Settling DMP and affect of defaults

Ffitz_2

Need a bit of advice - I have a debt management plan from June 2010 the remaining balance is just over 4K. I have been very luckily offered a loan from a relative to clear this in order to rebuilt my credit rating with a view to getting a mortgage in the future. I will still be making the loan repayments but the main objective of this is to improve my credit rating. I have lots of defaults registered on my credit file. My question is with the defaults and DMP my rating is awful so I thought I could approach the creditors and ask for a 'full and final settlement ' in order not to pay the full amount off. I know this will show as "partial repayment" on my credit file for 6 yrs but is this any worse than already having "default" showing? The loan covers the full amount of debt so I can pay all my creditors in full if needed.

sourcrates

Hi,

Only difference it will make is to your pocket.
Settle for as little as possible.

Get EVERYTHING agreed in writing before parting with any money.

National_Debtline

Hi Ffitz and welcome to MSE,


First of all the debts will show for 6 years from the date of default (whether they are settled or not). When you settle them the status will change from it being an outstanding to a settled account and the default will still show.


A partial settlement is better than an outstanding defaulted account but a full settlement is better than a partial settlement. A partial settlement shows that you have paid an agreed amount but that is not the full amount of the debt. That is not as positive as showing you paid the full balance but credit files are complicated and your overall rating can be affected by things such as whether or not you are on the electoral role, your age and your credit history. Good luck,


Laura
@natdebtline