How bad is paying a settlement offer?

buel10

Hi.
Summary:
Brother has an automatic settlement offer from Capquest, 20% discount. He is tempted to pay it but has to remortgage later this year as his 5 year fix comes to an end.
However, they state that this will go down as a 'satisfied with a partial settlement flag'....will this be a negative when it comes to how his credit file is viewed, please?

Rob5342

80% is a poor offer, bearing in mind that they will only have paid 10% or so for the debt in the first plsce. I would ask for the cca before considering paying anything, and then if they can produce that then make them a much lower offer

fatbelly

Is it even on his credit file? Capquest deal with old debts and the record drops off six years after the default.

If it is there, then a partially settled default would look better than an unsettled one. But he should take their offer as an opening one and suggest a much lower figure. 

buel10

Thanks all, but the real issue for him is whether accepting this deal (or a lower one) will harm one's credit application for another mortgage being as it will be recorded as above? ie - how bad does a partial settlement look?

sourcrates

buel10 said:

Thanks all, but the real issue for him is whether accepting this deal (or a lower one) will harm one's credit application for another mortgage being as it will be recorded as above? ie - how bad does a partial settlement look?

If the debt is with Capquest, then it will have defaulted at some point, the question you have been asked is if the debt is still showing on his credit file???

If it is, it will show as "in default" so a partially settled default is slightly better that an unsettled default.

If the debt no longer shows on his file, it doesn't matter what he does as his file will not be affected in any way whatsoever by any settlement deal.

I also agree that 80% is terrible offer to accept, but OK as a starting point for negotiation.

Rob5342

One other thing to point out is that if he switches to a new deal with the same lender then they won't look at his credit report at all. I hsve four unsatisfied defaults and I switched mu Santander mortgage to a new fixed rate with no problems at all (it took about 2 minutes in their online banking) 

buel10

Yes it shows as default on his credit file. Basically, I am asking 'how detrimental is a 'partial settlement' as opposed to paying 100% to get it as 'Settled' re the remortgage?'

RAS

You'd be much better asking in the mortgages forum rather than here. And I suspect the answer will very much depends on the provider.

There were a few useful mortgage advisors who respond over there.

ManyWays

Does this Caquest debt currently show on your credit record?

Your "remortgage", do you mean you want to borrow more or change lenders? Or do you just want a new fixed rate offer from your current lender. 

buel10

Apologies, wanted a remortgage to pay off some debts but he might be forced to stick with his current lender with how things are at present?

ManyWays

If you want to increase the amount borrowed, there will be a full affordability and credit check. With a recently settled default, partially or in full, this is very likely to be rejected. 

Unless this default will drop off soon (6 years from the default date, this doesnt change if the debt is settled in full or partially) AND he doesn't have other defaults showing or payment arrangements, he needs to assume that he will not be able to remortgage for more to clear debts. Which is usually a bad idea anyway!!!

Like @fatbelly I suggest he starts by asking for CCA agreement for the debt (see Credit agreements | Getting information | National Debtline). If that cant be produced he can stop paying. If it is produced, then offer a lower settlement, using the "My brother has offered me £2000 if this will settle the debt" is often a good line.