Paying off a credit card - help please

subes1

After some advice please.
I got into some financial difficulty a while ago and ended up setting up a monthly payment plan with Barclaycard which I have had for a number of years now. I still have a substantial balance outstanding on this account (£9000).I phoned up Barclaycard and they advised me that my account is actually closed now and the money that I pay off monthly goes towards the balance. There are no added fees or interest etc. Every time I pay them my balance does actually reduce. I asked them for a full and final balance as I am pretty desperate to pay this off as I no longer want this debt. They have said to me that I need to come up with a figure and they will consider it. My question is what would you say is the best amount to initially offer? They have also said that this is called a partial settlement and once this had been agreed they would not chase me for the differing amount, if that makes sense?
I am not really sure what to do here. Do I continue to pay my small monthly amounts, or do I pay a partial settlement and if so how much should I offer? I don’t have the funds to pay the full amount and I do want shot of this debt! (Young and stupid with money when I took out this credit card, not even sure what I’m paying off now!!).
I do want to remortgage at some point in the future. I asked if a partial settlement would be a default on my credit file and they said that it is highlighted that a partial settlement is on there but that at the moment no default is showing.
Any advice please would be well received. I am new to this forum, so I apologise if the question has been asked before.

[Deleted User]

First thing is to check what status the account is showing on your files.

If it's not defaulted, then it will probably be arrangement to pay - which can be more damaging if it drags on too long. If the AP started sometime ago, it may be worth asking them to default it retrospectively.

Once you know that, you can work out whether a partial settlement is acceptable.

Remember to check all three files.

subes1

Thank you
So just to confirm I should check all my credit files to see if this debt is showing as a default. If it isn’t I should ask barclaycard to default it retrospectively? Is this because of the 6 year thing where the default stays on your file? Or am I getting confused? I would say that a repayment plan has been ongoing for about 3 years so far.
Thanks for your response.

[Deleted User]

It depends on what is showing. If it shows three years of arrangement, then I would suggest a three year old default would be preferable, as it would then only have three years to go on your files.

If by some miracle it shows up to date, then clearing it in full would be best for your credit files.

subes1

Many thanks for the advice. I will checked credit files and go from ther
Thank you

subes1

Sorry me again. I have just checked my credit files. My credit card is showing as up to date on payments. There is no default shown. Should I ask them to default my account retrospectively? If I understand this correctly, I can then offer a partial settlement to get rid of this debt and the date shown on the default won’t be the date of the settlement but that of the retrospective default date, so in effect should be removed after say for example 3 years rather than 6?
If this is the case, I would be better off doing this as we would be looking to move house in the next 3-4 years.
Thanks again, you have been really helpful. This is something I hadn’t even considered and I am so glad I asked the forum first

[Deleted User]

Is it the same on all three CRAs? No AP markers or late payments?

If it is, then it would be best to clear it in full, in the hope you get away with a completely unblemished record.

If you did choose to go the default route and make a partial settlement, then yes, you would want it backdated, so it would be gone in three years.

Bear in mind though, although it would fall off your file, it wouldn't prevent Barclays from retaining a record, which may prevent further borrowing from them.

Pound-Of-Flesh

I am not an expert in these matters - but it sounds to me you are getting a bit confused, and are in danger of doing the wrong thing.

This is my understanding based on what you wrote -
You ran up a big balance on your barclaycard and were struggling to cope. You (wisely) contacted them and came to an agreement.
Under this agreement you are paying ZERO interest or penalties.
The info they send to the CRA basically says everything is fine on your account - your payments are up-to-date. You are NOT being represented on the CRA as a bad debtor.
This sounds to me like an excellent situation to be in (given you got in over your head in the first place). They have basically given you an interest-free loan.
The sensible thing is to pay it all off and there will be no blemish on your credit history. In fact making regular payments is GOOD on your history.


BUT you don't want it hanging over you. You rang up just asking for a balance by the sound of it. They have then told you (probably just due to a misunderstanding) about the possibility of negotiating a PARTIAL settlement. This sounds superficially attractive - it ends the situation quickly; and you get to keep some of the money you owe them. But this means you are defaulting on the debt. Obviously they will then put this default on your credit rating (as they explained). This will seriously affect you for a number of years - including if you apply for a new mortgage.

So it seems obvious to me that defaulting should be your absolute last choice. The idiot at Barclaycard seems to have put a really bad idea in your head, when all you wanted was a simple balance query.

My advice is pay off the debt in instalments as you are doing. If you win the lottery or whatever, pay off the balance. But otherwise just live with it - it's at zero %, so don't worry about it. Try to think about this debt logically rather than emotionally. You dealt with it in a mature way when you contacted Barclaycard and made the agreement. Now just have the patience to pay it off.

subes1

pound of flesh.
Thank you very much for your response. Yes I think I just had it in my head to get rid of this debt quickly, but like you said as it’s not affecting my credit report it’s probably best to keep making the monthly payments as ther is no interest being charged.
. I am in a position to pay off a lump sum, which would reduce down the term of my debt. This is the only debt apart from my mortgage that I have, I don’t have loans etc. This may be a better option for me and not one I really thought about.
Thank you.
You have both been extremely helpful. I really didn’t have much knowledge about what happens if you get into debt and I’ve definitely learnt something!