A reader has asked how Full & Final settlements (F&Fs) would affect her credit rating which is currently looking good as her debts were all defaulted and have dropped off her credit record.
A full and final settlement happens when the creditors agrees to accept an amount which is less that the total owed to settle a debt, and agrees that the debtor will not be pursued for the remainder. For more details, see this Guide to Full & Final settlements.
This article looks at how F&Fs are shown on a credit record in the two different situations:
- where the debts are still showing on your credit record, and
- where the debts have already disappeared.
Lenders often say that a partial settlement will be very bad for your credit record… but often it won’t be! So it’s good to know all the details.
Some different names for this
F&F settlements are often called partial settlements, because you don’t pay the full amount, only part of it.
Creditors usually mark the debt as partially settled on your credit record rather than settled.
If the debt has previously defaulted, the term settled is not used and the term satisfied is used instead. A F&F settlement on a defaulted debt is then marked as partially satisfied. I talk here about settled debts because that is is how creditors normally talk to you, even though the credit record term is normally satisfied.
Debts that still show on your credit record
When you settle debt, partially or in full, the balance is set to zero. The debt will then disappear from your credit record six years after the original default date.
If the debt hasn’t defaulted, it will disappear six years after the settlement date. But it is unusual for a creditor to accept a F&F unless a debt has defaulted. You may want to ask for a default to be added, see What should the default date for a debt be? for more about this.
It is common for a creditor to tell you that the debt will stay for six years from the settlement date.
This isn’t right if there is a default date on the record! It will drop off six years from the default date whatever you do.
How does a partial settlement affect your credit rating?
Your credit score is a complicated calculation looking at lots of different factors.
Partial settlement is a marker against a debt, That marker isn’t taken into account in the credit scores published by Experian, Equifax and TransUnion that you see when you look at a credit report.
Lenders don’t use the credit scores that you can see. Each lender can have their own rules about what is on your credit record that they want to take into account.
So it’s possible a lender may see a partial settlement marker and decide not to lend to you. This is only really likely though for very large credit applications – mortgage or car finance say.
Most lenders won’t care if you have partially settled the debt. They may think it’s good that a debt is gone – because with one problem less, you are more likely to be able to repay what you borrow from them!
And some lenders will reject you just because there was a default, even if you have settled the debt in full!
So it can be hard to decide if paying the extra money is worth it – there may only be a tiny number of lender that may make a different decision if you partially settle or fully settle a debt.
Think about the size of the discount you can get and how long the debt will stay on your credit record. For example:
- if the creditor will accept £500 to settle a £1,500 debt that is a big discount. And if the debt will drop off in the next year, it’s probably a good idea to grab it!
- if the creditors will only accept £1,300 to settle that £1,500 and the debt is still going to show for another four years, you may think it’s worth paying more to get the debt marked as fully settled.
The rest of your financial position also matters:
- with lots of problems on your credit record, getting one debt marked as partially or fully settled probably won’t make much difference at all;
- if you can’t afford to repay all your problem debts, it’s usually better to settle as many as possible partially, rather than take longer to repay them in full.
Wanting a mortgage is the most difficult situation – I look at it in detail in Will partial settlement make getting a mortgage harder?
Debts that have disappeared from your credit record
A defaulted debt drops off your credit file after 6 years, which is why the questioner is no longer seeing these old debts on her record. But would settling one bring back the debt? You can see why she wouldn’t want her new, clean credit record spoiled by having some partial settlement indicators added to it…
The answer is simple – after a defaulted debt has gone from a credit record, it will never re-appear. You can offer a F&F settlement on these debts and not risk them coming back and damaging your credit score. If a creditor tells you that a partial settlement will be shown on your credit record for another six years, they are wrong.
This also applies to CCJs that have dropped off after 6 years. They will not reappear if you settle them with a partial settlement.
Once a debt with a default or a CCJ has gone from your credit file, the only lender that will know about it the original creditor. So don’t make the mistake of applying for a mortgage to NatWest if you originally defaulted to RBS, or to Halifax if you defaulted on a Lloyds debt.
Unfortunately people are often given wrong information about this by customer service staff at debt purchasers.
Why offer a F&F if the debts have disappeared?
You might wonder why the questioner would bother making Full and Final offers on debts which have disappeared from a credit record. There are two reasons why trying to settle old debts is a good idea:
- a debt that isn’t showing on your credit record still exists. Unless it is statute-barred the creditor can still chase you for the money. See Do I still have to pay a debt which isn’t on my credit record? for more details.
- if you apply for a mortgage or a re-mortgage the lender is likely to ask about all your debts, not just check your credit record.
So as defaulted old debts can often be settled for low Full and Final offers, it makes a lot of sense for the questioner to try to deal with hers.
Getting settlements on old debts
No calls about a debt for years?
Improve your credit score for a mortgage
nava says
hi, SARA
I received partial settlement offer from the creditor.,
It is important to note that on payment of the agreed amount ,you will no longer have any further liability to pay the remaining balance and we will not request any further payment.
if you decide to pay the remaining outstanding balance at a later date, an update would be provided to the credit reference agencies to show the debt as satisfied,
what is the meaning was they will expecting more payment or they will close the account ?
nava
Sara (Debt Camel) says
Ask them if they will mark the debt as partially settled with a zero balance owing on your credit record.
How long ago was the default date showing on your credit record?
Emra says
Hi. I have recently received n1 claim for ccj. The debt collecter is taking me to court fior a debt that drop off my credit report. So, the defaulted debt is older than six years and doesn’t appear on my credit report anymore. I am willing to pay the debt. If I want offer to pay the debt but by installments, a payment plan. My question is would paying monthlt it still appear on my credit report?. guess it is too late now to offer them
full and final settlement.
Sara (Debt Camel) says
what sort of debt was this?
were you sent a Letter before Claim, sometimes called a Letter Before Action? See https://debtcamel.co.uk/letter-before-claim-ccj/ for what one looks like/.
Can you afford to pay the whole debt if you had to – what is the rest of your financial situation like… do you have any other debts you have been ignoring?
Charles says
I owed money to a bank and defaulted since 2008.Its 2020 and now a debt collector want to collect for them via partial settlement. It’s affordable so i want to accept. Would it disappear from my credit file after paying them since the debt goes beyond 6yrs. It’s listed on my credit file for now eventhough it’s over 6yrs.
Again, a CCJ was registered against 3yrs against me using my years ago house. I had moved when the court letters arrived.Can I ask them to remove since I didn’t recieve the letter to act and negotiate payment . Thanks
Sara (Debt Camel) says
The money owed to a bank – was this a loan, credit card or overdraft? Which bank? Has it been sold to a debt collector?
The CCJ – talk to National Debtline about your chance of getting this “set aside”.
Erin says
Is it illegal for a debt collector to list a partial settlement as paid in full? I’m trying to negotiate a F&F payment where it does not show up on my credit report as a partial payment. And what if the collector doesn’t accept an offer? What leverage or options do we have if we can’t offer any higher?
Sara (Debt Camel) says
It’s not illegal but it is against the credit reporting rules because it would not be accurate so not many creditors are prepared to do this.
Partial settlement markers do NOT affect your credit score. It’s up to an individual lender whether they care about them – many just ignore them.
Can you say some more about your situation – what is this debt? How one ago dud you default on it? Has it been sold to a debt collector? Are you currently making payments, if so how much a month? How much are you proposing to offer and where does that money come from?
Ash says
Hi
I have an outstanding default debt of £10k, company agreed a partial settlement of £6k. The default date was 3 years ago so 3 years left till it drops off however I was looking to apply for a mortgage next year. so just wanted to know does it make a difference to lenders and credit report if I partially satisfy or fully satisfy a debt?
Many thanks
Sara (Debt Camel) says
This is hard to say. Some lenders may care. But some won’t and will prefer you to have the extra 4k as a deposit!
Make sure when you apply for a mortgage that you go through a good broker (eg London & Country or Habito) and tell them about this so they can make sure you apply to a lender who doesn’t mind.
What is important is that the debt is settled as soon as possible. Many lenders prefer all defaults to have been settled more than a year before a mortgage application.
Viva says
hi, Sara, thanks for your help and support,
this is my last settlement offer , Santander agreed partially settlement offer , I paid, now they send the letter which says
I am writing with regard to you recent payment which has paid of the outstanding on the above account.
I can confirm that your account has been registered with credit reference agencies to which we subscribe and will be marked as partially satisfied. This information will remain registered for six years from date of default.
If you wish to pay the rest of the outstanding balance, you can do so by sending payment to above address, quoting the account number. Once the full outstanding balance has been repaid, an update would be provided to the credit, reference agencies to update the file as satisfied although the default information would still remain for six years.
My question is I paid £1303.56 for partial settlement but do they still want money from me? Can you give me advice please?
This account was not CCA, and this is 10 years old account, the default on the credit file is gone.
Sara (Debt Camel) says
This isn’t on your credit record any more and they couldn’t produce a CCA agreement for the loan?
viva says
hi, Sara,
yes, 30% agreed partially settlement offer, what will happen next. this is credit card.
thanks
Sara (Debt Camel) says
please talk to a debt adviser eg National Debtline on 0808 808 4000.from what you have previously said you have mortgage problems. I don’t know why you would pay to settle an unsecured debt which is not on your credit record and where no CCA can be prooduced. I can’t help you here.
MoneyWoe says
Afternoon.
I currently have a loan that has not defaulted (only missed payments), even though I have not paid anything on this for 2years – it was a 12mth loan.
I have today had redundancy money come through and have spoken to the company concerned about paying it off.
They have said I have two options.
1 – Pay off the amount in full
2 – Pay 80% of the amount as Partial Settlement, which of course it will be marked as this.
At present I have 3 loans (inc this) and 2 credit cards that are active with 1 credit card that defaulted at £150 that is now marked as satisfied.
Just trying to figure out would it be foolish of me to pay the 80% and jeopardise credit report?
If I could please have your advice.
Sara (Debt Camel) says
How long is it likely to be until you are back in work? because really that has to be your top priority, not settling unsecured debts. See https://debtcamel.co.uk/redundant-debts/
Are you buying or renting? Any priority bills in arrears – council tax, utilities?
Who is the lender here who has made a mess so far of credit reporting? It’s always hard to know what to say in a situation like this, as it’s perfectly possible they will look at your credit record and go back and add a default…. which would be quite right.
How large are each of your debts ?
Paul says
Hiya
Long story short, IVA in May 2014 with 6 accounts defaulted (IVA settled in 2017 3 years in) then in May 2020 (6 years after accounts defaulted) all accounts were removed from the credit reference agencies so all good.
Issue: Last Month in November 2020 one of the accounts is re added to the credit reference agencies because they have just got round to adding a settlement date of of 12/2017 and additional notes stating Partially Settled.
I have contacted the company for this account and they say they are have problems with their credit reporting systems and cant help me at all but it may get corrected sometime in the future (Not Helpful)
Credit Reference Agencies are saying there is no issue and the data is correct so it will remain on my credit reports for 6 years from 12/2017 until 2023 even though they should be able to see it defaulted in 2014 from there previous records. I have paperwork that proves the above but no one seems interested.
So what can I do? this means it will be on my credit file for a total of 9.5 years if its not removed.
Any help would be most appreciated
Thanks
Sara (Debt Camel) says
who is the creditor with the problems?
Paul says
Nationwide CC
Sara (Debt Camel) says
oh! That I did not expect.
I suggest you go back to Nationwide, send them a formal complaint and say you want this resolved within 2 months plus £100 for the inconvenience or you will be sending the complaint to the Ombudsman.
Paul says
Hi Sara, thank you so much for your help and fast response, That’s what I hoped your response would be and that I was within my rights to request removal.
I have contacted them twice once through email complaints and also by telephone but to no avail so I will do a recorded formal complaint letter to their complaints department and then onto the ombudsman if needed.
Thanks again for your time and help
Paul
James says
Hi Sara,
Hope you had a great xmas and new year, i decided to bit the bullet and get a partial settlement for my 8 lowell accounts.
Can I ask does your credit score increase when you partially pay a debt? or is it just the exact same as not paying it?
Sara (Debt Camel) says
No increase at all. And it wouldn’t increase even if you paid them in full, either.
It makes no sense but them’s the rules.
That’s why it’s better to pursue the affordability complaints where possible as your credit record will impove if you win.
Also read https://debtcamel.co.uk/settlements-old-debts-cca/
James says
Thanks Sara, should i really make offers to them then or just ignore the debt completely? It makes no sense.
My end game is within 5 years to get a mortgage.
Sara (Debt Camel) says
The debts have to be settled, not just dropped off your credit record, before you can get a mortgage. And settling them stops any chance of a CCJ…
James says
Thanks Sara, will partially settled cause any issues when trying to obtain a mortgage or as long as they are showing as settled the mortgage lender will look favourable on it?
Sara (Debt Camel) says
Partial settlement only matters if the debts are still showing on your credit record when you apply for the mortgage. And even if they are showing it may not matter much. See https://debtcamel.co.uk/dmp-partial-settlement/ for details.
James says
Perfect so if i get all my debts to partially settled although my credit rating wont improve i still have a chance of getting a mortgage earlier?
I also have pay day loans showing on closed accounts as paid and settled, i take it this will affect my mortgage chances?
I had credit cards and mobile phone contracts included with Lowel.
I understand that in order to get my credit file up I need to be able to get credit. Will the credit card and mobile phone companies give me another chance in the future or will i now be bared from using them.
Sara (Debt Camel) says
How old are the payday loans?
Are all the debts defaulted, if so how long ago are the defaults?
James says
Yes most of the debts are defaulted 1 is 12 years old but I stupidly made a payment 6 months ago before being aware of statue barred and some are within the last year.
I tried for 30% they came back with 50% I am now saying I will pay 50% over a year if they clear the 12 year old account and also another.
The payday loans are mainly from 2017, I thought when I won the affordability claims they would have came off all together but not so I guess.
Capital One £300 – £50 per month starting January 31st
Orange £150 – £1 per month starting January 31st if this was reduced to £50, I would pay today – 12 year old debt
O2 £1531.99 – £50 per month starting January 31st
Vodafone 916.81 £30 per month starting January 31st – will pay more when debts cleared – t
Vanquis 130 – I will clear by January 10th
EE 1273.45 – £30 starting January 31st per month increase when other debt clear
Niall says
Hi Sara.
Please can you help I’ve have a debt from essentially a pay day loan. It’s for £670. They have offered me £503 to partial settle this. It is defaulted but not 100% sure when that began. Do you think it’s worth continuing to pay £20 a month till 2024 to clear this or just taking the partial settlement?
Thankyou
Sara (Debt Camel) says
who is the lender? did you have other loans from them before this one? Can you afford that much?
Martin says
Hi there.
I have been paying a loqbox account for the past 9 months (£70) without missing a payment. I have also been paying my credit card in full for the past 6 month (£50). It’s a £200 limit credit card but I only use £50 of it each month on petrol.
For the past 3 month my credit score has went up. Will this be the case every month now? Or will I get months where my credit score goes down even if I’m doing the same payments every month?
Also is there anything else I could do extra to increase my score?
This time last year my score was 120 on clear score and now it’s at 321
Weatherman says
Hi Martin
Your credit score depends on a bunch of factors. All else being equal, if you keep making these payments your credit score certainly won’t decrease, although it might ‘plateau’ at some point.
This page has some useful information on what else you can do (other than ‘keep doing what you’re doing!’) – the main one is make sure you’re registered to vote: https://debtcamel.co.uk/credit-score-change/
Your score is a reasonable ‘finger in the air’ as to your creditworthiness – but don’t forget that’s just to give *you* an indication, lenders will all use the information behind the score a bit differently.
Sara (Debt Camel) says
I agree with Weatherman, you score won’t drop unless something bad happens, But at some point it will stop rising because if the LOQBOX and credit card accounts.
However the bad bits on your current credit record will be getting older and will eventually drop off, so that will help your score.
Time tends to resolve credit. Record problems and when they go, your new accounts will be the only thing showing and at that point they willlook great!
Martin says
Thanks for the feedback, appreciate it!
I’ve done everything I can to improve my score (register to vote etc.) At the start of last year I paid my defaulted accounts, I know there’s nothing else I can do with that apart from wait until they fall of my file. My loqbox ends in 3 months and I’m just planning on continuing to use under 30% of my credit card and paying it off in full every month.
Is there anything else I can do to keep my credit score rising or will it just stay roughly where it is?
Sara (Debt Camel) says
If you can still save money, another LOQBOX account will help.
You could ask your credit card company if they will increase your limit to £300 – that would be a small help as limits under £200 have a small credit score penalty (see https://debtcamel.co.uk/credit-score-change/). But many companies won’t up limits at the moment.
Chance says
Hi there, glad I found this website, it’s been really helpful :)
I currently have 5 accounts that defaulted between 2017-2019, four of them are with debt collection agencies and one with the original creditor. Partially settling would allow me to pay them off quicker, I’m not clear on if paying them in full or partially settling has an advantage/disadvantage.
Any advice for me :)
Thanks
Chance
Weatherman says
Hi Chance
Any debt you can get settled, whether in full or in part, makes you look better to lenders. This change won’t show in the credit score that you see – because the debt’s defaulted – but importantly it *will* show to lenders.
Some lenders will only care whether the debt still exists; others might prefer you if you paid it off in full rather than in part. It really varies, so think about what you can afford and start from there. Good luck!
Bill says
Hello Sara,
I’m glad I stumbled across this site.
Hopefully you can offer me some advice.
In early 2014 I made a foolish mistake and started to gamble. Within 6 months I had maxed out a Natwest loan, credit card and overdraft totalling around £7,000. I entered a DMP fairly soon after but stupidly continued gambling on and off till 2018. I owe just over £14,000 going by my Payplan account.
I have 11 creditors in total.
Cabot £4,653.71 (Natwest Loan & Overdraft)
Wescot £1,213.65 (Natwest CC)
PRA £1,847.11 (MBNA)
Moorcroft £553.73 (Halifax)
Moorcroft £1,254.81 (Vanquis)
Lowell £455.90 (Capital One)
Lowell £1,624.85 (Hitachi)
Link £755.70 (Barclaycard)
Lantern £584.55 (CTL)
Lantern £739.00 (CRS)
ARC £413.79 (Cash EuroNet)
The Natwest account (currently with Cabot & Wescot) has dropped off.
I have over the last year or two been sent letters being offered a 70% reduction on Natwest debt but was out of work (universal credit) so continued to make token payments. PRA and Lowell have also sent offers of 70 and 50%.
My situation improved in October 2020 when I started working. I’d like to take them up on these offers as I have around £2,000 saved.
I’m just apprehensive what the other more recent creditors will think if I partially settle these 4 accounts. My main concern is getting CCJ’s
Many thanks
Sara (Debt Camel) says
Offering F&Fs in general is a good idea although there are a couple of other things you might consider, see below.
If you settle some debts with a F&F, the other debts in your DMP will get more each month – they are unlikely to mind let alone go for a CCJ.
The other things to think about:
1) are all the debts enforceable? You cannot be taken to court for a card or a loan if the debt collector can’t produce the CCA agreement for the debt if you ask for it (doesnt apply to overdrafts). Sometimes a debt collector will have paid a very low price to buy a debt and they won’t be able to go back and get the agreement from the original lender…
So read https://debtcamel.co.uk/settlements-old-debts-cca/ and see if you want to try this.
2) you may have a good case to win an affordability complaint if the loan repayments were too high for you or the credit limit was set too high.
This is more likely for the debts taken out after your DMP started.
Read https://debtcamel.co.uk/refunds-catalogue-credit-card/ for credit cards
And https://debtcamel.co.uk/refunds-large-high-cost-loans/ for large loans
And for the Cash Euronet put in a claim TODAY as it is the last day you can, don’t dither
If you win these complaints you may get the balances reduced, even a refund, and any negative marks are removed from your credit record.
Bill says
Many thanks for your speedy response.
I decided last year to make a complaint to the financial ombudsman in regards to Natwest offering me a credit card and loan back in 2014 when I had originally wanted to see if the overdraft I had maxed out could have interest payments frozen due to gambling.
They decided Natwest acted responsibly even though my account was erratic at that point. The gentleman who sold me the loan ticked that I needed it for a car (I live in London so no need for a car). I never asked him to do that. And apparently they said they carried out an income and expenses check that I certainly didn’t sign.
I emailed proof that I was also in rent arrears at the time but to no avail. I take responsibility for my mistakes but looking back natwest was the catalyst in this mess.
I’m unsure whether to ask about a CCA because Natwest have only changed to Wescot & Cabot in that time.
Another quite old debt MBNA (2015) has only been passed on once to PRA. It makes me think a CCA would be quite easy to find.
I did put in a claim for Cash Euronet in late Nov 2020 but was emailed I wouldn’t be receiving any refund in December.
My credit report strangely doesn’t include ARC or two Lantern debts.
I will take your advice about the other credit cards I took out after the DMP but to be honest I’m not sure when applying for them I was completely upfront about my situation in terms of debt when applying.
Many thanks
Sara (Debt Camel) says
Was your Natwest decision from an adjudicator or an Ombudsman?
It is common for a debt purchaser to not be able to produce the CCA agreement even if this is the first sale.
There is no reason not to ask Cabot for the CCA agreement. Ditto PRA. You may think the CCA may be easy to find in theory, but the debt purchaser may have had a low price agreed on condition they never go back and bother the lender again.
I can’t say which requests will work, it’s up to you what you want to try.
What credit report are you looking at?
Bill says
Got my dates slightly wrong.
I made a complaint in 2019 to the ombudsman regarding Natwest and got a reply in early 2020 with a decision I disagreed with.
It was sent for a final decision mid/late 2020 and I heard back just before the end of the year that they had come to the same conclusion. I disagreed with this so I think that’s as far as I can take it.
Interesting they decided to look at the complaints separately even though I was sold the credit card and loan at the same time. The final decision was for the loan.
Natwest contracted me two weeks ago about my complaint about the credit card and I received an email a few hours later saying they acted fairly.
Btw I still get statement from Natwest now and again for the loan and credit card even though these were closed (I imagine) some time ago.
I’m using Credit Karma, clearscore, and Totally Money. Experian I don’t find that helpful as it only gives a score.
Sara (Debt Camel) says
Totally money gives you the same data as credit karma. To check Experian for free, see https://debtcamel.co.uk/best-way-to-check-credit-score/
Bill says
Thankyou for your help Sara
Going forward I’ll ask PRA, Cabot and Wescot for proof of CCA’s
I’ll make a complaint to Barclaycard, Capital One and Vanquis to see if I should have been offered credit in the first place.
As I said I don’t think I was truthful when filling out the form for credit, I didn’t tell them I was already in debt due to gambling so we’ll see what happens.
Halifax credit card was an old card from 2013 so I won’t make a complaint.
Any idea why the ARC (quick quid) and two Lantern debts (Credit Resource Solutions & CTL) don’t appear on my report?
Sara (Debt Camel) says
A lender should not take your word on an application for credit without checking eg at your credit records. If they showed debts which you had missed off, they should have been a cause for concern.
The missing debts may get added to your credit record at some point. Usually the most inconvenient for you!
Bill says
Ok, many thanks for the advice.
Still seems a bit strange as the two Lantern and ARC debt are almost 4 years old. I may just get in touch with them next week and see what the situation is.
Sara (Debt Camel) says
I would definitely ask for a CCA agreement for them.
Bill says
Good evening Sara,
I have what appear to be CCA’s back from Lantern x2 & ARC
Lantern (originally lendingstream & wage day advance) supplied what I think are genuine CCA’s. I applied for both online so I imagine what they’ve supplied is legit.
Same for ARC (originally Quickquid)
I think I should now offer a partial settlement via email and see what they say. Does that sound sensible?
kind regards
Sara (Debt Camel) says
I don’t really know anything about your situation, so I can’t really say what is sensible. In general it is a bad idea to offer more than you can afford and it is better to know the situation for all your debts, rather than to try to deal with them one by one.
Bill says
Thank you
Having just looked at my accounts I can see 3 defaulted in 2015, 5 defaulted in 2016, 2 defaulted in 2017 and 1 in 2018 (I think this one should also be 2017
I think I will ask all 11 creditors for proof of CCA and see what happens.
The Lantern debts look like having originally been with Lending Stream and Wage Day Advance
On my Credit Karma report Quickuid is showing as both an open and closed account.
Bill says
I decided to get on the phone today and call both Lantern & ARC to see if they’d accept a full & final offer.
My thinking was they’ve produced the CCA’s and I don’t want to be sent CCJ’s.
Pretty terrible experience as I had the phone put down on me on two occasions. Called back and managed to get the £773 lending stream debt down to £500 & the £578.55 Wage Day Advance down to £400 both to be spread across three payments.
There seems to be a mix up as one person I spoke to said the quick quid debt is also owned by Lantern and not ARC but the guy I managed to arrange the settlement with said ARC are in charge so I called this afternoon and I offered £250 on a £400 total spread across two payments. The caller said they’d get back to me but I heard nothing, hopefully tomorrow.
Sara (Debt Camel) says
You want the agreed settlements to be in writing before you pay them. Doing this on the phone can lead to misunderstandings, you don’t want them later to say you were just arranging to make some payments and these were not in full and final settlement of the debt.
Bill says
I did ask him to send an email confirming the amounts and it also mentioned my account would be “partially settled”
I think I’ll ask them to confirm they will no longer be chasing for the remainder or be selling the rest of the debt on.
Thanks Sara
Martin says
I have a £200 credit card limit, every month I only use £50 of my credit and no more. Would there be any benefit if I increased my limit and still use £50 of my limit every month? Would it help my credit score in anyway?
Sara (Debt Camel) says
See https://debtcamel.co.uk/credit-score-change/
Are you paying off the balance in full each month?
Martin says
Yeah I’m spending £50 of my £200 balance and paying it off every month in full
Russell says
Dear Sara,
I have several debts including mobile phone, council tax, teaching course debt, and an old Halifax overdraft debt from 2013, all of which I’ve left for a while but am finally getting round to dealing with. I’m also on UC, which is just about keeping me afloat.
A debt collection agency has offered partial settlement on the Halifax debt, 80% off by end of Feb.
My friend says he could help me pay the debt at 80% off. But we’re worried that it might be seen as preferential treatment over other creditors if I needed to get a DRO in the next year or two.
Also, I haven’t got any records so don’t know if it’s statute barred.
The council tax debt is not being chased heavily at the moment and I’m hoping to get the Council to take it back since I’m now on UC… with suspensions on the rest while I try and find a new job.
What do you think about taking the 80% settlement offer?
Thanks,
Sara (Debt Camel) says
How much do all the debts add up to?
How large is the overdraft debt? The council tax debt?
Would your friend need to be repaid at some point if is this a real gift?
If you get a new job, will you be able to start making meaningful repayments to all the debts? We will soon be into the next council tax year, so you need to be able to start paying that as well?
Russell says
Overall debts are about £4K, council tax around £430 including £75bailiff charge. Overdraft £1,200. Teaching course the other biggy.
Yeah, UC is seeing me right on council tax, food and bills. Friend can be trusted, yes, absolutely.
Hard to say about making meaningful payments. Was in the personal fitness world before the pandemic, but made unemployed shortly before March and fell through gaps in support.
What counts as meaningful? Reckon I could manage £10-30pm depending on finding new work. (On each debt) Thanks!
Sara (Debt Camel) says
So thoughts:
– it can sometimes be hard to tell when an overdraft is statute barred because there are no regular monthly payments required so how can a bank tell when they were routinely being missed? You can talk to National Debtline on 0808 808 4000 about this to find out more. If the debt is statute barred paying it would be a waste of your friend’s money.
– yes making a preferential payment can be a barrier to a DRO. But as the money is coming from a friend this may be seen as less of a problem if your friend writes you a letter/ email saying he will only offer you the money if it can be used towards the full & final offer you have been sent.
– the council tax debt is not going to go away even if it gets called back from the bailiffs now. Councils have gone very soft on this for the last year of necessity but that is unlikely to last and I think it would be foolish to hope that will continue for the next year.
– when you are back in work you should aim to repay priority debts such as council tax as soon as possible, with non-prioritry debts such as this old overdraft getting a token £1 a month payment
– the DRO rules are being reconsidered at the moment, see https://debtcamel.co.uk/proposed-dro-changes/. by guess is the proposed changes will be made from May. At that point you would be allowed a DRO even if you had spare income of £100 a month (provided you met the other criteria). So it could be realistic to hope that if you had a DRO and then found a job, your DRO would be able to continue.
– £4000 is not a lot of debt for a DRO but it sounds as though your finances were pretty marginal before the pandemic? In which case it may be better to go for a DRO now and get a frech start.
I suggest you talk to National Debtline about the overdraft debt and whether a DRO would be a good option for you.
Chance says
Hi,
I defaulted on a Vodafone contract in 2017, it got passed onto debt collectors and I paid them straight away. Up until this year, it was still showing as defaulted and not settled, so for 3years+ it was being reported that I was missing payments every month to the debt collector. I raised a dispute using TotallyMoney’s tool on their website and it has since been corrected, after this happened my credit score went up by 10pts
Any explanation for this? did my score go up because the debt changed to settled? my understanding was from this page is that settling the debt doesn’t affect credit score?
Sara (Debt Camel) says
10pts is such a tiny change it could have been some other change on your credit records.
David says
Hi, I have about 7 grand worth of debts that are coming up to the 6 years from when they defaulted in about two months. Would it be better to partially settle these or in full? I am looking to apply for a mortgage but it won’t be until after they have come off my file. Do they come off 6 years after the original default date regardless of whether they will be updated as partially settled? And can mortgage providers see this?
Sara (Debt Camel) says
Do they come off 6 years after the original default date regardless of whether they will be updated as partially settled?
yes
And can mortgage providers see this?
See https://debtcamel.co.uk/mortgage-debts-not-on-credit-record/
Anon79 says
I had a loan with moneyboat I have a payment plan with, with £226 left to pay. I have checked all three credit agencies and the loan isn’t appearing anywhere not even under defaults, they are willing to accept £75 to close the account my concern is if it doesn’t show now, will it suddenly show as partially settled so should I just wait and pay the £226?
Sara (Debt Camel) says
how many loans did you have from them before this one? Are they showing?
Amy says
Hello,
I have 2 DMP’s for debts that have fallen off of my credit report as they are very old and my report now is on a perfect score.
My partner & I are in the process of getting a mortgage. If I pay these off with an early settlement figure rather than the full amount, will this be worse than paying it in full in the eyes of the lender as they are no longer on my credit report? Will this affect my current score?
Ultimately will it make much difference if I pay in full or settle?
Many thanks
Amy
Sara (Debt Camel) says
If I pay these off with an early settlement figure rather than the full amount, will this be worse than paying it in full in the eyes of the lender as they are no longer on my credit report? Will this affect my current score?
Ultimately will it make much difference if I pay in full or settle?
No, No and No.
BUT you are still going to have a problem if you settle the debts now, in full or partially, as if you apply for a mortgage soon, the lender will see the DMP payments on your bank statements. It is better to have settled all the debts at least 6 months before a mortgage application.
Hammad says
I defaulted on all accounts 3 years ago and have one ccj as well. I have been on dmp for a year now with paying 100£ a month for 50k debts in totals with 6 creditors. Paying extra 50£ on ccj debt. Before starting dmp i asked one of my creditor to proof my debt through CAA agreement. The creditor was unable to provide me with that(debt collection agency) and removed me from credit file.
I am thinking of asking other creditors for CAA. I did’nt ask before getting on dmp. My accounts are all 10 to 12 years old. I am not even sure if i am paying to the right creditors and if i really owe them this money.
Question is if my dmp payments has validated the debt? If i ask creditors to produce CAA can that be fruitful?
Sara (Debt Camel) says
if my dmp payments has validated the debt?
No.
Asking for a CCA does not mean that you are denying the debt ever existed. It just means you want to see the paperwork for it.
Asking for the CCAs sounds a good idea for debts that were originally loans or credi rapt cards etc but NOT for overdrafts. And this will not work for the CCJ.
Have all the debts been marked as defaulted in your DMP?
Can I ask if you are buying or renting?
Richard Swain says
Hi Sara
I have a debt with Satsuma (Provident).
There is only £170 left. The debt doesn’t appear to have defaulted, and my credit report is only showing missed payments.
They have offered me an F&F @75%. I assume, based on your article, I would be better off clearing the debt in full rather than accepting the F&F, which would be marked on my credit file from now for 6 years? Thank you
Sara (Debt Camel) says
how long ago did you stop making the normal payments? was this the first loan you had from them?
James says
Hi Sara – Having followed your guidance over a couple of years, I have reduced my overall debt considerably, and the associated pressure, for which I again say thank you.
From 10 creditors over 10 years old, 6 settled very low or agreed write offs, but I am stuck with 4 remaining debts, all with Cabot ‘Sensitive’ care team due to health & domestic situation.
I requested copies of original agreements & they supplied just 1, for the only debt that went to CCJ over 10 years ago, so I continue to pay £1 per month on that.
They could not supply the other 3 so I stopped £1pm payments in Dec as they are unenforceable. I asked for write off’s which they rejected, and escalated it to a complaints team, who also rejected.
The last communication was in Jan when they advised ‘the relevant limitation periods are Dec 2026’ for those 3. I am not sure where they get Dec 2026 from on 10 year+ debts, though they have written this week insisting I contact them for a 6 month review.
Could you please clarify what ‘the relevant limitation period’ of Dec 2026 actually means and maybe why they came up with Dec 2026? And does a CCJ ever end, is there a way to end it?
Should contact them for the 6 month update? And if I do, what do you think my next steps might be? Should I just ride it out til 2026? Would they drop off then or are they hoping I pop my clogs so they can claim on my estate? Can they even do that?
Thankyou in anticipation, you are a star!
Sara (Debt Camel) says
If you stopped paying in November or December 2020, then 6 years after that you be the time it may be statute barred.
Why not just settle down and pay a token payment to the debt with a CCJ?
Bill says
Morning,
I am writing to 5 creditors requesting CCA’s
Silly question but when I’m filling in the individual cheques for £1 do I need to complete the pay line or can I leave it blank?
Im printing my name rather than signing also
Many thanks
Sara (Debt Camel) says
A cheque has to be a valid cheque, with the name of who to pay and your signature.
Bill says
Thanks
Just saw this message
Posted a little earlier, 7 in total
I filled out the cheque but wrote my full name instead of signature as I’ve read some creditors cause use a person’s signature in dishonest ways
Bill says
Btw sent then as recorded delivery, almost £16 but will be worth it if any creditors cant provide
Bill says
A final word from me.
I asked Cabot to provide CCA (debt originally with Natwest). But it seems the loan & overdraft have been combined under one reference number.
I’ve already sent the letter out but I’m wondering if that’s ok as you’ve mentioned previously that overdrafts aren’t included?
Sara (Debt Camel) says
Assuming Cabot combined the two debts, they should treat them separately.
Bill says
Hi,
Quick question as I’m not sure if a creditor is trying to be sneaky.
I’ve had a letter from Wescot regarding my CCA request. They are stating that they are not the creditor for the account (Natwest CC) but are instructed on behalf of Cabot.
In all fairness it does appear that the debt has changed quite a few times from Cabot to Wescot and back again according to payplan (latest shows Wescot).
They say I can either send directly to Cabot or resend to them and they will pass on.
Any ideas?
Sara (Debt Camel) says
Westcot are collecting on behalf of Cabot. Send the request to Cabot.
Bill says
Thank you Sara,
I’ve had a letter from my bank today saying the cheque I wrote has not been approved as in my hurry to send the requests off I forgot to date the cheque.
I imagine I will be getting several more of these so have decided to send the CCA’s again and include a quick message to the creditors that I forgot to date the cheque.
A bit frustrating but my own stupid fault
Julie says
Hi
I’m in the process of trying to settle some of my debts and have made offers to some of my creditors. One has come back with a counter offer that I would like to accept – they say my account will be closed and a partial settlement registered with the credit reference agencies .. then go on to say this will last 6 years so may affect my ability to obtain credit in future etc.
The debts all defaulted more than 6 years ago so are no longer on my credit record which is looking reasonably healthy at the moment.
I’ve read all the advice on Debt Camel and understand this creditor is probably wrong and this shouldn’t go back on my credit record, but is it worth going back to them to confirm this or should I just pay the settlement figure? I’m just a bit pushed for time as they want payment by the end of this week (letter from them with counter offer only arrived on Saturday) , and I find it really stressful speaking to them on the ‘phone so would have preferred to get this in writing but don’t think I will have time before Friday.
Thank you
Sara (Debt Camel) says
I think this is just a standard script they use, regardless of what shows on your credit report at the moment. (The other alternative is they are deliberately lying to customers to try to get them to pay in full – surely they wouldn’t do that?)
I understand why it is worrying but really this should NOT reappear on your credit reports. I suggest you have copies of your current credit reports downloaded so you can keep them and later prove what is showing now, in case there is ever a dispute about this.
Martin says
Hi Sara
I am trying to build my credit score but feel I am getting nowhere. I had 2 accounts in default which I paid about 1 year ago. I pay all my bills in time and I have a £200 capital one credit card which I use £50 and pay in full each month. Is there something I’m doing wrong? I got an email from credit karma saying …..
Hi Martin,
When your last report came through, it showed that you weren’t using any of your total credit limit.
Not using any credit can actually mean your score suffers, as lenders can’t see you using credit responsibly.
Find out what you can do to help boost your score by checking your personal credit factors.
I use my credit card ever month for the past year and have always paid in full so I’m just a little bit confused.
I hope you can help. Thanks
Sara (Debt Camel) says
do you pay your credit card in full automatically by direct debit? or are you manually crediting the account with an amount after you buy something?
Martin Mitchelhill says
I always get £50 worth of petrol on the last Friday of every month and pay it manually a few days later.
I’ve got a direct debit set up for the 4th of every month but it never takes the money so that’s why I started paying it manually
Thanks
Sara (Debt Camel) says
You should be able to tell the card to collect the direct debit? That will be after the statement showing the purchase, so a few weeks later. But pay the statement on time and you never get charged interest. At the moment I suspect you are paying too fast so your purchase seems invisible.
Martin Mitchelhill says
So I get paid the last Friday of every month and that’s when I use my credit card to pay for petrol. The direct debit is set to come out on the 4th of every month but it never comes out so that’s why I just pay it manually. Do you think I’m paying it too quick? When do you recommend I should pay it? I’m not really clued up on credit cards and just worried that if I don’t pay it straight away I’ll get charged interest.
Thanks again
Sara (Debt Camel) says
So you have set up the card to collect the full amount by direct debit?
If you talk to Capital One, they can arrange for the DD to be collected on a day that suits you. It sounds as though you have arranged this for the 4th of the month because that is after your payday.
The reason that isn’t happening it the amount is only taken a few weeks after your next statement is produced. So if you pay at the end of one month, the statement comes out sometime in the next month and the payment will be taken the month after. All this time no interest is being charged.
If you phone Capital One, they will confirm this.
Kay Kobe says
Hi Sara,
I have a defaulted account. The default date is February 2017 for a debt which over the years has been sold by the original creditor and it now owned by a new debt collection Agency. I have about 18 months to go until it drops off my credit file and right now i pay a sort of token monthly payment. The debt size is currently c. £13k and I am looking to hopefully apply for a mortgage in summer 2023 when the the defaulted account has been off my credit profile for about 3-4 months.
– The owner of the debt performed a hard search on me in January 2020 when they assumed ownership of the debt in January 2020. I recently read on this website that hard searches from debt collection agencies stay on for 2 years rather than the usual 1 year as would be the case with other types of hard searches is this correct? I don’t want to be in a position whereby my debt is sold again and another hard search is performed by the new debt owner as this will still be present by summer 2023 when I am looking to apply for a mortgage. Is it worth speaking to the debt owner and offering them a F&F some time in the next few months to avoid the potential reality of the debt being sold and my credit report being subjected to another hard search (without my knowledge) which would then hinder my mortgage aspirations?
Kay Kobe says
– my second question is whether debt collection agencies have to gain your consent before performing hard searches or if they free to do this provided they have acquired the debt?
– Lastly, the article (that i am currently posting on) states defaulted accounts that are partially settled with the creditor are not taken into account by the 3 credit agencies. Is this correct as i have read elsewhere that partially settling an account can adversely affect your credit score. My credit score is currently on the mend after taking quite a hit over the years so will it be negatively impacted if I settle the defaulted account with a offer to the creditor which is then subsequently marked as a zero balance but partially satisfied?
Sara (Debt Camel) says
i have read elsewhere that partially settling an account can adversely affect your credit score.
That’s wrong. Partial settlement is just a flag against the record.
But it may affect your chance of being offered credit until the debt drops off your credit record. Some lenders may care about the marker, many won’t.
Sara (Debt Camel) says
It isn’t a hard search here that you have to worry about… you HAVE to settle this debt before applying for a mortgage, just getting it off your credit record isn’t good enough.
If you are still making payments to the debts, a mortgage lender will see them from your bank statements and know about the debt. And if you stop making the payments so they don’t show, then the debt collector is likely to take you to court for a CCJ.
Bill says
Hi Sara,
I need your advice please.
I recently got in touch with Vanquis regarding affordability complaint. They took ages to resolve but yesterday I heard my complaint has been upheld.
The situation is they sold the debt to moorcroft quite some time ago (default date may 2018) and I recently negotiated a partial settlement with them for 50% (first of 3 installments of £208 paid yesterday).
Apparently Vanquis want to retrieve the account from moorcroft and have said they will refund interest payments (£124 to be taken of total) and remove negative markers on creditfile.
I’m beginning to think I’ll be worse off
Sara (Debt Camel) says
is the £124 interest refund correct?
Bill says
I havent checked to be honest but I assume it is.
My main concern is that once I partially settle this account it will be on my file for 6 years!!!
I should have just settled with moorcroft and it would have dropped off in early 2024 rather than vanquis now tellinge me they’ll remove the default and negative markers and me partially settling this account at the end of this year. They said there’s nothing they can do.
Honestly it’s so stressful
Sara (Debt Camel) says
Has Vanquis said they are refunding all the interest? over what period? Because that sounds like a low amount of interest in relation to the balance.
Have they agreed you can partially settle it?
I’m not sure why you mind about having the account for longer if all negative marks are removed – this isn’t a payday loan?
Bill says
Thanks for the reply
I thought its bad for an account to show as partially settled?
Yes they have agreed the settlement figure (i thought they have to as I’ve already agreed it with moorcroft and have a letter as evidence).
The outcome that would be best (and is what I’ve asked for) is if they could backdate the default date from May 2018 to feb 2016 and I partially settle this account with a further two payments of £208.
Am I wrong in not wanting a partially satisfied account on my credit file if I settle this in dec 2021? Maybe I’ve misunderstood things
I’m trying to get a clean credit report
Sara (Debt Camel) says
A partial settlement doesn’t harm your credit score, but it is a flag on the credit record. See https://debtcamel.co.uk/ff-credit-record/
Bill says
An update
Vanquis have taken the debt back from Moorcroft and have told me today they will completely remove the account from my credit file and I don’t have to pay the remaining balance.
I’m quite happy with that.
Hope Green says
Hi
I am in a DMP with stepchange and have been since Mid 2018. I had £23k of debt on 6 credit cards, 1 bank overdraft and 1 was excess mileage on hire purchase car that I had returned.
I now owe appprox £10k and have never missed a payment. I’d never missed any payments prior to SMP but had to in order to start SMP.
I am looking to negotiate for a full and final payment. A family member has offered a lump sum but would like me to negotiate with the creditors to build my confidence and to feel like I am achieving something.
6 of the 8 debts have been sold on. Two are with intrum (£4K) one with pra (£2k) and three when wescot (£3.5k).
I keep seeing people say off 25-50% of the original debt. Is it worth a try? Some of debts have been sold on more than once.
Also when discussing and making offers can I ask for letters in writing by post and email?
Can I also ask them to note on my credit file that debt has been paid so that it doesn’t affect my credit file? Or have the littlest impact possible.
Sara (Debt Camel) says
How much are you paying a month at the moment? Is this affordable or may you have To reduce it?
Are you in work? On any benefits? Renting or buying? Do you have current car finance?
Which two debts haven’t been sold on and how large are they?
Will this money from a relative have to be repaid?
Hope Green says
How much are you paying a month at the moment?
I pay about £330 a month at the moment which is about 1/4 of my income.
Is this affordable or may you have To reduce it?
It’s affordable due to Covid and not going anywhere. It will be in place till mid 2024 which feels like a long time.
Are you in work? On any benefits?
I am in work and not receiving any benefits. I could apply for PIP as I have a neurodiverse condition but get anxious around completing paper work and being judged.
Renting or buying? Do you have current car finance?
I have a mortgage on my property which I have managed to negotiate a new 5 year fixed term mortgage in 2020 while in my DMP. I don’t have any car finance but one of the debts is for excess mileage on a precious car finance. I was missold but was unable to prove it.
Which two debts haven’t been sold on and how large are they?
The two debts that have not been sold on are £3k credit card but is with internal debt team & car finance company £400.
Will this money from a relative have to be repaid?
No as the attitude is that by helping me clear debt it will allow me to have a clearer mindset to peruse choices that bring me happiness. I don’t mean that in an arrogant way but more so that I feel I have choices and am not stuck because of my past. I’m in a job where I have been subject to bullying and with this and the debt at times I have been in a very dark place due to feels hopeless.
Louis says
I have a payday loan opened in 2015. In 2017 I sent a complaint letter and received redress so as the original £237 outstanding was reduced to £89. I went to pay the other day, however, they have not updated their records and so are having to essentially review the complaint from scratch.
In the meantime, they have sent an email saying within the next month or so the balance is due to be written off and it will remain on file as partially settled.
Q – If I paid the reduced £89 following on from my complaint would that sit on my file as fully satisfied or would it still be partially settled?
Q – If they are unable to review my situation and update the amounts in line with my previous complaint before the balance being written off am I still able to pay it off after it’s been written off?
Sara (Debt Camel) says
who is the lender? do you have the emails from them with their offer in 2017?
Louis says
Lender is Safetynetcredit. They responded by letter so I have a copy of that, so providing proof of that is not an issue. It’s just more so whether with the reduced amount after redress that will be counted as fully satisfied after it’s paid or will still be ‘partially settled/satisfied’ and also if they write it off before I get a chance to pay it is that it can I not pay it after that?
Sara (Debt Camel) says
If you pay the remaining balance that should ba marked as paid in full not partially satisfied.
If they write off the balance then you save £89.
If the default date in 2016 it will drop off in 2021. Partial settlements don’t affect your credit score, they are just a flag on the account that other lenders may take account of or ignore, as the article above says.
however, if they refuse to allow you to pay the balance you can reasonably argue that they should not mark this as partially satisfied but fully satisfied as you are prepared to pay the balance.
Louis says
Hi, thank you for your advice thus far. Safetynet have now said they are clearing the balance completely and will be closing the account. When I’ve asked if it will be marked as partially satisfied or fully settled, I’m still a little unclear as they’ve said – “As the credit file entry is being removed, there won’t be a satisfied or partially satisfied account to report. All previous entries will be removed as well so we will not appear on your credit file” – this doesn’t seem correct as having checked, there are defaults on the account from this year, so surely they aren’t able to just remove those, so won’t it be partially satisfied? In which case, they need to provide me the opportunity to make payments on the account and if not the case can be argued that it should be fully settled/satisfied?
Sara (Debt Camel) says
“As the credit file entry is being removed, there won’t be a satisfied or partially satisfied account to report. All previous entries will be removed as well so we will not appear on your credit file”
They are saying they aren’t going to delete the negative information, they are going to remove the whole record. There is going to be nothing there at all to say you ever borrowed from them. This has no disadvantages for you.
But if you are in the process of making any other affordability complaints at the moment, or you may do in future, you need to take a copy of your credit record now, immediately, while the Safetynet problems are still showing incase you need to show this to another lender or the Financial Ombudsman. You want a report showing the problems which you can either print off or download eg TransUnion’s statutory credit report.
Cheryl says
Hi, hope you can help
Anyway, today I’ve had my FFS offer accepted by Link Financial. They wrote
‘ On receipt of cleared funds we will close your account with no further monies owed and update your credit file as partially settled.’
is this acceptable? Will this prevent them from chasing in the future?
Also, acceptance was by email, with their banner at bottom. I can print it out but would this be okay or do I need an actual letter please?
Many thanks for reading
Sara (Debt Camel) says
Yes that’s fine. And an email is fine too.
Cheryl says
Thank you Sara
It’s going so well. I’ll pay them now. Ecstatic
Ryan says
Hello there ,
I need some advise please .
I have taken a student loan for my master degree from a private company few years ago . Sadly it defaulted in 2018 . I have been making a Monthly payment but still have about 6K to pay . Going by my monthly payment , another 5 years to go .
They’ve offered me a settlement of 50% of the Balance to pay and mark it as partially settled on my credit file .
I was planning on getting a second job after the summer and pay it off , so I’m not too sure what I should do at this stage and whether it’ll make any difference on whether I pay it all or just settle it with the offer they sent me ?
Many thanks
Sara (Debt Camel) says
This has a default date in 2018 on your credit record?
What is the rest of your current financial situation like.
Ryan says
Hello Sara
It has defaulted in 2018 , along with another 2 defaults but I have paid them back in full in monthly payments . So my credit isn’t the best at all
Sara (Debt Camel) says
This debt will drop off your credit record in 2024, 6 years after the default date on the credit record. This will happen whether it is fully or partially settled.
Settling a debt partially or fully will not affect your credit score (weird but true). It may affect how a few lenders see you – but many lenders will just he happy all your previous credit problems have been sorted. See https://debtcamel.co.uk/dmp-partial-settlement/
One good option for you may be to settle it partially and still get that summer job and save up the money. So you don’t need to take out more credit. Or you could see it as a good start towards getting a house deposit saved up.
Ian says
Hello, not sure if this is the right place to post this so forgive me if it’s not!
I have had a DMP with a reputable debt charity for around three years. From the outset, it has run beautifully and I have never had any problems with my monthly payments or from any of the multiple (10 or so credit cards) lenders.
From time to time, some lenders offer me a discount for a partial settlement. I am rarely in the position to even consider the offers, but a relative has offered to help me out a little and it is possible that I could clear (partially) some of the smaller debts. I have contacted my DMP provider and they have advised against this as they say the other creditors would be unhappy that I am allocating funds to a couple of lenders rather than spreading it out more fairly. This I understand – but of course if I WERE able to get rid of some of the smaller debts I would be able to allocate more of my monthly payments to those that were left. Ideally, with more family support, I could ‘pick off’ each debt in turn.
I am loathe to go against the advice of my DMP provider as they’ve been so good, and I wouldn’t want to je0poradise the successful running of my DMP, but I wonder if they’re being over cautious (to keep me fully protected from extra charges/interest that aggrieved lenders might start charging again).
What are your thoughts? I surely can’t be the first person tempted to try to clear their debts one by one with partial settlements.
Thanks
Sara (Debt Camel) says
StepChange are just being unreasonable here.
So you don’t have any offers from lenders at the moment? What was the most recent one you had – how much off?
Ian says
Thank you for your reply Sarah, and for sharing your own experience, James. I do get settlement offers from most of the creditors – they tend to be for about 40%/50% of the total outstanding. The most recent was around three months ago. Is James’ approach one you would recommend?
Sara (Debt Camel) says
James’s approach means you have to have quite a large amount of money and be able to make offers to them all ata once. Also after only 3 years it’s unlikely you would have a lot of acceptences at a 20% offer.
I certainly think you should ignore StepChange’s approach. A relative has offered it to you so you can clear as much debt as possible – it isn’t doing the creditors you don’t make an offer too any harm – they will just get more from stepChange when a few creditors have settled.
I would go back to creditors who have made you an offer as you know thoseare the most likely to accept. And say you couldn’t take up their offer at the time as you had no spare money, but now a relative has offered you money if you can use it for settlement offers, so you would would like to offer them £x.
James says
You sound like a replica of my past scenario but without a StepCHange plan. I wrote to all mine by recorded mail telling them my situation and offered a split of available funds across willing partipant creditors at 20% of debt value. Ended up with 11/12 partial settlements over a period of 18 months at 70-90% write off. Paid them off in order of biggest discount or smallest value 1st, by when the non-willing creditors offered bigger settlements. Just one to go now, who are being complete slimeballs – https://uk.trustpilot.com/review/www.arrowglobal.net
Emma says
Hi, I have some old debts that I have been paying via stepchange DMP for over 5 years. I have under £500 left with 1 and in a position to settle it – I called them direct and they said they would accept half as partial settlement and warned me that even if it’s not on my report it would come back and show as partially settled. I understand this is incorrect if the debt had previously defaulted but I can’t be sure that this debt did default, although it likely did if they debt was sold on? I struggle to match up the debts / defaults I can see on my report with who now owns the debt and doesn’t help that not all credit appears on all credit reports but I have checked both Experian and Equifax.
Obviously I’d like to partially settle if I can but I’d rather pay the whole amount than it affect my credit as it is just starting to improve.
Sara (Debt Camel) says
It sounds as though the debt defaulted more than 6 years ago, before the start of the StepChange DMP. Is that likely?
Bright says
Hi Sarah,
I’m glad I came across your website. I find some of the responses very useful and thank you for that. I need some advice ;
I have 2 credit card with a total outstanding balance of £4500 but I have defaulted on both. I defaulted on the 1st credit card in April 2019 and (currently with Cabot) and the second in October 2019 (with morcroft) when life was difficult. I’m looking to settle these debt so I can focus on saving for a property. I am considering negotiating with the creditors for a reduced settlement figure so I can focus on saving every little penny I have. Is this a good thing to do or should I consider making an arrangement to pay in full by installment? How will this affect my credit score? I may also have other debts that are no longer showing on my credit file, should I consider chasing these and try to settle them as I don’t want them to pop in the future when I apply for a mortgage.
I would greatly appreciated your advice. Thank you.
Sara (Debt Camel) says
I have 2 credit card with a total outstanding balance of £4500 but I have defaulted on both
are ypu currently making payments to these?
so I can focus on saving for a property
what sort of timescale are you hoping for?
I may also have other debts that are no longer showing on my credit file,
How long is it since you made any payments to these?
Bright says
are you currently making payments to these?
I pay £14 a month towards the first credit card as agreed with Cabot. For the second one, there is no agreement so I pay whatever I can afford. The creditor said the account is with Morcroft, when I contacted morcroft they advised they have passed the account back to the creditor. This is why I have no agreement.
what sort of timescale are you hoping for?
I am hoping for year or 2 maximum.
How long is it since you made any payments to these?
About 10 years 😔
Sara (Debt Camel) says
These defaults will stay on your credit record until April and October 2025.
If you hope to get a mortgage in a year or two, the defaults will still show. It is a possible to geta mortgage with settled deafults, but the longer ago they are settled the better. You should assume this should be at least a year before you apply for a mortgage but two would be better, especially if you don’t have a great deposit. NB no one can have any idea what the mortgage market will be like in a year or two but ity may be sendisible to talk to a mortgage broker now or at least 6 months before you how to apply for a mortgage.
This article looks at the question of how hard a partial settlement makes getting a mortgage. If you decide not to make a partial settlement offer, you need to get the defaults paid off as fast as possible, not slowly over a year or two.
The other debts seem very old. They may well be statute barred, see https://debtcamel.co.uk/statute-barred-debt/. You could talk to National Debtine about how likely this is.
Bright says
Thank you Sarah, this is much appreciated.
Jordan says
Hi Sara,
I took out a credit Union loan in 2015 and defaulted very quickly after, a month or two.
Credit Union reported on my file as a default to Equifax and TransUnion. I moved address and they found me, I started paying a small amount every month from July 2019.
A couple of months later, they changed my payment history to missed payments instead.
I actually asked you for advice back then and you advised to raise a dispute, which I did. A notice of correction was added for a month then, I suspect, had no reply so the loan was since hidden along with the notice.
2 months ago I payed the final bill.
Now, Equifax sent me a notification saying the loan has been marked as satisfied although it doesn’t actually appear. No change to my score either. TransUnion have now displayed the loan – with years of missed payments – as now satisfied.
As the loan was originally a default and has been >6 years, should this not be removed?
Many thanks again.
Sara (Debt Camel) says
what happened to the dispute you raised?
Jordan says
Hi Sara
The loan disappeared completely from my file. The email I got from TransUnion at the time states they suppressed it until they receive a response. No updates since then until it’s came back on when I paid the final bill. Equifax help says still outstanding file suppressed.
Sara (Debt Camel) says
as I said back in 2019
“CRAs are usually useless in this situation. You need to complain to the CU and get them to put the default back – and take your complaint to the Ombudsman if the CU refuse.”
So you did not do this?
Jordan says
Hi Sara,
No you’re right, I didn’t make a complaint at the time. Once the CRAs stopped showing the loan, I didn’t go back to CU.
If CU agree to change the loan back to default, which would be from 2015, should it then be removed?
Sara (Debt Camel) says
Yes if the CU now adds back the default in 2015 it will immediately disappear
Jordan says
Thanks for your help Sara – much appreciated. Hopefully CU will be happy to change it.
Jordan says
Hi Sara,
Just an update and another question – I’m in talks with CU to update my file. It seems because the loan has been repaid, they are willing to help but say it’s their responsibility to accurately report to CRAs.
CU 100% originally reported the loan as default back in 2015. When I started paying, were they right to change history to missed payments?
If CU agree to change the period from 2015 to 2019 when I started repaying, will the loan disappear from my file?
Is there something particular I should say, or some sort of rule that would ensure CU should change it back?
Thanks again for your help.
Sara (Debt Camel) says
Once a default has been added, it should not be removed just because you started paying. They should reinstate the default and it will then drop off your credit record immediately as it is very 6 years old.
I suggest you say that leaving it as it is is effectively penalising you for repaying the debt and that is not treating you fairly.
Veronica says
Hi Sara,
Thank you for all your advice that I have read so far.
I have a few issues / queries.
I have been with Payplan for the past 10 years, I entered the DMP with £18,500 owing and when I recently checked my summary it showed that I have paid off £17,500 but still have £4,500 remaining. I contacted them recenty to ask why I have so much remaining which would mean somewhere along the line I have been charged interest from one or more comapnies and I wanted these charges refunded as I am now in the position where I want to clear the remaining debt. They advised me to contact the original creditors myself. Have you had other people contact you with similar situations with owing more than what they started in a DMP? Do you think the outstanding amount could be interest and fees?
Secondly, I have contacted some debt collectors where the debt was originally sold onto where I had defaults and wanted to request a full and final statement, as from your posts it is clear that once the default has disappeared I no longer have to pay the orignal debt back in full? however one company I contacted is only willing to knock £50 off a £1,850 debt and £100 off a £1,400 debt. I personally think it’s unreasonable.
Lastly, if an original debt which has been sold to a new creditor did not have a default, is it better to pay these debts off in full so it shows fully satisfied, instead of partially satisfied? They are no longer on my credit files as I have checked.
Thank you.
Sara (Debt Camel) says
Payplan isn’t being very helpful!
Can you ask Payplan for a copy of the creditors and the amounts owed at the start of your DMP and a record of how much Payplan has paid to each account and the current balances.
Let me know if Payplan say No.
One company I contacted is only willing to knock £50 off a £1,850 debt and £100 off a £1,400 debt.
You may think this is unreasonable but you cannot make a creditor accept a settlement offer.
However what you can do is as ask the creditors to produce the Consumer Credit Act Agreement for the debt if it was a credit card, loan, hire purchase oe catalogue. See https://debtcamel.co.uk/ask-cca-agreement-for-debt/. If they can’t, as athat article explains, you can just stop paying. (I am assuming these debts no longer show on your credit record.
They are no longer on my credit files as I have checked.
In this case there was a default date over 6 years ago. The debts will not reappear if they are partially settled.
It is the debts that DO show on your credit record that are more of an issue – do any of these not have default dates?
Veronica says
Hi Sara,
Thank you for your advice, I will reply in 2 parts.
I logged back into my Payplan account and cross checked what I originally started with (owed), with how much has been paid so far and can see where the added money to my plan has been coming from. From 8 creditors the added unaccounted money = £2,555.34. The main culprits if I am allowed to say are Barclays added £1,240.00 on top of what I orginally owed.
From doing this exercise I have been able to capture a true picture of what I feel I truly owe, which is considerably less than what I have been informed. To answer your question, I have checked my credit report and none of the 8 creditors who I am in the DMP with show on my credit reports. I checked an old ‘check my file’ report from mid 2021 and I can only see that 4 of the 8 creditors issued me with a default with the dates which were all in 2015.
Sara (Debt Camel) says
Then definitely go back to Barclays and make a complaint about interest and/or charges being added after the start of your DMP. Ask them to refund the charges. See https://debtcamel.co.uk/creditor-wont-freeze-interest/
Veronica says
So my plan going forward is to offer / ask for a F&F settlement figure to the creditors who I know issued me with defaults and then contact the other 4 to see if I was originally given a default before they bought the debt, as it may have been at the start of my DMP in 2012 for the reason I cannot see them now or on the report in 2021. If there is no default on the other 4, my plan is then to pay them off in full as they are roughly all under £150 each which I hope is the correct thing to do? As I do not want them then issuing any defaults / adding partial payments to my credit report.
I will certainly take on board what you said above that creditors do not have to accept / issue a F&F offer, and then at that point will ask for the CCA Agreement and make a decision from there. I don’t want to not pay anything, but least if I pay something to close these accounts I can finally move on with my life debt free and most importantly not in a DMP.
Thank you so much Sara as I feel a little lighter today, and more empowered to fight. I do feel a lot of people facing debt are taken more advantage of.
Sara (Debt Camel) says
Let me be clear:
1) if a debt is no longer on your credit records, then a default has been added and it was more than 6 years ago. Otherwise that debt would still be there. There is no need to do complicated things like asking creditors when they added a default.
2) if a creditors hasn’t added a default, it will still show. And you should ask the creditor to add a backdated default so the debt immediately drops off! If a debt reappears, that is what you should do – but this would be VERY VERY rare.
3) it’s your decision whether to ask for a CCA but re “I don’t want to not pay anything” – you have been paying them for over 10 years! And if this is a debt collector, they will have paid less than 10p in the £ for your debt so they have already made a lot of money out of you.
James says
I’m currently paying 2x BTL mortgages both in negative equity, with interest rates rising and being trapped as can’t sell due to mortgage shortfall, I can no longer afford to pay these, speaking to the lender they have suggested a full affordability assessment and then go for full and final settlement (once the tenants have vacated). They have initially suggested that as long as I keep paying the mortgage up until a full and final settlement is agreed, it won’t impact my credit rating. Couple of questions, 1. is this correct? 2. will there be an impact on my credit rating if as an example I agree to pay £75k in F&FS instead of the 100k I owe on the mortgage? 3. if there is an impact, how will it affect my ability to remortgage other properties i have in the future?
Thanks
James
Sara (Debt Camel) says
1. Yes
2. No, a partial settlement is a flag on a credit record that does not affect the score that you see.
3. It may affect your ability though to get new BTL mortgages or remortgages as lenders will see the partial settlement flag. Mortgage lenders make their own decisions and they don’t use the score that you see.
What are your other alternatives?
Have they suggested how much would be acceptable as a full and final offer – was the 75k what they have said or just an example?
How could you afford this? Afford both the settlement offer itself and to keep paying the mortgages on these properties while they sell and through to the settlement point?
Are these your only 2 BTLs?
Do you have a mortgage on your own house, when does that fix end?
Carwyn Williams says
Hi
I’ve applied for a mortgage and been in a IVA and settled early last year. To get the mortgage offer, I need Santander to update their records with the credit reference agencies to mark it as satisfied, all other creditors have already done this.
My worry is, they have said it will be partially satisfied. I checked my most recent credit report with an update stating the balance is now £592 not £769.
Should this balance show as zero with satisfied on it. Or does Santander’ partially satisfied mean just updating the balance? Just updating the balance doesn’t do any good for my mortgage offer. Should Santander mark it as satisfied regardless?
Thank you
Sara (Debt Camel) says
The ICO says the debts should be marked after insolvency (which includes an IVA) “to show that you no longer owe money on that account (perhaps by marking the entry as ‘partially satisfied’ or ‘partially settled’ or in some other way)“.
Santander is not obliged to show that this debt as being satisfied.
Who is your mortgage offer from? What does your broker say about this? How long ago did yout IVA start?
Sam says
Hi Sara,
I am calling Barclays next week to discuss full and final settlement.
I’ve already had an initial chat and they said they cannot consider an offer if my disposable income is in the minus and I’ll need to do do an income and expenditure with them which is fine.
When they say disposable income in the minus do they mean after all priority commitments are taken into account or after all priority commitments AND unsecured debts are taken in to account?
If it is after priority commitments then mine is fine but if it’s including unsecured debt then it’s not fine, that’s the whole point of the full and final to get rid of the unsecured debt. My debt is currently all in a DMP. The money is from inheritance.
Sara (Debt Camel) says
Disposable income is usually income minus priority bills and essential living expenses. NOT after unsecured debt repayments – they are not a priority & not essential.
Sam says
Thank you
I was worried that they’d reject my offer because with debts included I’d be in the minus but excluding debts there is a small surplus (the amount I pay the DMP)
So you think that’ll be fine then?
Sara (Debt Camel) says
I really can’t guess what Barclays will say. I hope it works for you.