Question about Default vs Settled on credit file

Surfeit75

I have a default on my Credit File from 2011.

I have an arrangement to pay £1 p/m but have no intention to clear the balance as I dispute the amount owed, and was once offered to "partially settle" the debt for 60% of the balance. So they must know full well the amount they say I owe would not be enforced by the courts etc.

My question is would I be better off sticking to the £1 p/m arrangement until the 6 year period is up and it drops off my file, or try and negotiate with them to some kind of settlement?

I wouldn't mind paying a tiny bit more than what I feel I owe if it actually did some good to my credit file but I've heard conflicting reports.

For instance I've read that if I settled the debt then it would reset the 6 year period? Can someone confirm whether this is true or not?

And what is the benefit of it being settled vs partially settled?

Thanks :beer:

matttye

If you pay it off it will not affect the date it drops off your credit file. It will show as 'satisfied' if paid in full and 'partially satisfied' if paid in part.

If you don't pay they could take you to court and obtain a CCJ against you assuming all of their paperwork etc is in order. That would damage your creditworthiness for 6 years from issue date.

Surfeit75

Thanks.

Realistically though how much of a positive impact would it have by being partially settled?

Just trying to gauge whether it would be worth my while.

Thrugelmir

Surfeit75 wrote: »

So they must know full well the amount they say I owe would not be enforced by the courts etc.

The fact that you are paying even a token £1 means that you acknowledge existance of this debt. Something the Court would take into consideration.

matttye

Surfeit75 wrote: »

Thanks.

Realistically though how much of a positive impact would it have by being partially settled?

Just trying to gauge whether it would be worth my while.

Not much. The mere presence of a default means you'll be treated like a leper by most prime lenders. My third and final default is due to drop off tomorrow so I speak from experience!

Gaz83

Making payments of anything, even a token £1, is probably the worst thing you can do if you dispute the debt.

solentsusie

The fact that you are making payments, even of £1 per month, means you are acknowledging the debt. Even after the default drops off your file after six years, if you cease payments you can still be taken to court and a CCJ obtained against you. If you had not acknowledge the debt by not making payment and ignoring any communications from the lender or debt collection agency after the six years the debt would have become statute barred.

You may be better off by negotiating a full and final settlement now.

Surfeit75

The debt has been bought by a DCA, and it is not a token payment it is a formal arrangement with them, which has been in place for nearly 2 years.

Why would the original creditor sell the debt to a DCA for very little money, and then for the DCA to receive just £24 in 2 years if either of them believed they could recoup much more by taking me to court?

Don't forget the 60% "discount" offered to me too.

I don't dispute the debt, just the amount owed. I need to make some exact calculations but I am not too far off.

They don't even apply any pressure to me, I just wanted to repair my credit file.

wazza24

I don't know your full situation so its hard to say but if it was me i think i would try to settle for as little as possible, make them your best offer.

i am not 100% sure but are you not resetting the 6 year period every time you make a £1 token payment. at least if you get the account settled now and closed it will drop of your file in 6 years from now, but continually paying every month on an account which sounds like it will never be out of default means in 6 years from now the account will still not be paid off and will still be in default.

wazza24

Surfeit75 wrote: »

Why would the original creditor sell the debt to a DCA for very little money, and then for the DCA to receive just £24 in 2 years if either of them believed they could recoup much more by taking me to court?


just a guess like but i would say the original lender cuts their losses by selling to a DCA (it would cost them money to take you to court) and DCA's are designed and set up to chase money, they are probably happy having thousands of customers drip feeding them money every month and if 1 or 2 pay up every now and again then happy days.

Surfeit75

wazza24 wrote: »

I don't know your full situation so its hard to say but if it was me i think i would try to settle for as little as possible, make them your best offer.

i am not 100% sure but are you not resetting the 6 year period every time you make a £1 token payment. at least if you get the account settled now and closed it will drop of your file in 6 years from now, but continually paying every month on an account which sounds like it will never be out of default means in 6 years from now the account will still not be paid off and will still be in default.

I think I will try and negotiate a settlement but am worried about what you say in your post.

6 years from now?

The default is due to drop off in 2017, I do not want to extend beyond this so what should I do?

You're telling me if I arranged a full and final settlement I would have to wait until 2021 for it to be off my credit file?

Seriously concerned about this now.