Paying off debt in one go

popjoc

We have about £40000 debt, mostly from Credit Cards between us. However we are in the process of selling our home and buying a smaller property. As we have no mortgage on our current home, we can buy a new house outright.

When we sell, and buy the new house, we will have more than £40000 left over, so that we can pay all the debt.

My question is this, would we be able to negotiate a deal with the CC companies, or is it just better to pay everything that is owed. We have never defaulted or been late with any payments, so by paying off in one go, will this affect our future credit ratings.

Thanks in advance

glentoran99

popjoc wrote: »

We have about £40000 debt, mostly from Credit Cards between us. However we are in the process of selling our home and buying a smaller property. As we have no mortgage on our current home, we can buy a new house outright.

When we sell, and buy the new house, we will have more than £40000 left over, so that we can pay all the debt.

My question is this, would we be able to negotiate a deal with the CC companies, or is it just better to pay everything that is owed. We have never defaulted or been late with any payments, so by paying off in one go, will this affect our future credit ratings.

Thanks in advance

you wont be able to negotiate unless you have defaulted and missed payments etc

popjoc

glentoran99 wrote: »

you wont be able to negotiate unless you have defaulted and missed payments etc

Thanks for the quick reply. Would it be wise to default for a couple of months, knowing that we can pay all off in a few months?

SeduLOUs

glentoran99 wrote: »

you wont be able to negotiate unless you have defaulted and missed payments etc

Well, you can still try, but you probably won't get far.

It's not really in their interest to settle for a lower amount when you are demonstrating an ability to make appropriate repayments and earn them the maximum possible amount.

glentoran99

popjoc wrote: »

Thanks for the quick reply. Would it be wise to default for a couple of months, knowing that we can pay all off in a few months?

Not unless you want your credit messed up for 6 years, the other risk is they can take you to court and you would still have to pay the full amount as you can afford to and your credit would still be messed up

Muhren

popjoc wrote: »

Thanks for the quick reply. Would it be wise to default for a couple of months, knowing that we can pay all off in a few months?

I think this is just morally wrong, as you have borrowed the money and have the means to pay it back.

andyfromotley

popjoc wrote: »

Thanks for the quick reply. Would it be wise to default for a couple of months, knowing that we can pay all off in a few months?

Are you really suggesting that you deliberately default in order to try and escape paying your debts that you can actually afford to pay?

I think I've heard it all now.

Just in case you were in doubt, no! What you should do is repay your debts in full, as you agreed when when you borrowed the money.

popjoc

Thanks for all the replies. We have never defaulted in our lives and to be honest it is not something that we have really considered. We are willing to repay the full amount that is owed but we just wondered why people who are bad payers get a better deal than people who can and do pay on time every month.

I agree that it is not the best route to go, but given we have good credit histories, why should people with poor history get a better offer than someone in a position to pay off their debts.

SeduLOUs

andyfromotley wrote: »

Are you really suggesting that you deliberately default in order to try and escape paying your debts that you can actually afford to pay?

It wouldn't work anyway. By missing payments for a few months the debt level would actually increase because of charges for the missed payments plus interest.

You'd probably only get a significantly reduced settlement figure once the debts have been sold to Debt Collection Agencies, which could be 6-8 months away. By this point they will all have been defaulted and the credit file will be completely trashed meaning you'd struggle to get so much as a £200 overdraft for the next 6 years.

popjoc wrote: »

We are willing to repay the full amount that is owed but we just wondered why people who are bad payers get a better deal than people who can and do pay on time every month.

I can understand this frustration but it probably isn't always quite what it seems. By the time it gets to the point of settlement figures there have probably been so many charges on the account over a long period of time that in many cases the overall amount paid back would still be substantially higher than if they'd managed to settle the account 'properly'.

andyfromotley

SeduLOUs wrote: »

It wouldn't work anyway. By missing payments for a few months the debt level would actually increase because of charges for the missed payments plus interest.

You'd probably only get a significantly reduced settlement figure once the debts have been sold to Debt Collection Agencies, which could be 6-8 months away. By this point they will all have been defaulted and the credit file will be completely trashed meaning you'd struggle to get so much as a £200 overdraft for the next 6 years.



I can understand this frustration but it probably isn't always quite what it seems. By the time it gets to the point of settlement figures there have probably been so many charges on the account over a long period of time that in many cases the overall amount paid back would still be substantially higher than if they'd managed to settle the account 'properly'.

And much much longer in some cases.

andyfromotley

popjoc wrote: »

T

I agree that it is not the best route to go, but given we have good credit histories, why should people with poor history get a better offer than someone in a position to pay off their debts.

Because, in general, these are people who are really in dire financial straits and realistically will never pay off their debts, or take a huge length of time to do so. Its a case of being pragmatic. But people in this position usually have paid a high price in regard of their personal finance and their credit worthiness in order to get to the position for cheap settlements. Not to mention stress and despair! (i accept there may be some who 'work' the system but not many).