Partial Settlement vs default advice

OUTOFPOCKET

I am hoping someone can help me quickly as my partial settlement deadline is looming. I have agreed a partial settlement with MBNA to pay £2650 on a balance of £6250. The agreed payment is due in a week's time by the end of this month (September 2016) as otherwise it will default. Although MBNA have said they will write it off, on my credit file there would be a 'footnote' with the outstanding amount of £3600 written even though there would be a zero balance with MBNA and the debt would not be sold on. Is this the done thing to list the outstanding balance? I am still waiting for them to put everything in writing before sending the money but as the deadline is looming have asked they email me a copy of the letter but they will not email it. At this point, I am wondering what the big differences are between a partial settlement with the amount outstanding actually listed on my file VS a complete default? Advice much appreciated.

sourcrates

Hi,

A partial settlement and a default are both bad for your credit worthiness.

You appear on the face of it to have negotiated a good deal.

Just make sure you get it in writing that the remaining balance won't be chased, as there responce seems a bit ambiguous to me.

National_Debtline

Hi OutofPocket,


I would advise you to get the to agree in writing to the following: -


- That neither they nor any other third party will chase for the shortfall unpaid and I am released from any liability
- That the credit file will be marked as partially settled and with a zero balance owing


If they won't agree to these conditions in writing then I would advise you not to send the money. You cannot negotiate the terms of payment after the money has been sent. Deadlines are changeable, and although I understand the risk that they or you may withdraw this offer, you will be more disappointed if the conditions are not clearly outlined and they can keep chasing you in the future.

We have a sample letter that may help you - https://www.nationaldebtline.org/EW/sampleletters/Pages/Full-and-final-settlement-offers-%28sole-name%29.aspx#


Laura
@natdebtline

fatbelly

OUTOFPOCKET wrote: »

I am hoping someone can help me quickly as my partial settlement deadline is looming. I have agreed a partial settlement with MBNA to pay £2650 on a balance of £6250. The agreed payment is due in a week's time by the end of this month (September 2016) as otherwise it will default. Although MBNA have said they will write it off, on my credit file there would be a 'footnote' with the outstanding amount of £3600 written even though there would be a zero balance with MBNA and the debt would not be sold on. Is this the done thing to list the outstanding balance? I am still waiting for them to put everything in writing before sending the money but as the deadline is looming have asked they email me a copy of the letter but they will not email it. At this point, I am wondering what the big differences are between a partial settlement with the amount outstanding actually listed on my file VS a complete default? Advice much appreciated.

I wouldn't be happy with this as it stands.

Yes that is a good deal - 42% settlement with no default

But at the moment they will not confirm the details in writing and will leave the 58% of the debt showing on your file.

There are two risks here - one is that at some point in the future the 58% might get caught in some debt sale, someone else starts pursuing you for it and you have no evidence of any agreement - merely that you made a lump sum payment.

The second is that the credit file is supposed to reflect the true position and if they have accepted this sum in partial settlement, then that is what the partial settlement marker is for!

OUTOFPOCKET

Thank you for all your replies.

As the situation currently stands, I finally spoke to a manager at MBNA who emailed me a copy of the letter via the Bank of America secure email system. The letter does not clearly mention a zero balance but says 'after receipt of the required payment, we will close your account and register a partial settlement with the credit reference agencies'.

Another thing the manager mentioned was that nothing can show up on my credit file! I am a Brit living in Italy having lost my job in London. Since the move, work and finances have been dire (and then the recent earthquake which rocked us all) so hence the partial settlement to ease one of my debts. As MBNA have my official Italian address, apparently an overseas address cannot be put on the UK credit file system so apparently nothing (default, partial settlement or outstanding balance) can show up. Any thoughts?

fatbelly

Well that does sound better. You have a good deal, you have something in writing. And it is more difficult for them to do anything while you are in Italy.