Settlements and affect on credit files

gradute

Hi All

Would like a bit of advice,

I'm 27, I have a few debts I've been paying off since 2008 after I graduated, overdrafts and PD loans. All of them have been passed on to DCA so the payments are being made to them. Currently only been making token payments as the job market has not been kind to me.

Recently a sibling has come into some money and very kindly offered to clear my debt so I can start over, my question is this.

If I negotiate settlements with each DCA, does anyone have a clear idea on how my credit file will be affected? Bearing in mind it's already quite heavily affected from the past few years of making minimal payments, how will paying a settlement figure affect it further?

Any advice would be much appreciated.

Thanks

izools

They would be marked as partially satisfied defaults; they would show £NIL balances and be closed.

If you paid them in full they would show as satisfied defaults.

The difference in effect on your creditworthiness would be very negligible if anything.

Although you mention you've been paying them off since 2008? Defaults drop off your credit file altogether six years after the date they originally defaulted whether or not they are settled.

Also, if you do negotiate partial settlements don't pay anyone a penny until they confirm acceptance in writing

gradute

That's some excellent advice, thank you! Sure my sister will be happy to know she won't need to shell out as much to get me out of debt too.

I was mainly worried as I'd heard about this 6 year mark but if thats only from the date it defaulted rather than the settlement then it makes sense to negotiate a cheaper settlement I guess.

gradute

So I just had a look on Noddle at my credit report, it looks like even though I'm making monthly payments, they're being marked as late? Any suggestions on why that might be?

happy_bunny_2

Which accounts are showing late? The ones you talk about in your original post?

it may be that they haven't all been defaulted.

gradute

I think you're right actually, looks like a lot of them have been left in arrears for years so even though I'm making payments they're being marked as late

Tixy

So these accounts don't show as defaulted or show a default date on your credit report?

What is showing in the monthly status section for these? Are they showing as though you are 6months in arrears?

If they are being collected by a debt collector then they should have been defaulted and show as in default with a default date that is definitely no later than when it was passed to the debt collector (but quite possibly a lot earlier than that).

gradute

I'm calling them all now to try and get an idea of why things are showing like that.

Robinson Way who look after a Halifax OD that I had tell me it's a defaulted account but halifax are still marking the payments as late,

Halifax tell me that because I didn't honour the original repayment plan they will continue to mark all payments as late until the balance is settled.

This is confusing no?

Tixy

If the halifax account entry only shows late payment and not defaulted then you need to write to them and state that as the account has been passed to a debt collection agency it is an unequivocable indicator of the account being in default and that they should therefore update your credit report to show when the account defaulted.

(A default is worse than just late payments in the short term, however the benefit is that the whole record of the account is removed from your file far sooner - a default should be added a few months after they recalled your overdraft at the latest).

Do double check that the accounts are not showing as defaulted on your file though (as well as then showing that you are behind with repayments) - as it would be unusual for several creditors to have not put defaults on when your accounts are with debt collectors.

gradute

Okay Halifax sorted, the next screwy one is Barclaycard. They sold the balance on to IDR/Link who have been marking my payments late since 2011 when BC sold it to them.

After a day of calling around here's what I got, nothing in stone yet but if any one has any tips on how to reduce these amounts further I'm all ears.

Wonga - Balance - £413.83 (Settlement offered - £315)

Robinson Way (Halifax OD) - Balance - £2547 - (Settlement offered - £1905)

MotorMile Finance (QQ PD Loan) - Balance - £200 - (Settlement offered - £110)

IDR/Link (BC CC) - Balance - £505 - (Settlement offered - £250 (Not accepted yet)

Capquest (CapOne CC) - Balance - £271 - (Settlement offered - £200)

CCSG (BT Bill) - Balance - £304 - (Settlement offered - £253(Not accepted yet)

LCSDR (Southern Electric Bill) - Balance - £770 - (Settlement offered - £350(Not accepted yet)

Westcot (Natwest OD) - Balance - £2057 - (Settlement offered - £1028)

I tell ya what, it's pretty bracing seeing it all laid out like that. What do we think, should I be happy with these discounts or push for a bigger chunk? After all the less money my sister has to pay out the better really.

Sidenote: I wish I had been taught about the dangers of OD's and CC's before I got to uni

happy_bunny_2

Barclaycard should have defaulted at the very latest when it was sold. Complaint time...

Make sure you get all settlement offers in writing, before parting with a penny.

You normally get a better discount with a DCA than original creditor. They buy the debts for not a lot so want to make a quick profit.