Try early settlement or continue for 6 years?

kme2023

Hi there, this is my first post and Im looking for some advice on settlement offers for debt collection agencies. 

I currently have debt accounts with Lowell, capquest and link financial totalling £17k across all 3. 

We are currently re-mortgaging in order to pay these debts off and for home renovations in my husband’s name. 

My main question is - I am currently working out % offers to make to each creditor in order to make an early settlement. 

whilst doing this it I thought that even with an early settlement payment discount it would still be on my account for 6 years, so what would stop me from lowering the payments to £10 per month on each and let them ‘tick over’ for the next remaining 5 years which would be cheaper than paying them off early now, and not get me any better thought off credit score wise. 

I’m not trying to get out of this and believe me I am fully accountable for my financial situation, however I’m now thinking will I actually have any benefit from paying them off early!? 

Any advice/thoughts greatly appreciated. 

RAS

Please do not remortgage to pay off debts, particularly those that are already defaulted. Turning unsecured debt into secure debt put you at more risk of losing your home.

Let them tick over. Meantime find a half decent ISA that allows a couple of withdrawal a year as your f&f fund.

Do a proper SOA so you know how much you can save, remove that from your main account every month shortly after pay day. Add any bits you get if you can and hope the DCA offers you a f&f. If they want 40%, offer less than half that and see what they will take. Then use your "savings" to clear the debt. 

kme2023

Thanks for this - just confirm, we are remortgaging solely in my husbands name and removing me from the mortage

RAS

Doesn't matter in whose name the mortgage is. 

What matters is that you have £17k unsecured debt that is already with debt collectors. Turning that into secured dent is extremely unwise, who ever picks up the tab.

Presumably, the debt collectors have defaulted the accounts?

Or do you have the dreaded AP markers!

sourcrates

kme2023 said:

I’m not trying to get out of this and believe me I am fully accountable for my financial situation, however I’m now thinking will I actually have any benefit from paying them off early!? 

Any advice/thoughts greatly appreciated. 

On the contrary, the likes of  Lowell, Capquest and Link financial, will have bought your debts for pennies in the pound, and are now wanting to still extricate the full face value from your good self, well I for one happen to think that such practices are abhorrent, and quite unfair, after all, the creditor got their money back, and wrote the rest off to tax.

The debt purchasing companies make a killing out of such deals, you are the only one who gets the crappy end of the stick, so why on earth should you do them any favours ?

I would advise you to do all you can, and use any and all tools available to you, to make certain you get the absolute best deal you possibly can out of this, and in that regard, your first step, before you do anything else, should be to send CCA requests off to messers Lowell, Capquest & Link, and see who actually has the legal right to ask you to pay these debts.

If they can`t produce compliant paperwork, then you can offer them peanuts or nothing, and see how they like that.

redux

It's a dilemma, but include these in your thinking

As you can already see, people on here advise against converting unsecured to secured debt - which it would be if you increase the mortgage to pay these off.

As you suggest, the credit record is there for that time, and maybe the biggest damage is the initial problem. Meanwhile you're not paying interest

If they will eventually settle at maybe 40 to 50%, then all the payments you make before then don't get this discount

So maybe you're right to try to lower the monthly payments until then. If you're paying £10 a month on each and will somewhere along the line settle later at 50%, then it can be considered as an effective cost of £5 each - not interest, but in a way a bit analogous to the same effect 

Even so, if there is scope to negotiate and pay at around 40%, or less, it gives a nice feeling to put it behind you.

kme2023

RAS said:

Doesn't matter in whose name the mortgage is. 

What matters is that you have £17k unsecured debt that is already with debt collectors. Turning that into secured dent is extremely unwise, who ever picks up the tab.

Presumably, the debt collectors have defaulted the accounts?

Or do you have the dreaded AP markers!

Sorry what are AP markers?

kme2023

sourcrates said:

kme2023 said:

I’m not trying to get out of this and believe me I am fully accountable for my financial situation, however I’m now thinking will I actually have any benefit from paying them off early!? 

Any advice/thoughts greatly appreciated. 

On the contrary, the likes of  Lowell, Capquest and Link financial, will have bought your debts for pennies in the pound, and are now wanting to still extricate the full face value from your good self, well I for one happen to think that such practices are abhorrent, and quite unfair, after all, the creditor got their money back, and wrote the rest off to tax.

The debt purchasing companies make a killing out of such deals, you are the only one who gets the crappy end of the stick, so why on earth should you do them any favours ?

I would advise you to do all you can, and use any and all tools available to you, to make certain you get the absolute best deal you possibly can out of this, and in that regard, your first step, before you do anything else, should be to send CCA requests off to messers Lowell, Capquest & Link, and see who actually has the legal right to ask you to pay these debts.

If they can`t produce compliant paperwork, then you can offer them peanuts or nothing, and see how they like that.

Hi there, thanks so much for this information- I honestly didn’t know they would have bought my debt for cheaper!!! How niave of me!!! Could I ask if there is any template letters available online to send to them with the appropriate wording?

RAS

Arrangement to Pay markers. If you download you credit record (free via MSE recommendations) it says AP against the debt.

They are generally damage your credit rating for much longer than defaults.

Which is why we recommend people doing DMPs stop paying their creditors altogether to encourage them to default rather than pay peanuts per month.

sourcrates

kme2023 said:

Hi there, thanks so much for this information- I honestly didn’t know they would have bought my debt for cheaper!!! How niave of me!!! Could I ask if there is any template letters available online to send to them with the appropriate wording?

Debt camel are a great source of information, as are National Debtline -

Debts - why, how & when to ask for the CCA agreement · Debt Camel

The exact figure debt purchasers buy at is a closely guarded secret, but suffice to say it will be around 25p in the pound or thereabouts.