To pay in full or part settle

Hudora

Hi All,

I have been in some financial difficulty for years now, so I just hid from my debts and didn't make any payments at all. The bulk of my debts are over 6 years old now and are not showing on my credit file any longer. There are 2 that still show which are around 3 and 4 years old and to £3500 in total.

I have been saving money to one day just close these off and I have now managed to save enough to clear these two that show on my file.

I am going to contact the collection companies this week to pay in full, but before I do this, I was hoping for some advice. What has happened to the debt that is not on my file? And also is paying these two debts off in full going to improve my credit in anyway? I read something about pay for deletion? I have also read that they may take a part settlement?

Do I call them to pay or write to them?

I am now financially stable to looking to repair my credit and hopefully save for a house. Any advice on what are the best option(s) would be hugely appreciated.

Thanks in advance

Hopefully someone can help guide me :-)

Steve

vlad

A part settlement known as a "full and final" is best done in writing after a little research.
My starting point for a f&f offer would be around 40% of the outstanding debt.
With your recent debt problems it may be some time before you can think about mortgages.

sourcrates

Hudora wrote: »

The bulk of my debts are over 6 years old now and are not showing on my credit file any longer. There are 2 that still show which are around 3 and 4 years old and to £3500 in total.

Do I call them to pay or write to them?

I am now financially stable to looking to repair my credit and hopefully save for a house.

Hi,

Regarding the older debts, have you paid anything, or acknowledged them in writing at all over the last six years ?
If not, and dependant on the type of account, they may be statute barred by now.

Any offers you make for the two accounts you wish to settle, must be done in writing, using the correct template letter, available here :

https://www.nationaldebtline.org/EW/sampleletters/Pages/Full-and-final-settlement-offers-%28sole-name%29.aspx

Start low, you can always increase your offer, it's all a matter of negotiation, expect to write a few letters, you could include removal of default as a condition of settlement, however don't expect to be successful on that score, but if you don't ask..........

Negative information stays on your credit file for 6 years, paid or not, probebly best to wait a while before making any mortgage application.

Hudora

Thanks for the info.

Would it not be best for me to pay the full amounts as opposed to offer part payment? Also I don't have account numbers for the two accounts. I'd like to do whatever is going to repair my credit score the best.

Thanks again.

Hudora

sourcrates wrote: »

Hi,

Regarding the older debts, have you paid anything, or acknowledged them in writing at all over the last six years ?
If not, and dependant on the type of account, they may be statute barred by now.

Hi, no payments or any contact for over 6 years and unsecured credit. There are no public records or CCJs showing on my credit either....

Reading up on this, it appears they may be statute barred.....

sourcrates

Hudora wrote: »

Thanks for the info.

Would it not be best for me to pay the full amounts as opposed to offer part payment? Also I don't have account numbers for the two accounts. I'd like to do whatever is going to repair my credit score the best.

Thanks again.

You said the debts were with collection agency's yes ?

Just reply to whoever is writing to you.

This old myth about "credit scores" rears it head on here on a regular basis, there is no universal credit score, it's a number made up by the credit reference agency's, all potential lenders have there own credit scoring system, so it makes little difference to you how a credit reference agency scores you.

As I said above, makes little difference to your "credit score" if you settle in full or part, the information is there for 6 years regardless of how much you settle for, so it makes sense to settle for as little as possible.

sourcrates

Hudora wrote: »

sourcrates wrote: »

Hi,

Regarding the older debts, have you paid anything, or acknowledged them in writing at all over the last six years ?
If not, and dependant on the type of account, they may be statute barred by now.

Hi, no payments or any contact for over 6 years and unsecured credit. There are no public records or CCJs showing on my credit either....

Reading up on this, it appears they may be statute barred.....

Yes that may be true, if anyone was to contact you in regard to these accounts, you would respond with a letter stating the accounts are statute barred.
It would be up to the creditor/DCA to prove they were not SB, not up to you to prove they were, in other words they would need to do the legwork, not you.

Hudora

sourcrates wrote: »

You said the debts were with collection agency's yes ?

Just reply to whoever is writing to you.

This old myth about "credit scores" rears it head on here on a regular basis, there is no universal credit score, it's a number made up by the credit reference agency's, all potential lenders have there own credit scoring system, so it makes little difference to you how a credit reference agency scores you.

As I said above, makes little difference to your "credit score" if you settle in full or part, the information is there for 6 years regardless of how much you settle for, so it makes sense to settle for as little as possible.

Hi thanks again.

Would it not look better that it has been paid in full though? I am getting mixed messages when I read up about this online. Yes I get that it makes sense to settle for less, but surely it will be better for any potential future credit if I paid the full amount?

Thanks
Steve

sourcrates

Hudora wrote: »

Hi thanks again.

Would it not look better that it has been paid in full though? I am getting mixed messages when I read up about this online. Yes I get that it makes sense to settle for less, but surely it will be better for any potential future credit if I paid the full amount?

Thanks
Steve

You say the accounts are 3/4 years old, so will be gone after 6 years, so another 3 years, your file should be clear.

You would be unlikely to get a great mortgage deal with defaults on your file anyway, regardless of if you settled fully or partially.

As I said before, every lender has there own credit scoring criteria, what looks bad to one, may be OK to another.

Your best bet would be to wait until negative information has gone from your file completely before even considering new borrowing.
So to me it makes no difference, credit file wise, what you do, the damage has already been done with the default.