Credit Card Settlements

Nick82

Hi All,

Cutting long story really short I have 4 cc debts and 2 store card debts which i trying to get cleared. Wrote letters to all with income/outgoings and brief background story asking if they would accept a % settlement as i can no longer afford the payments due to interest, fact ive been stupid and as im losing my job early next year.

Having positive talks with most as we speak but wanted to ask some on here that are in the know about partial settlements.

Have read they are not good and to only go for settlements marked off as all paid... my question is if the company are saying they will mark it as partial and it stays on your file for 6 years but will not chase you for the rest, if your credit history is already !!!!!!ed for the next 6 years then will it make a difference?

Some help would be appreciated :cool:

Nick82

Can anyone help with this?

CLAPTON

Really its impossible to say.

Clearly a debt marked 'settled' is going to be better for your credit record than a debt marked 'partially settled'. However predicting how this will affect you is fairly impossible because

a. each creditor has their own credit scoring systems
b. times are changing almost daily with creditors being more cautious about lending so who knows what will happen in several years time.
c. if you read these boards you will find people with 4/5 years of well managed money finding it impossible to get even a proper debit card but fairly recent bankrupts who seem to be able to get proper bank a/cs, debit cards, cheque books and even credit cards. There seems to be little consistancy.


However what is very important is that you have a very clear written statement from them that they will not chase you for the debt once you make the partial payment (don't rely on any phone call).

angelavdavis

Nick82 wrote: »

Having positive talks with most as we speak but wanted to ask some on here that are in the know about partial settlements.

Have read they are not good and to only go for settlements marked off as all paid... my question is if the company are saying they will mark it as partial and it stays on your file for 6 years but will not chase you for the rest, if your credit history is already !!!!!!ed for the next 6 years then will it make a difference?

Some help would be appreciated :cool:

Don't go for partials - it effectively puts you on a list to be chased within a few years after you make the "settlement".

In addition, as you have said, the credit file does not get marked with a settled marker and although it might not prevent you getting credit, it will almost certainly restrict you to higher interest credit offers only, not the lower competitive rates (the famous phrase "subject to personal financial circumstances spring to mind here". Let's face it, if you are going to lend someone money who historically hasn't been able to pay others back 100% of what they owe - you are higher risk and so you want to be able to get more back while they can pay - so you charge them a higher interest rate.

Do you have the funds to settle? Its pointless asking if you don't as it will only make the creditor assume you are playing for time.

If you can afford it and agree to settlements, you need to be getting "Full and final settlement" confirmation (in those words) before committing your funds. If the phrasing is different, it isn't legally recognised and is likely to be followed up by a letter confirming your partial settlement of the debt.

Generally though, F&F settlements are only accepted for about 65-75% of the overall debt, anything lower and you might struggle to get the creditor interested.

It might be worth you seeking advice from CAB, CCCS or Paypal, as if they put you on a DMP you are more likely to get the interest frozen which would benefit you more if you are unlikely to get work early 2008 when you become unemployed. The downside is your credit record will be affected also.

So, if you don't want to go on a DMP, there are templates on Nationaldebtline's website to request that your interest is frozen. Its worth a punt - even if you end up getting a no, but at least you can honestly say what you are earning and what you can afford to pay them every month.

There could be other solutions - if you post up details of your current income and outgoings and anticipated income and outgoings it will help everyone on here to help out some more.

Nick82

Thanks for the advice...

I have some money to try and settle them and will keep trying to get them down, at present MBNA which I have 2 cards with are offering to settle at 95% but I need them to go to nearer 60% - 65% in order to pay everyone off.

Mint have agreed lower payments for 6 months but say its against there policy to accept Full and Final Settlements although i know from here that they do accept them so I will keep asking away.