Advice needed on repaying debts in full

adviceseeker88

Good afternoon

I've joined looking for advice really, apologises if I've posted to the wrong section!

A little bit of background, I'm 28 years old, single mother to one, work full-time in payroll and... have a bit of debt!

Most of my debt stems back from the break up of my relationship with my daughters father, since then I've moved about a lot, lost my mum, changed jobs and just generally not being settled. My credit file is atrocious and I've just ignored it all over the last four years or so which has had a negative effect on my general well being and I've felt a bit like a shell of my former self. I now have a stable job with an ok salary, although renting, I'm settled in my own home, and I want to rebuild my life.

Below is a quick break down of what is currently on my credit file

Indigo Mitchell - £290 Default 01/03/16
Bluestone Credit Management - £2141 Default 06/11/12
Arvato Financial Solutions - £179 Default 09/02/12
Motormile Finance - £174 Default 23/12/12
Payday UK - £354 Default 01/05/14
Cabot £1628 Default 08/03/13
Lowell
£203 Default 23/04/13
£131 Default 22/06/12
£591 Default 10/04/14
£733 Default 12/08/13
£78 Default 09/08/13
£258 Default 17/05/13
£38 Default 11/12/13

Total - £6798.00

CCJS

Amount - £1835.00 10/10/2014 (Not sure what this is for and how they haven't chased me up in regards to this if its outstanding?)

Amount - £582.00 06/01/16 Severn Trent water currently paying via a payment plan to be cleared July 2017

Like I said, I've stayed pretty oblivious to it all, ignoring the letters, not communicating with anybody other than the water.

I am now about to come into a bit of money via inheritance, and I feel like this could be my saviour. Once done and dusted, I should end up with around £39,000 and the plan is to pay off all the debts, and this may sound like a stupid question, how do I go about doing this?

Ideally, I want to pay them all off asap and then start focusing on rebuilding my credit file so that I can then begin to think about using the remaining money for a deposit on a house and getting a mortgage. I appreciate this is not something that will happen over night, but I just want advise on how to begin.

I notice on letters, companies often offer you a discount on repaying debts in full etc... but how would this reflect on me? Am I better paying the debts off in full with no gimmicks or offers?

Please, any advise what so ever is appreciated! I have never dealt with these companies before, and I'm sure most will be shocked to even hear from me lol I just don't want to be silly about this, it feel's like it's my chance to turn things around!

Thanks for reading

EssexHebridean

You're definitely in the right place! I'm going to leave any actual advice on how you should proceed to those who are more expert in that field, but just wanted to say that although the circumstances may not be happy ones, I'm glad that you have the opportunity to get your life back on track.

sourcrates

Hi,

From your post it appears a lot of your debts are with debt collection agencies.
Now these companies buy bad debts for a fraction of the outstanding balance, so there is usually a lot of room for negotiation.

I wouldn't be surprised if some of the letters you've ignored contained reduced settlement offers.

Your credit file is trashed anyway, so you may as well settle for as little as possible, national debt line has a good template letter to send to creditors, start negotiations at around 30/40% and see what happens.

Make 100% sure any offer that is accepted, is done so in writing :

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

redux

And don't tell them you have plenty of money available. Say something vague like you might be able to get some help from your family.

As well as that, do some reading in the bank accounts section here. Some pay interest of 3 to 5% (some about to drop slightly) on amounts to £2000 or £5000 at the moment, though I suppose you might be turned down for one or two.

adviceseeker88

Yes, most of my debts are 'bad debts' such as payday loans, store cards, contract phones etc Ive learned the hard way in regards to overspending.

How does it work in regards to my credit file? If I pay my debts off at a lower rate will this have an adverse effect on future room for improvement? I always hear a timeframe of 6 years being thrown about too. What exactly does this refer to? If I pay the debts are they than on my file for 6 years from that date?

I'm sorry I really am so clueless, hence how I got myself into this mess in the first place. I try to do research but i'm looking for real life experiences more than anything.

I'm most concerned about the timeframe in which i'm looking at. If the debts are paid off instantly, how long exactly before I can expect to begin working on building back my credit? A year or two? Or more like a few? I am going to guess that I may as well be asking how long is a piece of string? Lol

sourcrates

If you look on your credit file, under each debt, assuming most of your accounts are already defaulted, it will give you the date of default for each account.

Six years from that date, the default will drop off your file.

Paying the debts either in full or part, will not change anything.

Only time will clear your credit file, so you may as well settle for the least amount possible.

Your credit won't improve until all defaults have vanished.

sourcrates

Hang fire on doing anything with the Motormile Finance debt for the time being.
They have just had there knuckles wrapped for not following due diligence when acquiring bad debts, so they are currently in the process of contacting affected customers, there are likely to be refunds/write offs etc if your one of them.

adviceseeker88

Thanks for that! I will keep my eye on that motormile one.

I'm guessing I am pretty much screwed until 2022 then? I'm confused though, if paying them still doesn't help what's the point in paying? I'm obviously missing something here!

EssexHebridean

adviceseeker88 wrote: »

Thanks for that! I will keep my eye on that motormile one.

I'm guessing I am pretty much screwed until 2022 then? I'm confused though, if paying them still doesn't help what's the point in paying? I'm obviously missing something here!

- Honesty
- Peace of mind
- the fact that you spent the money in the first place, knowing it was going to need paying back
- the fact that you have already said you will have the money available to do so - therefore you don't have the long hard slog to repay the debts that a lot of folk on here have had
- Not having to look over your shoulder until the debts become stature barred

It is 6 years from the date of default that they will drop off though - not six years from the date you pay them, as I understand it. So something defaulted in 2013, for example, will drop off in 2019.

sourcrates

adviceseeker88 wrote: »

Thanks for that! I will keep my eye on that motormile one.

I'm guessing I am pretty much screwed until 2022 then? I'm confused though, if paying them still doesn't help what's the point in paying? I'm obviously missing something here!

Well your creditors could take you to court for non payment.

You risk having CCJ's, and if you don't pay what the court says, you risk further action, such as an attachment of earnings order, or in extreme cases, baillifs at your door.

Never wise to ignore debt collectors, non of the above may happen, but then again it might !!!

adviceseeker88

Hi

Sorry, I seem to have gotten under your skin with asking whats the point in paying... >.<

I 100% appreciate its the right thing to do by paying off my debts and i'm lucky to be in a position to pay them off (despite the reasons as to why)

I just nievely thought it might have a positive impact of some sort on my file if I did so.

Oh, to be able to go back and explain some of these things to my former self would be amazing!

I think the worst thing about it all for me is just how spread out and minimal most of my debts are, i'm guessing this looks a lot worse for me with over a dozen defaults than say someone with one default on an 8k debt?

Just wish I had been more educated on money and credit etc hindsight is a beautiful thing!