Settling Debt

Nextsteps999

Hi All,
I'm currently working with Stepchange for the last year and have agreed payments with my creditors, most of which have now been sold to a 3rd party. In the next few months I will be in a position to clear all of this debt, my question is, is there value in trying to negotiate a lower settlement figure as the debt has been on my credit file for a year so the damage is done, or do I pay in full in the hope this would benefit my credit file? 

EssexHebridean

The debts have all defaulted, yes? If so, then you definitely may as well try and negotiate full & final settlements. Usually the advice is to start the process offering no more than 25%, and regardless of what the real situation is give the impression that the money has come from a third party (so a gift from a family member for example) rather than having been accrued by saving up. Don't tell the creditors what the total amount you have is or they won't agree any settlements though as they will see a chance of getting paid in full! 

A year might not be long enough to convince them to go for F&F's but you have nothing to lose by trying - make sure all negotiation gets done in writing too so you have a paper-trail (albeit probably an electronic one). 

sourcrates

You are still only a year in, so don`t expect to get massive discounts here, but certainly something should be obtainable.

Now a word of caution, stepchange are great for most people, but if you tell them you have a lump sum and want them to negotiate settlement offers, they will insist you pay them that lump sum upfront, before any deals are done, you will not get any say in what is acceptable or not, they will do the deals and you may not pay off all of your debt.

So if you are going to do this, I recommend once you get the money, end your DMP, wait until the letters start coming in, and then take negotiations from there, do the deals yourself.

ManyWays

 or do I pay in full in the hope this would benefit my credit file? 
A partial settlement shows on your credit record as a marker against the debt, it doesnt affect your score at all. 

Rob5342

I would make CCA requests to see if the debts are enforceable, if any aren't then you wont need to repay them at all.