Advice on Early Settlements for a Default

moneyworrier2021

Hi everyone

New here so please go easy on me as this may be more a moral question.

I got myself into a fair bit of debt late 2015 when i first took out an unsecured loan to start up a business. That failed, i defaulted on the loan which was passed onto Moorcroft in the form of a DMP. I was also in a load of financial difficulty back then with Stepchange helping me delay payments to other creditors. Jump to today and ive repaid all my debts personally and from our failed buisness. All i have left is this defaulted loan.

It was a £15k loan, took out in December 2015. Defaulted April 2017 and been on a DMP since. I now want to tackle getting it settled which current;y stands at £8.8K. I don't want to increase my payments with them directly in case finances change, one of us is made redundant, don't want the extra commitment going out. 

Do i just save the money aside and pay off lump sums as and when until its totally cleared or do i try and go for a Part and Final Settlement for say half the amount owed? £4.5k

According to step change, if i pay in full then the whole issue and default will disappear off my credit file in 2023 which is 6 years from the loan defaulted. However, if i do a lower settlement, it will show that on my credit file from 6 years at the point of settling? Is that correct. 

Need advice as to what others will do?

gizmo111

The account will drop off your credit file 6 years after the date of default regardless of any arrangements you make in the interim to pay less.  StepChange are wrong on this.

moneyonmymindsam

The default will drop off 6 years later even if you paid nothing? That can't be the correct advice so do check that again with stepchange.

Personally I would save up no less than 60% for a f & f partial settlement just in case, if you can get it settled below that for a lump sum then fab you have saved yourself some money. 

There is a thread on the boards of what percentages others have had accepted/tried with DCA. 

moneyworrier2021

moneyonmymindsam said:

The default will drop off 6 years later even if you paid nothing? That can't be the correct advice so do check that again with stepchange.

Personally I would save up no less than 60% for a f & f partial settlement just in case, if you can get it settled below that for a lump sum then fab you have saved yourself some money. 

There is a thread on the boards of what percentages others have had accepted/tried with DCA. 

They are saying that, I pay a settlement figure tomorrow and once accepted that starts another 6 year countdown before it’s removed from my credit file. 

Even looking at their site shows what the lady told me is incorrect. I don’t think I would be looking to settle until this time next year but that means overall I would only have partially settled on my file for a year or so.

gizmo111

The default will drop off 6 years later even if you paid nothing? That can't be the correct advice so do check that again with stepchange.
This is absolutely the correct advice - your credit report will show the date also.
"When will my credit record be clear?" Good news & bad news · Debt Camel

StepChange_Aidan

moneyworrier2021 said:

moneyonmymindsam said:

The default will drop off 6 years later even if you paid nothing? That can't be the correct advice so do check that again with stepchange.

Personally I would save up no less than 60% for a f & f partial settlement just in case, if you can get it settled below that for a lump sum then fab you have saved yourself some money. 

There is a thread on the boards of what percentages others have had accepted/tried with DCA. 

They are saying that, I pay a settlement figure tomorrow and once accepted that starts another 6 year countdown before it’s removed from my credit file. 

Even looking at their site shows what the lady told me is incorrect. I don’t think I would be looking to settle until this time next year but that means overall I would only have partially settled on my file for a year or so.

Hi,

The debt will show on your credit file six years from the default date, whether it has been repaid or not. 

If you agree a settlement offer with the creditor it will not extend the amount of time the debt is on your file. It will be marked as ‘partially settled’ and will still drop off your credit file in 2023.  

If a StepChange advisor has told you otherwise, this was incorrect, and I‘m sorry if you were given the wrong information. Please give us another call so we can look into this and re-advise.

Kind regards,

Aidan

moneyonmymindsam

Yes I am saying that the default will drop off regardless at 6 year point, but what OP does want to know is if he settles the debt it would stay on longer than 6 years I. E. From the point of settlement - that is what stepchange have said which has caused the confusion. 

Thanks 

StepChange_Aidan

moneyonmymindsam said:

Yes I am saying that the default will drop off regardless at 6 year point, but what OP does want to know is if he settles the debt it would stay on longer than 6 years I. E. From the point of settlement - that is what stepchange have said which has caused the confusion. 

Thanks 

If OP settles the debt, it won’t change the amount of time it will be on his credit report. It should be marked as ‘partially settled’ and will still disappear in 2023.

Regards

Aidan

moneyworrier2021

Thank you for the replies clarifying.
I guess it's better and gives me more options come next year. I've paid off so much debt over the last few years, I'm going to try and get a Full and Final settlement on this last debt.

So after the 6 years, it doesn't change to just a 'closed' account on my credit file, it will just completely disappear or does it need to be closed within those 6 years?

I'm guessing then that the only thing i need to be mindful about is the fact it will say 'partially' settled for a year or so if i plan to settle it next year. 

gizmo111

The default will be of more concern than partially settled.  Whatever you do with this debt it will come off your credit file 6 years after the default date.

moneyworrier2021

How long of a gap do people leave between offers of an early settlement.

Say I owe the 8K, At the end of April when I have about £5K saved, should I go in with my first offer of 30% £2,400. I assume they will accept and decline within a few weeks. If declined can I wait say 6-8 weeks before making my 2nd and final offer of 60% £4,800 to give me more time to buffer my bank account or should I just wait until I have my buffer waiting before making any offers.