Making an offer to lenders to remove defaults

chriz1000

I currently own a house with my ex-partner. I have 8 defaults on my credit file and roughly £55,000 worth of debt (this was from a company administration and the majority of the money was money invested in the company that I guaranteed). I have been paying a token payment of £2 to each lender for over 2 years and I suspect they have pretty much written off the debt

I have our 4 year old boy 3 nights of the week and it’s always been a stable home for him. I’d prefer not to sell, however my ex is getting rather insistent that she wants to come off the mortgage.

Now if I do agree to sell, I should receive £30,000 in equity. If I was to approach my lenders explain the situation and say I'm prepared to sell the house only if all lenders agree to accept £0.55 in the pound to clear my debt from the sale of the house, and also providing they remove any defaults and black marks from my credit file. The main reason for this being that to rent somewhere decent enough for myself and my boy I will need a clean credit file, or to use the equity in the house for a big deposit. Is this something anyone has tried before?

The other option is I can ether sit and wait for the next 4 years and let my ex try and force the house on the market until which time the defaults fall off my credit file.

DevCoder

Lenders won't remove defaults (unless they are wrongly applied). Your credit file is meant to represent a true and accurate picture of your financial history.

What you are suggesting is a full and final settlement (F&F), the lender will mark your file as either satisfied (if you're very lucky) or partially satisfied.

If you've been paying the creditors then you are acknowledging the debt so it will be 6 years (or 5 years in scotland) when you stop paying them that the marks will fall off your file. Although to be honest at 55K, creditors will seek a CCJ in the majority.

chriz1000

Surely if I'm making a token payment and my SOA proves that is all I can afford it would be pointless going applying for a CCJ as I'm paying an amount that they have agreeing to accept, and I would be able to prove to the courts that this is the case. I often even get letter saying "thank you for keeping to your agreement, as a thank you here is a voucher for 30-40% off your debt if you settle before the end of the month" If I stopped making payments they would have more grounds to push for a CCJ?

aymz1983

Defaults will stay on your file for 6 years, so if they still have 4 years left to run, there is nothing you can do about that.
If you decided to stop paying your creditors altogether, then they would have 6 years from the date of last payment to be able to take further action, in this case in the form of obtaining a ccj as you've already had the default. They can't put any more defaults on or anything as it is already on there, and they will fall off in 4 years regardless of when you paid or stopped paying.

I wouldn't advise to stop paying entirely, definitely not with the amount of debt left owing in your situation. I would look to sell the house, keep some money back so you can put money down for a rental deposit + first month rent, and then negotiate with the creditors as to full and final settlements. If some are sending you offers already, start with those as they are the ones who have already shown they are open to the idea. make sure you get the f&f offers in writing from them though.

As for renting with your file as it is - we managed to get a privately rented house, and I have several defaults and 4 ccjs on my file. These were from 2, 3 years ago at that point, but we were honest about credit file from start when applying, and circumstances explained to the landlord. We were also able to get a guarantor, although that was more to show the agent/landlord that we were serious, rather than saying we couldn't afford the rent. Perhaps it might be worth asking to speak to the landlord on any properties you have an interest in. If you can't get a guarantor, perhaps offering two or three months rent in advance instead of the usual one?

Hope it works out