Advice on Settling Old Debts That No Longer Appear on Credit File

dudewithdebts

Hello everyone, 

I’d appreciate anyone's guidance on settling old defaulted debts and their potential credit impact.

Background:
– In 2018, I defaulted on accounts with Capital One, Halifax, and HSBC.
– These defaults have now dropped off my credit reports (Experian, Credit Karma, Clear Score), and my file reflects a positive history since.

Current Status:
– Lowell now owns the Capital One and Halifax debts and has offered settlements.
– I’m handling HSBC debts directly with the bank.

Questions:
1) If I agree to a partial settlement with Lowell, can you confirm these debts won’t reappear on my credit file?
2) Could future lenders still access this history through internal records, and how might a partial settlement be viewed?
3) Based on my current credit standing, would you recommend partial or full settlement with Lowell?

Thanks in advance
Best regards,
Shaz

ManyWays

A settled debt will not reappear, whether it was settled in full or partially, so partial settlements are great BUT you may be able to get a lower settlement agreed than lowell have offered you!
A lender can keep their internal records for as long as they want. But if they have, its your default they will see and not what eventually happened to the debt after it was sold, so I can't see this is relevant. 

PRAISETHESUN

The thing to keep in mind is that although the debts are no longer on your credit files, the fact you have been corresponding about them means they are still legally enforceable. If they have offered you a full and final settlement figure that you find reasonable, then I'd accept it purely to draw a line under the whole affair. Otherwise if you ignore them they could start chasing you again down the line, and or apply for CCJs, etc. The debt won't suddenly reappear on your files if you accept their offer.

The specific lenders you defaulted with (eg. Capital One, Halifax, HSBC) are allowed to hold records about the fact you default with them and will likely use this as a part of their internal criteria if you ever apply for credit with them again in future. Other lenders won't see anything that isn't your credit file, so will be less likely to decline on that basis, as long as your other recent credit history is OK.

dudewithdebts

ManyWays said:

A settled debt will not reappear, whether it was settled in full or partially, so partial settlements are great BUT you may be able to get a lower settlement agreed than lowell have offered you!
A lender can keep their internal records for as long as they want. But if they have, its your default they will see and not what eventually happened to the debt after it was sold, so I can't see this is relevant. 

I appreciate your insight regarding debt settlements and the potential for negotiating lower offers with Lowell. Interestingly, I've observed a shift in their correspondence: until a few months ago, their letters were labeled as 'Zone 1' and included discounted settlement offers. Recently, however, the letters are marked 'Zone 2' and no longer propose any discounts, instead requesting full payment. I'm curious about the significance of these 'Zone' designations and how they might influence the possibility of negotiating a reduced settlement.

dudewithdebts

PRAISETHESUN said:

The thing to keep in mind is that although the debts are no longer on your credit files, the fact you have been corresponding about them means they are still legally enforceable. If they have offered you a full and final settlement figure that you find reasonable, then I'd accept it purely to draw a line under the whole affair. Otherwise if you ignore them they could start chasing you again down the line, and or apply for CCJs, etc. The debt won't suddenly reappear on your files if you accept their offer.

The specific lenders you defaulted with (eg. Capital One, Halifax, HSBC) are allowed to hold records about the fact you default with them and will likely use this as a part of their internal criteria if you ever apply for credit with them again in future. Other lenders won't see anything that isn't your credit file, so will be less likely to decline on that basis, as long as your other recent credit history is OK.

Thank you for your thoughtful advice. It's reassuring to know that settling these debts won't cause them to reappear on my credit file. I have no intention of seeking credit from the original defaulted creditors, so their internal records are not a concern for me. Currently, I'm banking with another institution and have been offered a credit card within a few months, reflecting my improved credit report and a score of 850 with Experian. I'm pleased with this progress and aim to maintain it.

My primary concern now is determining how to settle the debts with Lowell and HSBC without negatively impacting my current credit standing or them dragging me to the court or issuing CCJ's. Given my family's financial reliance on me, I'm unable to commit to substantial payments at this time, making the situation quite challenging.

I understand that negotiating a payment plan or settlement with Lowell and HSBC is crucial. It's important to communicate openly with them about my financial situation to explore manageable repayment options. Additionally, seeking advice from a professional debt advisor could provide personalised strategies to address these obligations without compromising my credit score.

I appreciate any further insights or recommendations you might have on navigating this delicate situation.

ManyWays

Recently, however, the letters are marked 'Zone 2' and no longer propose any discounts, instead requesting full payment
So you have had settlement offers in the past but there isnt a current one? I would ignore this zone 1 zone 2  stuff. It doesnt help you decide what to do.

dudewithdebts

ManyWays said:

Recently, however, the letters are marked 'Zone 2' and no longer propose any discounts, instead requesting full payment
So you have had settlement offers in the past but there isnt a current one? I would ignore this zone 1 zone 2  stuff. It doesnt help you decide what to do.

Yes, that's correct. When I searched online for the meanings of 'Zone 1' and 'Zone 2', AI summarized the information from available resources, as shown in the attachments. I'm concerned that since my case has been escalated from Zone 1 to Zone 2, Lowell may no longer offer any discounts. This change prompted my question about the possibility of negotiating a reduced settlement.