Full balance or settlement closure

dobbollah

In brief, Im on a debt management plan......

I know, once ive paid things off Ive 6 years 'bad credit history'

However...heres the question, I'm in a position to start achieving pots of money to start paying off creditors, it will still take a couple of years but all the same...its positive progress.

So.....whats best from a credit perspective.

a: Get a settlemnt figure ie 80% of the balance and pay it to have the account closed with a 'settled but not paid in full' mark

b: pay in full to get a fully settled status and take longer to become debt free

Given my credit is going to be tainted for 6 years anyway, would it better to just get things done and settled asap to get that 6 year clock started

dobbollah

i've since realised that the default is removed 6 years from the date of the default, ive been on my dmp for coming up to 6 years so in theory that will be removed soon.

That being the case.....assuming I continue to meet the monthly payments then my credit file will slowly improve...?

the original question does remain, is it better to close down the down asap using a settlement and have that on my credit file, or to pay the full amount to have a fully satisfied record...?

downhillfast

OH was on DMP until a couple of weeks ago (:j )

When our financial position picked up and we were thinking of F&F etc none of the creditors wanted to know. In their eyes they had been receiving a 'reasonable' sum regularly and were happy to wait it out. At this point with her credit file being 5 years or so into its trashing we decided to just keep going with the DMP as it wasn't accruing any interest (but the PPI payout in our TSB account was earning us interest!)! Since then it has all been paid off and the final default will drop off in July!

Realistically you need to consider how close you are to paying it off - for us it was a no brainer as the payoff was close to when the last default drops off. So it made little difference paying it off in a lump sum or letting the DMP continue.

dobbollah

thanks for reply and well done :-)

i guess where i am different is i will still be on the the dmp when the defaults fall off....

is my credit likely to start improving as the defaults fall off as ill be then making regular payments or is it further tainted for years even after the defaults come away

and if i can get a settlement figure, should i

downhillfast

dobbollah wrote: »

thanks for reply and well done :-)

i guess where i am different is i will still be on the the dmp when the defaults fall off....

is my credit likely to start improving as the defaults fall off as ill be then making regular payments or is it further tainted for years even after the defaults come away

and if i can get a settlement figure, should i

Your credit worthiness should improve very quickly once the defaults are gone as that is the part that potential lenders see - however whilst in a DMP you are bound to not take out further credit anyway so it's a bit of a moot point. OH will be applying for a CC to help rebuild credit file pretty soon. Has passed credit checks for 2 interest paying current accounts so don't want to risk another search just yet!

You will get there... it might be a long road but the look on OH's face when she got the letter saying it was all done and dusted was amazing!

downhillfast

dobbollah wrote: »

and if i can get a settlement figure, should i

No harm in asking as you are so close to the defaults disappearing.

vickyj87

I don't think you will have to chose. I would offer around 60% but ask for full and final settlement, they will probably increase the % a bit but should mark as fully settled when you pay the lump sum. Also it depends who the defaults are with, for example if any have been sold to lowell..they pay about 10% (if that) for files, so would be happy with a lot lower percentage of the bill paid. I got a F+F settlement deal with lowell for only 30% of the balance a few years back.

dobbollah

so a settlement is best i thought it would be...

one of the creditors, paragon, i approached on the phone a while ago re settlement, they declined and at that stage i didnt pursue it, but they said they would not mark it as as full and final settled...instead marked as paid but not in full....

downhillfast

dobbollah wrote: »

so a settlement is best i thought it would be...

one of the creditors, paragon, i approached on the phone a while ago re settlement, they declined and at that stage i didnt pursue it, but they said they would not mark it as as full and final settled...instead marked as paid but not in full....

Definitely worth a shot but make sure any future offers you negotiate in writing. There is a guide here


Good luck :beer:

dobbollah

thanks for the link, is makes reference to the debt being shown as part paid and im just concerened that will look bad...

but i guess weighed against saving a few thousand and being debt free sooner that worth it...

downhillfast

dobbollah wrote: »

thanks for the link, is makes reference to the debt being shown as part paid and im just concerened that will look bad...

It would if it was going to be on file for long but the partial settlement will disappear with the default once the 6 years from default date have elapsed!