money I make at home is currently going back into buying products and paying for training (I do hair extensions!) I hope within the next couple of months though that this will have leveled out and that I will actually start to see some profit. When this happens it will go towards by debts.
  • HappyMJ
    HappyMJ Posts: 21,115 Forumite
    Combo Breaker First Post
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    I can afford to pay them all £10 a month each, or alternatively save £50 a month until I have a lump some to pay them. Thats the bare minimum I can afford, I'm hoping that certain months I may have more.

    Yes they have defaulted as I don't get much hassle/letter/calls from them, but they are there, and I have every intentions to pay them off! (GRRRRRR).

    So, correct me if I have this wrong please, technically the damage is done, so if I pay a settlement figure I'm not making my situation worse or last longer?

    I currently work full time, plus I work part time at home, days off are far and inbetween at the moment! Any money I make at home is currently going back into buying products and paying for training (I do hair extensions!) I hope within the next couple of months though that this will have leveled out and that I will actually start to see some profit. When this happens it will go towards by debts.
    If you are going to offer £10 a month you need to offer each creditor a proportionate amount such as £4 to the one with £400 outstanding and £19 to the one with £1900 outstanding.

    I don't think it'll do any harm paying them something.....although.personally I'd just save it up and pay it off if one of them they try and take out a CCJ against you....or even use the savings for any possible emergency that may come up.
    :footie:
    :p Regular savers earn 6% interest (HSBC, First Direct, M&S) :p Loans cost 2.9% per year (Nationwide) = FREE money. :p
  • Cycrow
    Cycrow Posts: 2,639 Forumite
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    If you go on a payment plan, then they could mark your file with an arrangment to pay. This will stay on your file for 6 years after you have finished paying. So that could make it worst.

    If you pay off the final amounts in one go, the only thing that'll make your credit file worse is if they apply for a CCJ before you can pay the money back.

    As they are not chasing you, then i would focus on saving what you can and pay them back in a lump sum. If and when they start chasing it, then you can reconsider your options.

    The defaults will drop of your file after 6 years from when they were issued not when you pay it back
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