Full & Final Settlements

SamuelBB1

Hello,
I have been in special arrangements for a while but I have now finally been able to pay of my payday loans and been able to focus on my other bills.
I want to offer a full and final settlement figure for the rest of my bills to get them cleared once and for all but I am slightly unsure what a few creditors have said to me and would like to ask if someone can give me some more insight please.

I have credit cards with Vanquis, Barclays, Debenhams, Aqua.
 I first offered SafetyNetCredit a fixed amount to pay of my balance and they agreed to meet me half way and I have now paid this and I understand that the account will be marked as partially settled in my credit file. This means I have made a reduced payment to clear the balance with the other bit being written off by the creditor and it will effect my credit score for 6 years.

I have now been speaking with Debenhams and Aqua (owned by same company). They offered me a full and final settlement figure of 75% of my balance which I will be willing to pay to clear the balance however. They have said that it will go down as partially settled which I already knew butt hat said that the other 25% will go down as a default on my account.

I don't understand why they would leave another default on my credit score when I am making a full and final settlement as the company is the one saying I can make a payment of 75% to close the account. Can anyone please explain as to how this default will go on my account please or is this default part of the partially settled flag. 

On a side note, at the moment it shows I am in a special arrangements, is this damaging my credit score already and if I did save and clear each account in full would this remove the bad "special arrangement" I have been in and boost my credit score

Thank you very much for reading and your input as it's really appreciated. 

Willing2Learn

Ideally, this would have been better placed in the Debt-Free Wannabe board.  But never mind 

Welcome to the board Samuel 

When did you open all these accounts?  If they are quite old then you should submit CCA requests for each eligible account before you think about settling the account.
Debts – why, how & when to ask for the CCA agreement

An account is defaulted when the credit agreement and relationship between the creditor and the customer has irreconcilably broken down.  This usually happens once an account is  3-6 months in arrears.  A defaulted account will remain on your three credit files for six years from the date of default.

SamuelBB1

Thanks for getting back to me and I am sorry about posting this in the wrong section. 
The debits are still with their original owner and I have been in arrangements with all of them since July last year which I wanted to avoid but had got into trouble with taking out to many pay day loans. 
The CCA option is not one I am considering due to the accounts still being with the original creditors.
I am just unsure how to handle the full and final settlement offer as I have been told differently by different companies. 

SafetyNetCredit allowed me to pay half of my bill to them for the account to be closed and they would write of the rest and this will just show on my credit score as a Partially Settled account. Aqua & Debenhams are saying I can close the account down with a partial settlement but the part which isn't paid will be left on my credit score as a default.

I want to try and close all of my accounts down with the a partial settlement and happy to have this showed on my account as it clearly says I have settled my account with a fraction payment and not a default mark on my file saying how much I didn't pay. 

I currently have no defaults or CCJ's on my credit score but each account just shows as a "special arrangement" and so I don't think this will negatively impact my file in the long run once the account is closed and settled either be with a full settlement or a partially settlement. 

harsh_but_fair

The company is saying that they understand that you cannot afford to pay the full amount and that they are willing to settle the account for a smaller amount for example 75%

However (and completely separate so that) they are saying that they want to put a marker on your credit file saying that you defaulted on your loan as a warning to any future lender considering lending money to you (either as a loan or as a credit card)

If I were a lender I would want to know that information so it seems entirely fair to me

Willing2Learn

Okay then, if all your accounts are still with the original creditors, then it is likely that they have compliant paperwork.


With regard to defaults. As far as your three credit files are concerned, a defaulted account is good news.  Why good news?  Well because the toxic accounts will be automatically removed from your three credit files, six years from the date of default

SamuelBB1 said:

On a side note, at the moment it shows I am in a special arrangements, is this damaging my credit score already and if I did save and clear each account in full would this remove the bad "special arrangement" I have been in and boost my credit score

An 'arrangement to pay' that you may have with your creditors is bad news for your three credit files.  An 'arrangement to pay' is toxic data and will remain on your credit files far longer (often years longer) when compared to a default.  This is because the toxic 'arrangement to pay' data will remain on your three credit files, for six years from the date of account closure.


Because of all of the above, I would recommend that when you make your written offers or counter-offers to your creditors (using the National Debtline letter template), that you add a further condition stating that the accounts are defaulted, back-dated to when you were 3-6 month in arrears.  (Remember, a toxic defaulted account is automatically removed from your three credit files, six years from the date of default.) 

Edit:  Oh yeah!  While I'm here, I recommend you read the following article about payday loans.  This is because in many instances, a payday loan has been granted, without first ensuring that it is affordable to the borrower.   This is called 'irresponsible lending'.  Many borrowers have successfully used the 'irresponsible lending' aspect to reclaim what they have paid (plus interest).
How to get a payday loan refund – with template letters that work

Also have a read of the Financial Ombudsman article:
https://www.financial-ombudsman.org.uk/businesses/complaints-deal/consumer-credit/unaffordable-lending