Default - Partial settlement worth paying off???

Ruby_Gold

Hi

I'm looking to get a joint mortgage with my husband but before I can do this I need expert opinion/advice on a credit card (Barclaycard) I defaulted on 7th October 2011 whilst working abroad for 18 months. The default amount is for £3370 and the current balance is Satisfied BUT partially settled. I rang Barclaycard and asked them why this account was partially settled and they advised me it still had an outstanding sum of £1350 but I wouldn't be chased for this amount.

Further to the above, I do not remember receiving a default letter advising me that I have defaulted and for that matter paying the Debt agency two payments of £505 and £1515.

I feel I have some options listed below but really could do with some advice from people who have been through the same scenario or have knowledge of this subject.

A) Would paying off the remaining debt and therefore making the account fully settled and satisfied but still having the default on my file improve my chances of been accepted for a mortgage?
Should I go down the route of negotiating to pay the remaining debt in return for the removal of the default;

C) Should I send a formal letter to Barclaycard to invoke a SAR for my default as I do not remember receiving correspondence's from Barclaycard.

I understand if I take no action, the usual protocol remains and that it will take 6 years and 1 day from the effective default date for my default to be removed from my credit files.

Any advice or tips would be greatly appreciated.

Thanks in advance.

Thrugelmir

a. Would still impact your ability to obtain a mortgage.

b. Not negotiable. That's the whole point of CRA data so that lenders have an insight into the borrowers attitude towards money.

c. Not remembering , particularly as you were abroad at the time , isn't really the basis of a complaint.

People always wake up when they find a mortgage a struggle to find. The hard facts are that you walked away from a debt. Mortgage lenders arent in the business of lending money to those who do so. Harsh but that's business.

india

I was going to ask a similar question. Does anyone know if a debt is partially settled after 6 years of the default date. Will it still be visible on my file or wiped off completely and no longer affecting my credit score?

Ruby_Gold

India, I know enough to say that the Default will be taken off all credit reports 6 years after the default date. Hope that helps.

Ruby_Gold

Thrugelmir,

Many thanks for your quick response last night. I totally understand where you are coming from and you're right, I wouldn't lend to someone who has a bad credit history. At this stage all I am try to do is make a bad situation a bit better which entails me trying to see if there is any way of improving my eligibility for a decent mortgage. I still have over 3 years before the default will drop off my files.

My husband has a very good credit history with no missed payments (not financially linked with myself), we have a joint income of over £130k with savings of £80k and we're looking at purchasing a home in the region of £600k. Subtracting the Stamp duty of circa £24k that leaves us with 11% deposit and wanting to borrow £534k.

We've spoken to a 4/5 brokers who have advised that it will be hard to get a mortgage with the default and the specialist lenders in adverse credit require a bigger deposit.

One broker has advised that I try a mortgage application (soft search) on my own with a high street bank and the actual Bank that I have a Current account and Credit card with (No missed payments in 6 years) who is a tad more lenient and see where that gets me, if successful, my husband and I can apply jointly for a larger amount. If unsuccessful, the bank will tell me why (broker has a contact in the mortgage department in the bank) and what I need to do to be accepted. This should hopefully give me more of an insight and as it was a soft search, it will not have a negative impact on my credit file.

Lioness_Twinkletoes

With an income that high you can afford to fully satisfy your historical debts.

Anthorn

india wrote: »

I was going to ask a similar question. Does anyone know if a debt is partially settled after 6 years of the default date. Will it still be visible on my file or wiped off completely and no longer affecting my credit score?

6 years from the default date the debt is deleted from from CRA file. But don't be too bolshy about it. It can be a bit late in being removed. But the debt still exists. However the default date can never be changed.

If over the last 6 years you have never made a payment off a debt, you have never admitted the debt in writing and you have never been taken to court to recover the debt then under the terms of the Limitations Act 1980 the debt cannot be enforced and therefore you don't have to pay it. But the debt still exists and if the government ever changed the Act to make old debts enforceable you could then be chased for it.

There are basically two types of settlement involving the word "partial": Partial payment in full settlement where the debt is settled, fully paid, etc. and partial payment in partial settlement where you won't be chased for the remainder of the debt. In both cases you need the agreement in writing before you pay up.

Ruby_Gold

Lioness_Twinkletoes wrote: »

With an income that high you can afford to fully satisfy your historical debts.

Hi Twinkletoes.....I can afford to pay it off but will that make my credit history look better and therefore make a mortgage application have more chance of been accepted?

As Thrugelmir mentioned in an earlier post, it won't improve the credit score in his opinion.

Thanks.

Anthorn

Ruby_Gold wrote: »

Hi Twinkletoes.....I can afford to pay it off but will that make my credit history look better and therefore make a mortgage application have more chance of been accepted?

As Thrugelmir mentioned in an earlier post, it won't improve the credit score in his opinion.

Thanks.

If you pay off the remaining balance then it can only be "settled". The account in the CRA file will however still have a default date and the history of the account will still show the defaults. Whether that will impact a mortgage or other credit application depends on the lender. However you can ask Barclaycard to remove the account but they are not obliged to do so.

SeduLOUs

With a default (whether settled or otherwise) you are highly unlikely to be offered a mortgage from a high street lender. With your income/savings though I'm sure that not all doors are closed, you might just have to work a bit harder to find someone who will give you one and it might not be at the best interest rate.

crystal_pixie_2

Ruby_Gold - may I suggest going to a bank that will not use your credit history to make decisions?

Handelsbanken take details of your present circumstances and make decisions based on the information you give them and your future income rather than a credit file.

I am in a similar situation to yourself - a high earner with savings but with defaults. Even with financial disassociation and payment of debts my credit file is still damaged for 6 years.

I went to my local Handelsbanken branch and explained my circumstances - they gave me a current account and my partner and I are looking to go for a joint mortgage soon.

It may be worth a try.