New house and debt.

bryanferguson07

I’m looking for some advice if anyone can help, we bought our first house in 2016 and have kept up with the mortgage payments. However I had issues in 2017 with gambling and ended up with 11k debt. I was unable to make the repayments to the lender and have since set up payment plans for each creditor using a third party company.

im now in a position to pay the debt of as well as us wanting to move home in a years time. Some creditors have offered a partial payment of half of what I owe them roughly. So my question is if I do partial settle these creditors will it effect us when we go for a new mortgage potentially or shall I pay them back in full? Any help and advice would be much appreciated!

csgohan4

Any debt will affect your affordability and therefore your budget, have a play around the mortgage calculators

foxy-stoat

If you can pay them in full then you should.  You may find you have defaults on your credit file that will be unsatisfied if you dont pay in full.

bryanferguson07

csgohan4 said:

Any debt will affect your affordability and therefore your budget, have a play around the mortgage calculators

So if I partially settle the debt with them and we agree together I pay back less than I owe and that will be the end of it - will this still affect my budget because I haven’t paid in full?

csgohan4

I think this one would be something for the broker, I would avoid the conveyor belt ones like L+C.  The problem is, it isn't just debt, but also a debt management plan as well which complicates things

Thrugelmir

The sooner you can draw a line under the past the better. Whatever the short term pain. Longer term time does heal. 

tim_london

bryanferguson07 said:
So if I partially settle the debt with them and we agree together I pay back less than I owe and that will be the end of it - will this still affect my budget because I haven’t paid in full?

If you still have monthly payment arrangement then it may affect the amount you can borrow.  

The bigger issue is how the debt is registered.  It sounds like you probably should have default marked in your credit file in 2017, but do double check.  The rulebook is that when a bank sells the debt to creditor then the creditor needs to use the date the bank closed your account as the default date, but often creditors don't follow this and use the date you responded to their letter.  You can demand them to correct it if they did do a mistake.

The was a similar thread yesterday about defaults, a MA said as long as it is registered 3 years ago then most big lender would be ok with it.  I'd suggest getting a free statuary credit file of yourself to make sure your creditor did not make any mistakes on your file. 

Also: after 6 years from the default date you have no legal responsibility to repay the debt any more even if you haven't repaid it all yet.  It also disappears from your credit file.  May explain why your creditor is offering you good settlement deals.

MovingForwards

" after 6 years from the default date you have no legal responsibility to repay the debt any more even if you haven't repaid it all yet.  It also disappears from your credit file.  May explain why your creditor is offering you good settlement deals."

THIS ∆∆∆ is incorrect.

If no contact and no payment has been made in 6 years, the debt is statute barred, regardless of whether it's been defaulted or not. During those 6 years the creditor can issue could proceedings and potentially obtain a CCJ.

I did partial settlements on mine as I had a choice, keep paying the debts each month like I had been doing for several years and have a bigger mortgage deposit, or take a punt with offers to clear it and have less for my deposit. Whatever I did wouldn't change the fact I would only get a sub-prime lender to provide me with a mortgage, I picked a broker and had him waiting for 15 months before I was in a position to proceed with an application.

Have you spoken with a broker to see what your options might be, based on both scenarios? 

bryanferguson07

MovingForwards said:

" after 6 years from the default date you have no legal responsibility to repay the debt any more even if you haven't repaid it all yet.  It also disappears from your credit file.  May explain why your creditor is offering you good settlement deals."t

THIS ∆∆∆ is incorrect.

If no contact and no payment has been made in 6 years, the debt is statute barred, regardless of whether it's been defaulted or not. During those 6 years the creditor can issue could proceedings and potentially obtain a CCJ.

I did partial settlements on mine as I had a choice, keep paying the debts each month like I had been doing for several years and have a bigger mortgage deposit, or take a punt with offers to clear it and have less for my deposit. Whatever I did wouldn't change the fact I would only get a sub-prime lender to provide me with a mortgage, I picked a broker and had him waiting for 15 months before I was in a position to proceed with an application.

Have you spoken with a broker to see what your options might be, based on both scenarios? 

Thanks for the advice and this is now how I shall proceed! Thank you.