Settling Debts Early.

colinairey

Hi.

I owe 4 different creditors around £11000.00.
The highest is to Natwest for a loan of £9000. I owe Barclays around £800 and the other 2 are for credit cards making up the remainder of the debt.
Ive owed this money for about 6 years and I'm currently paying each one £1 a month.
Ive been lucky enough to have a relative offer to help me out financially as they know I'm desperate to clear these debts so i can get my credit score back to normal in the hope of finally being able to get a mortgage. I asked one of the creditors what they would accept as a settlement and they said they would knock roughly about a third of the overall debt but they then told me that it would go down on my record as not paid in full and would stay on my credit score for 6 years?
Is this correct? If its not going to make any difference to my credit for 6 years then I might as well keep on paying £1 a month until I get whole amount together.
Can anyone advise ?

Thanks

Angry_Bear

It's right that if you agree a partial settlement then the creditor will mark your file as "partially satisfied".

However, this should drop off your credit file 6 years after the original default date - which, assuming the creditor have done everything properly, should be almost up (or maybe already up).

Get a copy of your credit report and check that the accounts have been defaulted and what date the default was added. It's not unknown for a creditor to mark you as a continuing "arrangment to pay" or delay putting the default on your credit report. You can fight to get that changed, but first you need to know what's there.

National_Debtline

Hello there.

From what I understand is that the settlement could be marked as a 'partial settlement'. We asked Experian what this would actually mean. Their response was:

The outstanding balance will be changed to zero to reflect that no money is due; but the P flag will show that it was not paid in full. They also advised that they don't currently believe such flags are usually used in credit scoring, but they could well be included in a lender’s underwriting policy rules. This could mean that the appearance of a flag on a report would trigger a manual review of the application, where the additional information could then be considered by one of the lender’s underwriting experts.

It's vital that you negotiate the settlements in writing. And await for them to accept the settlement prior to making a payment. If the payment is made by the person whos money it is, the settlement would be more binding from a contractual standpoint.

Here's our full & final settlement fact sheet:
http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

Best wishes,

David @ NDL.

The_Boss

Ignore any reference to your credit score too. You don't have a credit score (nobody does) and one financial institution cannot accurately tell you hiw another would scorr any applications you make.