Reduced payment offer

GMac14

Hi All

Currently paying off my last debt through Cabot. Small amount now circa £700 paying off £40 per month and then larger amount of around 7k paying £10 per month with larger payments as and when I can, but still around 7k owed.

With bonuses from work and tax refund (2k) hope to be in a position to pay this off in full over the next 12 months. Then looking to get a mortgage. Credit file has no CCjs and this is the only default, once paid will then put money towards wife’s credit card debt of 6k ( she has great credit file with 0% balance transfer cards, I’m still rebuilding with the credit builder cards and using 50 pounds per month and paying off in full) .

Cabot have e mailed me today with an offer that they will discount the debt down to £1,700 if I pay within 7 days. It won’t happen as it’s 10 days to pay day plus I have only £600 in savings so far, but it did get me thinking, what if they come back with a lower offer in the next few months?

So my question is, if I accept a discount and pay a reduced amount, is this classed as part settled/part satisfied rather than paid in full and what difference will that make to my credit file?

Am I better biting the bullet and paying it in full? It’s tempting to take a reduced amount and then put the money towards paying off the wife’s credit card to try and get into a position of having no debt at all when it comes to applying for a mortgage.

Supplementary question, once I have cleared my debt, what’s effect does a 6k debt on a 0% interest card have on an application for a mortgage? Does this lower the amount we can borrow? Better to be fully debt free?

Appreciate all responses and thanks in advance

[Deleted User]

Once you've defaulted, settling is the key thing. Full or part will make little difference (full payment isn't really possible once you've defaulted).

Carrying debt going into a mortgage can impact both acceptance and amount advanced.

GMac14

So no real penalty for settling for a reduced figure makes it a no brainier I guess.

The offer that they have made so far is not acheiveable as I’m around £1100 short, but around £600 bonus due end of March and same amount end of April plus tax refund due soon. Do I wait for another offer or do I contact them directly and propose a different amount and see if they accept?

Looks like if I can settle early put all the effort in clearing the credit card debt to get totally debt free ready for mortgage application. (10k also due this year from share of equity on house with an ex, long ongoing process).

Willing2Learn

If you want extra leverage for a reduced settlement figure, then I suggest you submit a CCA request for the account. If the DCA cannot supply you with the correct paperwork then that would be helpful for getting a lower settlement figure

GMac14

How do I go about submitting a CCA request and what is this?

Willing2Learn

The CCA request asks the DCA (Cabot) for a copy of the credit agreement. If the DCA is not a able to provide you with at least a reconstituted true copy of the credit agreement then the debt becomes unenforceable. Fact Sheet and sample letter are in the link below.

https://www.nationaldebtline.org/EW/factsheets/Pages/getting-information/credit-agreement-advice.aspx

fwor

Are you saying that they have discounted £7,700 worth of debt down to £1,700 if you settle now?

That doesn't seem likely to me but, if so, I would not be waiting in case they come up with a better offer!

GMac14

E mail header is “its time to save £4,057, offer says pay £1,739 in 7 days.

My figures were out as I lost access to my Cabot account and only just got accurate figures, lower amount now £660 and higher amount is actually £5,900, so figures don’t add up exactly.

Unfortunately only have £600 saved up and not paid again for ten days and can not afford to pay out £1100 out of next wage but could do at a push end of March

fwor

Ok - it's only a guess, but my guess is that that Cabot have a 2018/19 financial target to meet and they are prepared to cut to the bone to do it. If that guess is right, they won't be interested at the end of March, because payment will ~probably~ complete too late to fit into this year's figures.


As I say, it's just a guess, but that offer is not something I would turn down if I could find a way...

Verityspinelli

GMac14 wrote: »

once paid will then put money towards wife’s credit card debt of 6k ( she has great credit file with 0% balance transfer cards.

Appreciate all responses and thanks in advance

I know they’ll be those that will say this is a stupid idea but if I was going to save over £4000 I’d be considering this.
If your wife’s borrowing capability is quite good and you have a couple of thousand pound coming to you, could she apply for a money transfer card? I know there’s a chance it won’t be in your bank in time but if she were to also apply for an overdraft once approved for the money transfer you could use the overdraft to pay the £1700 then pay the bank with the money transfer and then pay the money transfer with the payment you are waiting on. I know there’ll still be fees and charges but the charges will be peanuts compared to the amount you’ll be saving.
Of course that’ll only work if your wife is approved for both.

GMac14

I know in theory that makes sense but I think I would avoid doing that. I have had it in my head this had to be paid back in full and a settlement figure would ruin my file because it wasn’t paid in full. Now that I know I have an option of a) possibly getting another reduced settlement offer over the coming months or b) being in a position by end of March to approach them with an offer to settle I would probably prefer to go this route rather than risking more credit checks/approvals etc, even though on the surface it does seem like an idea.