Old Credit Card debt - how to clear it off.

SinkingFast

(I've posted this in another section - don't think it was the right one though.)

So at £25k of unsecured debt (some in arrears), two mortgages on the house (in arrears) and struggling to pay bills in general we reluctantly sold our house and moved into rented. We were lucky in that our sale price covered all moving costs and outstanding debts except one £11k credit card debt which is with a debt management company and several years old. They have written to us to offer 4 repayment options ranging from 12 to 36 months. We have £4.5k in savings left over from the house sale. We have also put a savings plan in place to raise a deposit for our next house purchase late 2017. The question is what to do with this last debt. There are pros and cons for the options we've come up with but I would like opinions on the best way forward for this last debt please.

a: Take out a new loan and clear the debt that way. Downside is the additional interest incurred whereas the original debt is interest frozen. The upside (?) is that it will be a closed account on our credit report for nearly two years by the time we purchase again. The new loan will show repayments being up to date on the credit report.

b: Agree one of the options offered by the debt management company. Upside is that interest is frozen, downside is that it may affect our goal date of obtaining a mortgage with it still showing on our credit report. This concerns us because we are both mid 40s and perhaps may struggle to get a mortgage much later because of our age, we think?

c: Use what savings we have left from the sale to clear £4.5k of it and repay the balance over an agreed term. That would clear our savings out that is currently sitting in an account earring 4% interest and increasing each month.

We are just glad to be out of the other side of this to be honest and it was an extremely difficult time for both of us as we made the decision to sell our home and just hanging onto our marriage. We are relieved to have a fresh start and approach to our financial management but are just unsure how to deal with this last debt. It literally is the very last thing to go.

Any thoughts please?

sourcrates

Hi,
They are a debt collection agency, not a debt management company.

There is another option, make them an offer to settle the account.

There will be scope for negotiations here, why not do that ?

SinkingFast

Hi Sourcrates

Thanks for your reply. I always thought that if you negotiated then it only showed as partial settlement on your credit record and that would go against you as much as if you still owed the debt? Is that a misconception?

sourcrates

SinkingFast wrote: »

Hi Sourcrates

Thanks for your reply. I always thought that if you negotiated then it only showed as partial settlement on your credit record and that would go against you as much as if you still owed the debt? Is that a misconception?

What date did the account default ?


The negative information will stay on your credit file for 6 years regardless of what you do.

SinkingFast

I realise that that everything stays on your record for 6 years.

So, you wouldn't choose any of the options I listed, you would negotiate down on the debt and then what? Use the savings to clear as much as possible and then put a repayment plan in place? I'm struggling to see the way forward with what you suggest. Many thanks.

Edit: Default was five years ago.

sourcrates

Ok, so no matter what you do, it will be gone from your file in a years time, unless they were to take legal action.


Sorry, I`m replying to a lot of post this afternoon, having just re-read your post I see you have 11k outstanding, and 4.5k in savings, its not unheard of for a DCA to accept that amount in full and final settlement, maybe worth a try, they can only say no ?


One other important factor, when did you originally open the credit card account, what year ?


Older debts, possibly with deficient paperwork, would more likely be settled for less, than if the paperwork was available.

SinkingFast

The account was opened in 2007. MKDP took it to court last year then dropped their claim. Now another company has it in place of MKDP and they will apply to the court to have their name replace the previous claimant.

Really can't be done with any more hassle.

Thanks for your response.

sourcrates

SinkingFast wrote: »

The account was opened in 2007. MKDP took it to court last year then dropped their claim. Now another company has it in place of MKDP and they will apply to the court to have their name replace the previous claimant.

Really can't be done with any more hassle.

Thanks for your response.

Understand completely,


but may be to your advantage to CCA the original creditor,
if nothing else it will automatically put the account "on hold" until the request is fulfilled.


Usually takes up to 2 months, further action is forbidden until they comply.




Quote:

(Your home address)
Date:

To:

Dear Sir/Madam

Account/Ref No:

With reference to the above agreement, I/we would be grateful if you would send me/us a copy of this credit agreement and a full breakdown of the account including any interest or charges applied.

I/we understand that under the Consumer Credit Act 1974 [sections 77-79], I am/we are entitled to receive a copy of any credit agreement and a statement of account on request.

I/we enclose a payment of £1 which represents the fee payable under the Consumer Credit Act 1974.

I/we understand a copy of any credit agreement along with a statement of account should be supplied within 12 working days.

I/we understand that under the Consumer Credit Act 1974 creditors are unable to enforce an agreement if they fail to comply with the request for a copy of the agreement and statement of account under these sections of the Act.

I/we look forward to hearing from you.

Yours faithfully



Your name.


The statutory fee of £1 should be a postal order.

SinkingFast

Thanks Sourcrates.