Partially settled debt

shomk

We are in a pickle! With large debts all of them are with debt collection agencies, some default notices and some CCJ's (it not been good).

We often get offers from the collection agencies a settlement figure (we've never had the money to pay it but things are improving and it could be possible for the smaller ones at least).

If we take the settlement figures with the agreement that the debt is then paid off and there is no more to be paid, how will this affect our credit? We understand that our credit rating is going to be very very bad for a number of years, so is this going to make it any worse? Will the fact that the account has been settled be better in the long run?

Has anyone gone down this road?

Thanks!

National_Debtline

Hi shomk,


When you do a full and final settlement it will normally be marked on your credit file as partially settled. This shows that you settled the debt, but not in full. This is better than an outstanding default but not as good as a fully settled debt.


Doing full and final settlements with only some of your debts is a bit risky. This can be seen as a preference payment, and not all of the debts are being treated fairly. This could make the outstanding debts less likely to negotiate with you in the future and more aggressive in taking action.



If you do decide to try and do settlements then it is important to get all of the conditions of a settlement payment agreed in writing before you send a penny. Make sure the creditor agrees not to chase you for the shortfall and not to pass the remaining balance on either. Mark your credit file as partially settled and with a zero balance.

Please try and post a SOA so that we can look at further options with you.

Laura
@natdebtline

Anna24

How ironic as I logged on today purely to ask the same question.

My debts are all credit cards some of which I defaulted on. I managed to set up payment plans with a few of them (interest free) and some were sold onto other companies, which terrified me at first but all working well and have been so for almost two years.

One company has written to me offering me a reduced settlement of £953 whereas the total outstanding debt is £2,720 so that's a massive reduction and they have said they can even offer me instalments! They have also stated that my credit file will show this as 'partially settled'.

I'm hesitant to agree but on the other hand I already have a poor rating on noddle and I have defaults and late payments on my file (no CCJ).

I'm just unsure whether to accept this or not as it's tempting or just carry on paying what I am paying each month. ?

Any thoughts ?

HairyHandofDartmoor

Accept, it won't make your credit rating any worse and then you will have more money to pay down the others.

Anna24

The thing is that I am happily going along paying them a very small sum a month (£8) which is manageable so I'm thinking to just continue that.

More worried that accepting a partial settlement offer has detrimental affects in future on credit rating although I've already got defaults on file.

sourcrates

Anna24 wrote: »

More worried that accepting a partial settlement offer has detrimental affects in future on credit rating although I've already got defaults on file.

Once the default drops off your file, all record or trace of the debt will be gone forever.

So the only difference it will make is that you will retain more money in your pocket for a partial settlement, rather than a full one.