The Best Way To Pay Off Debts?

Ben207

This is a long story so I do apologise to anyone who stumbles across this and is bored to tears but I would appreciate any advice or guidance on the above matter.

Back in 2013 I had a business that failed. I defaulted on several debts. The complete amount on my credit file showed as owing was £13,701.00 I buried my head in the sand and completely ignored all correspondence from everyone. The debts are owed to Lloyds for a credit card & an overdraft. Tesco bank for another loan and TMobile for non payment of a mobile bill.

Last month Lovell sent me the threat of a CCJ which I again stupidly ignored. They then got a CCJ but told me if the debt was paid in full before 2nd September this would not go on my file I had the official paperwork from the court as well. Yesterday I went in to the bank and paid the CCJ for £3026.91 in full. This cleared me out cash wise.

I have got the money from my parents to pay the outstanding £10,675 I owe and I am going to pay them back monthly as I now have a full time well paid job and live in a nice rented house.

This debt has played on my mind for over 3 years. I didn't realise until I told my family about it yesterday how much it had effected my mental well being. They all wished I had told them earlier but at the time I thought I was doing the correct thing. It was my mess and I should have sorted it out. Instead like a coward I hid it and buried my head in the sand.
Luckily Barclays gave me a cash card account which they have since upgraded to a Visa and I also have a credit card with them that I owe a little on but could pay off easily. I have this to build my credit rating up.

Is paying the debt back the right thing to do?

Am I ever going to be able to get a mortgage when my girlfriend who owns her own house already, moves back down south to live with me?

Is there any way of getting a reduction by offering to pay the amount in full?

My credit rating is very poor with Noddle at 488. When will it or will this improve?

Any help or advice would be most appreciated. This morning was the first day for 3 years I woke up without feeling sick with worry.

Thanks
Ben

MyLastFiver

Ben207 wrote: »

Is paying the debt back the right thing to do?

Yes.

That's what your parents gave you the money for, isn't it?

Is there any way of getting a reduction by offering to pay the amount in full?

You can certainly make an offer of £x in full and final settlement. I don't know how much you should offer, but someone will be along in a minute to suggest that to you.

Then if you pay off the reduced debt, I hope you're going to give the difference back to your parents, and not keep it or spend it on something else, which would be extremely dishonest.

On other matters:

I also have a credit card with them that I owe a little on but could pay off easily.

Well...pay it off then?

Then once that's gone, pay your parents back in instalments.

My credit rating is very poor with Noddle at 488. When will it or will this improve?

Your credit file will show a missed payment marker for every month you didn't pay the instalments on your credit cards and loans. Furthermore, you are likely to have been given a default marker for each account.

You will be unlikely to be able to obtain prime credit while these markers are on your file, and they stay on your file for six years.

If you're looking to get a mortgage, use this time to save for a deposit.

Muttipops

Hi, Ben, I would suggest you set up a SO to pay back your parents monthly if you haven't already done so and keep it business like with them, so that they have faith in you to pay back what you owe and to prevent any difficulties arising in your relationship, because owing money to relatives or frinds can easily come between you if you let it.


I think that on a personal level, paying back the debts was the correct thing to do, because as you say, you feel so much better, and that tells you it was the right thing to do.

Ben207

Thanks for the replies. I am certainly going to pay the debt off. I wouldn't take the money and not pay them. I just wanted to know the best way of doing it. All at once or offer them less etc etc.

I will set up a standing order to pay my parents back. That's now my top priority. The only reason for my credit card was to help my rating. I've paid it off this morning!

Thanks for the response. Any more will be appreciated.

enthusiasticsaver

You can see if they will accept full and final offers but I am not sure if this then stays on your credit record as a default. Someone more knowledgeable than me may know. Personally if you are now in a position to pay it off either in full immediately or in stages I would do that.

fatbelly

The accounts will already be defaulted

With a bit of work you can get settlement deals on the remaining 4 debts and save your parents some money.

As you're not too bothered about a spectacular deal, I'd say to try offers at 40%, which is the example at the end of the factsheet, and see how they reply.

https://www.nationaldebtline.org/EW/factsheets/Pages/fullandfinalsettlementoffers/lumpsumoffers.aspx

Fireflyaway

Facing up to the debt is actually a good feeling isn't it! Hiding from it just causes more worry, so in that respect you are already dealing with the situation. I agree about paying your parents back even if they have never asked.
This might sound weird but I dealt with my debts based on the Dave Ramsey baby steps. Found out about him on YouTube. It made logical sense to me. Some say do the higher interest first but I found the Dave Ramsey way more motivational.
Yes you may be able to get a mortgage via some lenders but if not I would suggest being honest with your girlfriend. Money secrets are so stressful! If you can't get a mortgage just focus on increasing your deposit until you can.