How or whether to clear old debts?

2toomuch · 21 June 2018 at 1:31AM

Hi all,
This is a bit long-winded so I’ll try to be brief.
I have in excess of £30k debt with several lenders that I have been paying each £1pcm for over 8 years.
I am currently studying at university and last year broke my back, which has dramatically reduced my income. When I qualify I am afraid that my ability to earn will still be impaired as since the injury I am not as mobile as I was and in constant pain. Firstly would any lenders reduce or settle debt on this basis?
Secondly there is a slim chance that there may be an insurance payout - not life changing, but I want to make it as effective as possible as I won’t get a lump of money again I doubt. So as the debts are over 8 years old they no longer appear on my credit file - does that make a difference? Should I just keep paying £1pcm and put this towards a mortgage when I qualify instead or could they have a claim on that, do I have a right to a property (currently renting) or should I try for full and final settlements - does anyone do this anymore? The letters I get state that if an agreement is reach they will reflect as ‘partially settled’....does that even affect me if they’re no longer on my credit file and does that mean they still have a claim in future?
Sorry it’s convoluted, I just really don’t want to ruin an opportunity if it does come. Thank you for any advice!!

fatbelly · 21 June 2018 at 7:13AM

Not as longwinded as some...

I'm not a fan of token offers and your case illustrates why. 8 years on and nothing is resolved.

Will lenders write off debts on health grounds? Yes, and this should be your first strategy, now. Do not mention the possibility of a lump sum.

https://www.nationaldebtline.org/EW/factsheets/Pages/write-off-debt/write-off.aspx

If a lump sum does materialise, and this can take several years, then settlement becomes possible. Fresh marks will not appear on your credit file as the whole entry drops off 6 years after default or settlement, whichever happens sooner, and yours have all defaulted from what you say.

There should not be any claim after settlement but obviously keep your paperwork

https://www.nationaldebtline.org/EW/factsheets/Pages/fullandfinalsettlementoffers/lumpsumoffers.aspx

You are probably going to need 10k to clear 30k of debt

I have not mentioned insolvency as you are clearly considering a house purchase but I will point out if you had gone bankrupt 8 years ago all this would have been behind you now - I'm saying that as a warning to others really. Token offers should only be used short-term, if at all

2toomuch · 21 June 2018 at 10:36AM

Thank you so much, you have confirmed most of my thoughts on the subject!
I agree with you regarding insolvency, for most it would have been better to get it done sooner, however there would have been a career impact from my perspective at the time so I was looking for all other options. The opportunity for full and finals has not come until now (possibly), it genuinely was meant to be short term on the token offers!
I really was just worried that f&f’s may not be possible anymore....if they offer (if health grounds doesn’t work) to reflect only as part settled then do I refuse that?

Much appreciated!

fatbelly · 21 June 2018 at 9:56PM

Partially settled is the correct mark for a settlement deal. The balance should be zero though.

How or whether to clear old debts?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free