In a Full and Final Settlement (F&F) a creditor agrees:
- to accept less than the whole amount to clear it (“full”), and
- that they won’t take action to recover the rest (“final”).
This is sometimes called a “partial settlement” and sometimes a “short settlement”.
You can offer a F&F to a creditor. Or a creditor may write to you to suggest an F&F. This usually happens if you have defaulted on the debt or have been in a debt management plan for a while.
Contents
You propose a Full and Final settlement
If you have a lump sum, then you can write to your creditors and offer a F&F.
You can do this yourself, there is no need to employ a solicitor to write a letter, that is no more likely to be accepted than an offer from you.
Where could the money come from?
The lump sum could come from:
- a refund that you get, for example from an affordability claim;
- a redundancy payment (make sure you will still have enough money to live on and pay the mortgage until you find another job);
- selling some assets, possibly even your house;
- an inheritance;
- it might be offered by a relative (do consider if your relative can really afford this – if your situation is close to hopeless, then it may be better to go bankrupt rather than take money from a relative); or
- if you are over 55, you might consider taking money from your pension if you can get your creditors to agree a low enough settlement.
It is usually a big mistake to try to borrow money in order to clear a debt that has already defaulted.
You don’t have to offer the same to all your creditors
If you don’t have a lot of money, it could be a good idea to use it to pay off one creditor.
For example, if you only have £1,000 then that isn’t going to get far if your debts add up to £24,000. But if you could get a creditor you owe £3,000 to take £1,000 then this is a good improvement.
When is an offer likely to be accepted?
A full and final offer is NOT LIKELY to be accepted unless you have already defaulted on your debts.
The longer you have been paying little or nothing towards them, the lower offer your creditors may be prepared to accept. I looked at this problem in Is it too soon for have good settlement offers?
How to make the offer
National Debtline has a sample letter that you can use.
It is a good idea to add an explanation about where the money is coming from.
A couple of examples:
“I have been offered £2,000 by my sister if this will help me clear my debt with you, which is currently about £4,650. “
“I am reluctant to take money from my pension, so I will only do this if you agree to accept this offer.”
Enclosing an income & expenditure sheet with your letter will make the point to the creditor that if they don’t accept this offer it will take a very long while to repay the debt.
That sample letter asks the creditor to confirm in writing that the money will be accepted as a Full & Final Settlement and also that they will not sell the remaining debt.
You need to insist on this. Unscrupulous creditors have been known to just take the money, reduce the debt then continue to chase you for the rest of it. In 2023, this is very rare but it’s simply not worth the risk! If a creditor calls you up and agrees to your offer, do not pay the money without a written agreement.
When you are in a debt management plan
A F&F can be great way to start getting the number of debts down in a Debt Management Plan. the remaining debts will then be paid off faster
Often your DMP company will say you have to offer the same to everyone, which is normally not going to work well unless you have a lot of money to offer.
So I suggest you don’t talk to your DMP firm about this but make the offer to some creditors yourself.
I don’t think this is being unfair to your other creditors – by clearing one debt, your DMP will then start paying more to the others.
An unusual case – a single payment IVA
If you have a lump sum to pay towards your debts but afterwards you are unlikely to be able to pay much at all on a monthly basis, then this could be a good option for you.
A typical situation might be if you have been made redundant and you are unlikely to be able to work again, perhaps because of your age or health. Or if you have downsized your house.
This gives you a Full & Final settlement on all your debts without having to negotiate with each creditor individually.
The downside is that this is a form of insolvency – it has the same bad effect on your credit record as bankruptcy for 6 years.
If you want advice on this, talk to StepChange, who could set one up and who will explain if you have better options.
Before making an offer…
Is the debt enforceable in court?
Think about this before making a settlement offer.
For loans, credit cards, store cards and catalogues, the debts are unenforceable in court if the current creditor (usually a debt collector) can’t produce the CCA agreement for the debt. See When and how to ask a creditor for the CCA agreement for more details.
This is most likely to work for old debts, especially those where the account was opened before April 2007. It’s also worth doing this for accounts that were opened more recently if they have been sold to a debt collector. It won’t work for overdrafts or mobile or utility bills.
If the creditor admits they can’t produce the CCA agreement, you could decide not to pay the debt at all. This is normally your best option.
You may think that the creditor will then accept a really low settlement offer. Unfortunately many don’t. completely sorted.
How low an offer will be accepted?
This is a really hard question to answer because it depends a lot on your circumstances. An offer may be rejected because it is too low, but if you give the creditor more information it’s possible that they could be persuaded if you can give them more information.
You have to put yourself in the mind of the creditor and try to work out what they will think – for more details read What to do if a Full & Final Offer Is Rejected.
For example, if you have been paying token payments for more than a year and your brother offers you half the amount you owe, then there is a good chance your creditors might be interested.
But if you have just lost your job, are young and healthy and have only missed a month’s payment, then your creditors are very unlikely to accept 50%… but you may be able to persuade them with 90%.
It isn’t good tactics to always start with a really low offer such as 10% if all the indications are that they won’t accept that. Your letter may just be binned if it isn’t somewhere close.
Realistically, a secured creditor is extremely unlikely to accept a low F&F if there is much equity in your property. And they are uncommon on debts where there is a CCJ.
Your creditor proposes a F&F
If you have been in a DMP for a while, or have not been paying anything, then you may receive a letter offering you a Full & Final settlement.
Klarna has said that it will offer 50% reductions to eligible customers who have missed payments for a long period.
Of course you may have no money to accept this offer… But if the offer is a good one it may be worthwhile taking a hard look at your situation (see the list of possible money sources above) to see if you have any options.
At this point it may be a good idea to negotiate, but there is no point in wasting everyone’s time. If they have offered you a 60% settlement, then it’s worth seeing if they will accept 40%, but not 10%.
Read their letter closely – is it clear that they are definitely writing off the remainder of the debt? If you are unsure, get them to clarify this in writing.
Your credit record & worries about a future mortgage
Debt collectors tell you that a partial settlement will harm your credit record and it will be there for 6 more years. The first is partly true – but often doesn’t matter – and the latter is simply wrong!
- A F&F usually results in the debt being marked as “partially settled” on your credit file. You may decide this isn’t important for you. Your credit rating is usually poor or dreadful if you are likely to get a F&F, and it’s sensible to decide that clearing your debts is your top priority. Whilst it would be lovely to get rid of the debts and improve your credit record at the same time, that probably isn’t going to happen.
- If the debt has a default date on your credit record, it will always drop off your credit file six years after that date. Making a Full and Final settlement will not affect this, the debt won’t stay there for longer.
- If the debt has already dropped off your credit record it will NOT reappear after a partial settlement.
This is discussed in more detail in How partial settlements affect your credit rating.
You may be worried about a future mortgage. I have looked at this here: Will partial settlement make it hard to get a mortgage?
For most people if they have to pay in full it will be many more years before they can get a mortgage… so unless you can easily pay the full amount, this probably isn’t something to worry too much about.
Summary of pros and cons
Pros Clears a chunk of your debts, leaving you in a better position to clear the rest faster.
Cons Your creditors don’t have to accept. You shouldn’t leave yourself short of money you need for living on. The debt will be marked as ‘partially settled’ on your credit file.
Debt Camel says Often you don’t have the money for a F&F, so they tend to be rare, but they are good options when they work for you.
Remember to keep the emails or letters
99 times out of a hundred, everything goes smoothly and you will never hear anything about the debt again after a F&F.
However just in case something goes wrong – perhaps your debt which is closed gets accidentally included in a lot of debts the creditor is selling to a debt collection agency – it’s a good idea to keep the emails or letters from the creditor confirming that your payment was a Full and Final settlement.
If you ever get any letters about the debt again, send them a copy of the letter or email where the creditor agreed to the settlement or proposed it. Keep these letters for at least six years, after which the debt would become statute-barred anyway.
Karen says
I have a default on my Credit report from January 2015 and recently wrote to them to offer a Full and Final Settlement on the account at 25%. I have on going health issues which Cabot know about. Today, I have received a letter from them saying for them to look at whether to accept the offer they want a letter from a healthcare provider stating my illnesses are really bad and ongoing and they also want a financial Statement. I was paying £1 a month, but that was stopped by them when I disclosed health problems years ago. Can they ask for this information before they accept a full and final settlement?? It feels very intrusive for a small amount of money. Total debt is £358.00. Thank you in advance.
Sara (Debt Camel) says
Well they can ask for anything they want. But this does seem like overkill if they have already accepted that you can’t afford to make any payments. It could be simpler to just carry on making no payments…
Mick says
Hello,
I have 2 debts and a friend has offered to pay off the debts if I can get the Debt collection companies to agree to an offer for full & final settlement.
1 debt is for a personal loan and the other is for an arranged overdraft that was on a joint bank account with my ex wife, we have been divorced since Easter 2012.
My concern is that although I know there will be no contribution from my ex wife the debt will not be able to be settled on behalf of both parties as only I will be making an offer.
Please could you give advice on how to best approach the situation, and also if there is a way to assure if an settlement is agreed that it shows as settled in full or even better to have the credit file deleted altogether.
Any help appreciated in advance
Sara (Debt Camel) says
You just need to make it clear that you are offering to settle the whole debt on behalf of you and your ex.
There is no way to ensure that a partial settlement is marked as “full” on your credit record. When did the loan and the overdraft have default dates added?
Mick says
Default dates are: Loan – 6/2015 & Overdraft – 7/2015
Could I ask also a question regarding the F&F offer – as previously mentioned the money would be provided from a 3rd party, I would like to know if the letter should be written from the friend or from myself stating that a third party would be willing to settle?
Thanks again in advance,
Mick
Sara (Debt Camel) says
So these debts will be dropping off your credit record in 2021.
the best thing is for you to write the letter and say the offer is coming from a friend who is only offering you the money if it can be used to settle the debts.
Mick says
Thanks very much indeed.
Apologies for the multiple questions; Should I put the offer amount in the letter, and if they accept – does the payment need to be made via myself or the friend for it to be binding?
Thanks,
Mick
Aaron says
Hello,
I have a two catalogue accounts which defaulted in May 2015 , the first account I owe just over £360 and second one is for £900.
The debts were recently sold to a collection agency and the agency is now looking to procced with county court claim.
I have spoken to the debt collection agency and informed that them I can clear the small amount of £360 in full and they have agreed that if i do so they will be willing to accept an offer on the second amount of £900. I am prepared to offer £450 and if they accept I understand this will be registered on the defaut as partially satisfied .
Based on your experience , do you believe this a wise move, as the defualts will be dropping off in 2021 ?
Also if they decline the offer , I understand that If I clear the debt within a month of it being registered as a CCJ , it will be removed off my record altogether, is this right?
Regards,
Sara (Debt Camel) says
It’s good to get these debts settled. I wouldn’t worry too much about the debt collector going to court straight away – they are probably just trying to get you to make a settlement arrangement. How old are the accounts?
Aaron says
Hi Sara,
Thanks for the reply, they are both 7 years old.
* Also got home this evening to find official court claim forms for both accounts have been send to my address via post.
Regards.
Sara (Debt Camel) says
Did you get a Letter Before Claim/Action for each of the debts and did you return the Reply form?
Now you have a court case in progress I strongly suggest you talk to National Debtline on 0808 808 4000. It is urgent that you return the court forms within the set timescales and they can help you with what to say.
Aaron says
Yes,I did get letters stating their intention to proceed with county court claims for boths debts early last week, but I spoke to them over the phone offering to settle one of the accounts rather than reply to their letters via post.
I think I will have to call them tomorrow see if the offer still stands , if so I will just pay off boths debts.
John says
Hi Sara
Received a letter today from Credit Security Limited which is a notice of instruction with reference PRA Group MBNA card. I had entered into a payment plan with MBNA but they passed this debt over to PRA group after a few months of me paying this which I understand is their prerogative. To be honest I spoke with them once then they sent a few letters but I was no longer living at my parents house. Just recently due to a break up and going back to parents I started looking through all old letters, I hadn’t realised I had any contact with them and ridiculously silly I know but no news was good news and I was in denial. So this letter arrives today stating that no payments had been made to PRA, true not a single one was as I was living all over the place. A default was registered 28th Feb 2017 it states in the letter. The amount is for 6k and they had unfortunately offered me a final settlement fee of 2600
What should I actually do now? I can’t afford to pay the 6k, can potentially afford around £70 a month but could also get salary finance with work to pay around 2/3000 maximum
Should I contact them and offer this to them do you think?
Sara (Debt Camel) says
“they had unfortunately offered me a final settlement fee of 2600”
is this the letter you have just got? or one that was sent a while ago that you have just read?
Taking out more debt to repay a defaulted debt is often not a good idea, so can I ask some questions?
when did you first get the MBNA card?
when was the debt sold to MBNA?
do you know if interest has been added after started the payment arrangement with MBNA?
do you have other problem debts that you are paying or which you have been ignoring?
Rich says
Hi, I’ve offered settlements to 8 dca’s, 5 have agreed but they don’t seem in a rush to send their agreement in writing!
I’ve had 2 email, are emails sade enough to pay the dca or should I hold out for it in writing?
Pat says
I have been made an offer to settle a holiday accommodation dispute by the owners intermediary. They said it was in full and final settlement and I accepted it. An hour later they said that they had made a mistype and they were not making the offer. Is the original offer legally binding?
Sara (Debt Camel) says
No, not if they corrected an error that soon afterwards. You could go to your local Citizens Advice and ask for help with this.
Michael says
Hi Sara,
I have a single remaining £2k debt for a credit card with Cabot as DCA (previously capital one, opened circa 2012), which defaulted in Nov 2015. I have never acknowledged this debt, nor made any payments to it since it defaulted.
Given that 4 years have passed with absolutely no contact or acknowledgement, what would you think the odds of settling under F&F offer of around 40% are? I can just about scrape this together and would just like to be rid of them once and for all, as myself and my partner would like to start saving for our first mortgage in the next few years and the last thing I would want is for it to escalate to potential court action as it approaches statute barred date.
Sara (Debt Camel) says
The chance of it becoming statute barred is not good – it makes sense to look at your options now.
I would think the odds are good. If they refuse you will have to settle down and pay it.
BUT first read: https://debtcamel.co.uk/settlements-old-debts-cca/. For this old debt, this is well worth trying.
Emmanuel says
Hello Sara,
I have an old defaulted phone bill debt that was purchased by Lowell, who have now sent me 3 discount offers on the debt of 40%, 50% and most recently 60% (August). The default was registered in December of 2015, so will therefore fall off my credit file and become statue barred in just over 2 years. I have not sent a single response to Lowell about the matter and have not acknowledged the debt either. I have been considering if it would be worth me emailing them with a F&F settlement offer of 75%. The total figure is just over £500 so I would be paying them something like £125 to clear the debt. Firstly do you think this is a good offer and secondly, would my F&F settlement offer be considered as me acknowledging that I owe the money and if so could it be used as a new date from which Lowell are allowed to pursue me for the outstanding debt?
Thank you for you time reading this, you are genuinely saving lives here
Sara (Debt Camel) says
I have no idea if they will accept 75%. There is no yardstick to assess whether this is a “good offer” or not.
Yes making the offer will constitute acknowledging the debt. But realistically the debt is not likely to get to be statute barred, Lowell will go for a CCJ before then.
Emmanuel says
Ok thank you,
What would be your best advice out of these two options for my situation then?
1. Send the previously mentioned F&F settlement offer of 75% discount to clear the debt (or a figure similar to this)
2. Accept lowells previous offer of a 60% discount on the debt
3. Wait and see if lowell send me another letter offering a further discount on the debt
Sara (Debt Camel) says
It’s up to you. I can’t say whether Lowell is likely to accept 75% off or later offer a larger discount. The difference between 75% and 60% on these amounts is quite small, but if you don’t have 60% then you can’t afford that.
Emmanuel says
Ok thank you again,
Just one last question, if I make the F&F offer and Lowell decide to decline, will the 6 year clock then reset as to how long they can pursue me for the debt ?
Sara (Debt Camel) says
Yes. But as I said this debt is not likely to become statute barred, so does that matter done way or the other?
Andy says
Hello, i have been offered a 60% discount off a debt from the DCA holding it.I cannot afford a single payment of 1500 but i was thinking to take this offer if they would accept monthly payments in a period of at least 24 months.Would that be reasonable to ask or not and what’s the best way to do it?Unfortunately they have stated in the letter that i could pay the discounted price in a month’s time so I can’t see many chances there.Would enquiring about monthly payments mean that i accept the debt , so the six years waiting until statute barred start over again?Same would happen if I register an online account with them providing them with my budget details?
Sara (Debt Camel) says
It’s pretty unlikely they would agree to you paying over 24 months.
What is this debt – a credit card, overdraft, loan etc?
Do you have other problem debts you arent’ paying as well? Any high cost debts you are paying?
Andy says
It is from a credit card that I haven’t paid for four years now as mental health problems led to a huge debt problem.I only recently was offered a similar discount from another company that i agreed to pay monthly within 40 months time and they accepted it but their discount offer letter had stated that they could offer monthly payments as an option, seems like diffrent approach from different DCA’s.
Would contacting them to ask/registering online for a better deal mean that i accept the alleged debt and the 6 years will start over again?
Sara (Debt Camel) says
Would contacting them to ask/registering online for a better deal mean that i accept the alleged debt and the 6 years will start over again?
Yes.
BUT there is almost no chance this debt will get forgotten and go quietly statute barred. It isn’t going to happen. If you ignore it you will end up with a CCJ. So resetting the clock is very unlikely to matter here.
How long ago were these credit card accounts originally opened? who were the lenders?
Sammo says
Hi Sarah
I have 9 defaults on my account ranging from Jan 2018, various debts where I had been paying nominal amounts. I’ve cleared 2 of those debts in full so they should hopefully show as satisfied/settled. I’ve received a letter from lantern I owe £3375 and as a valued customer they have offered me F&F £675 which can be split over 3 months, this seems an amazing offer but will show as partially satisfied on my credit report. Should I jump at the offer or carry on chipping away as the chances are I would pay this off in full in the next 4 years,, My priority is trying to improve my credit score as it’s in an exceptionally bad place it’s not to say I can settle all of my default debt in 4 years, so based on that very fact as it drops off after 6 anyway, should I jump at this offer?
Sara (Debt Camel) says
That sounds like a good offer if you can afford the repayments – don’t get into more debt trying to pay this off!
A partial settlement doesn’t reduce your credit score. It will be just the same as if you had settled the debt in full. The partial settlement is just a flag on your account that some lenders may care about, which will disappear anyway 6 years after the default date.
As your credit record sounds pretty wrecked at the moment, it will never get to good until the 6 years is up. Your priority has to be getting as many debts settled as possible, partial settlements on defaulted debts just don’t matter. It’s important from here that you avoid CCJs, so you would be much better off getting this large debt sorted and then being able to repay the other debts faster.
Adam says
Hi Sara,
I’m two years into an IVA and next May turn 55 so will be able to access my pension pot. However, the terms of my IVA state that anything I draw down from the pension will be treated as a windfall and therefore must be paid into the IVA. I’m wondering whether cancelling the IVA and negotiating with the creditors myself might be worthwhile – more than half of the debt is now owned by a debt recovery company, so I’m wondering if I could offer a F&F to them which would in total be close to the outstanding IVA payments (rather than full original debt), and use funds from the pension to make the payments.
What do you think? I’m keen to be debt free ASAP but don’t want to use up all my pension pot!
Many thanks
Adam
Sara (Debt Camel) says
Perhaps it would have been good to have had this as a plan back 2 years ago and not gone for the IVA! IVAs are a very bad “temporary” solution to wait a couple of years, you should have chosen a DMP.
But now you can’t easily “cancel” an IVA. You can “fail” it by stopping making payments but this is stressful, takes time, you will remain liable for any unpaid IVA fees, there is no guarantee your creditors will accept the F&F (how big would it be?) and the IVA remains on your credit record for 6 years anyway.
Unless you are struggling and can’t afford the IVA payments it seems much simpler and less risky to carry on making them and leave your pension untouched. Your proposed alternative won’t save you money, it’s likely to cost more because you have to pay tax on money taken out of your pension. And it’s risky and uncertain. You are in a clear route to becoming debt free already, the only thing you will gain by doing this now is butchering your pension.
If you are struggling, then you need to look at if your IVA payments can be reduced.
Tom says
Hi Debt Camel ( not sure if it appropriate to post this here)
I have two significant CCJs on my house from 2007 and 2010 respectively totalling £67,951. I have never defaulted on the agreed repayments. I have an agreed equity release offer on my house to allow me to clear these debts. But after paying off my interest only mortgage and paying the fees for Equity Release, I only have £48, 608 available to repay the CCJs in a full and final settlement. I have prorated the available amount between the two CCJs and offered them 71.53% of their total each, One of the banks involved had originally offered a significant reduction in the event of a full & final settlement but is now insisting on the full amount of the CCJ as the funds are through Equity Release. The credit committee of the other bank are dragging their heels and are delaying giving me an answer. Without a reduction I cannot go ahead and will be unable to pay the ER costs in that case. I am a pensioner as is my wife. I am doing all this at her request as the CCJs are impacting her health.
What are my options and where can I get sound advice?
Could I for instance go back to the Aldershot Court and ask them agree that in the circumstances my offer is fair and just for a F&F settlement.
Sara (Debt Camel) says
One bank has accepted your offer?
The other one, they had previously said in writing they would accept an amount that was equal to (or lower?) than you are now offering but they have changed their mind?
Sarah says
I stupidly had a payday loan back in 2012 from minicredit when I had no other options what so ever for £100 but only received £80…. for reasons beyond my control mental health wise I’ve never been able to make a payment nor have I ever acknowledged the debt kinda buried my head in the sand kind of thing.
I’ve had kapama which took over minicredit come after me for £307 then passed it Opos
The default date was March 2013 so is due to go into the statute of limitations in 3 months and I don’t know what to do as my head is still kinda buried in the sand and for the first time in 5 year they tried to call me tonight and I’m now a blubbering mess about it all, Any advice please
Sara (Debt Camel) says
What date was the loan in 2012? Does your bank statement show a credit of £80? Could there have been a £20 charge for faster payment or something?
What are your finances like at the moment?
viva says
hi
I paid F & F settlement offer with barclays over draft , I paid £ 952 .00 Barclays bank kept record balance still £ 2223.72 ,
what is the meaning of F & F settlement ? the letter says
the letter says
What this means for you
full payment of the amount stated will be accepted in full and final settlement of your liability on this account.
if you have chosen to close you account. we will close the account and deem it settled when payment has been received and the funds have cleared. if the above payment is received we agree not to pursue you for the remaining balance and will not pass on the remaining balance to anyone else pursue.
I paid now, then I call Barclays I need to payment recipe not sent to me, letters normal 2 to 3 day can recited by post, I paid 04 December 19,
still I not get the payment received letter. this is right??
thanks
Sara (Debt Camel) says
You were settling the overdraft with 952? Where did the money come from? Does the money not show on your account?
viva says
yes, my friend offered me, yes the money does show up on the account, then I paid off the money with Barclays.
thanks
Sara (Debt Camel) says
so what are Barclays asking for?
viva says
Barclays not send confirmation letter, they says xmas holiday , letter will come late, 35 days still not get letter.
why Barclay playing game can I possible to claim compensation ?
thanks
Sara (Debt Camel) says
I don’t know, go to your local Citizens Advice.
Paul says
Thanks for your reply , Its not possible for me to do that as Im not in the uK , Can someone at least explain where I look for the default notice o a credit report . I cannot find anything.
Lorraine says
I have been in a DMP for past 9 yrs with 10 togo!
I pay around £172 a month to 6 Debts. I have sent CCA to all of them so far one reply saying debt can not be enforced. The company (idem) state they will continue to pursue the debt £1264.00 and register any arrears and defaults with credit reference agencies as far as I know these have already fallen off my credit history can they but them back if I stop paying?
TIA
Sara (Debt Camel) says
No, a debt can never reappear on your credit record.
Kelly-Jo says
Hi,
I have a balance of almost £2000 with Arrow Global. I’d like to offer a partial payment £1200.
The debt came from a catalogue who then sold it on to Arrow in my view it should’ve been made a defaulted account especially as on my credit file there were over 8 missed payments. I wrote to them to query this and they’ve responded with saying as a good will gesture they’ll remove the account from my credit file (had it have been defaulted when it should have it would have been removed at this time anyway). Regardless I was happy for it to be off my credit file.
My query really is as the account is now considered closed are they likely to accept a a partial payment?
Many Thanks,
Kelly-Jo
Sara (Debt Camel) says
Have they said the account is closed? And has if gone from your credit record? How long ago was the account opened? And are you making monthly payments?
Rich says
I agreed a full and final settlement, however, this is not showing as discharged on my credit file. Is that correct or is it only classed as discharged when the amount is paid in full.
Also, is there a difference in treatment of the date of the default and the date of the CCJ assosciated with the default? Does the default of of file after 6-years but in effect stay on via the CCJ?
Sara (Debt Camel) says
Once you have paid it, your credit record should be updated to show a balance owing of zero on the debt. the debt drops off 6 years after the default date.
BUT if there is a CCJ this doesn’t get updated unless you pay in full. This is very annoying but there is nothing you can do about it. The CCJ drops off 6 years after the CCJ date so there can be a period when the debt has gone but the CCJ remains.
Josh says
Hi there I am looking for as much help as possible. I have a catalogue debt of around £600 that was recently sold to a debt collector. The debt has defaulted on I think the both companies. I have spoke to the debt collector and they have agreed to drop the debt to £100 so £500 off but told me this will be classed as partially satisfied/part paid etc. I am very unsure if I should accept there offer. I am currently in a position where I pay them back around £15 every friday and in the position where I am looking to get a morgate with my partner but we were recently declined for an agrement in principle. If I accept there offer of £100 will the partially satisfied mark on my credit file make my chances better or worse off at getting a mortgage? I don’t know if I should pay the £100 or pay off the full amount. Also the defaults have only recently been added in 2019 so they are very recent. Any help would be appreciated as I am really struggling and stressed out with the whole situation. Thank you
Sara (Debt Camel) says
when did you actually stop paying this debt?
rob says
Hi,
I am currently paying £275/month to my DMP for 2 debts. Both are for credit cards ( one £3500 & £2500) and are not with the original creditors. I have requested to both for them to be written off as a gesture of good will on the basis that this money is needed for the work. I have reduced my payment to £5 until I hear from them both, but the DMP budget arrangement is currently based on the £275.
On the basis that this will be rejected, would you advise I request the CCA before offering a F&F. I want to do the work urgently and cant re-mortgage due to credit file.
Sara (Debt Camel) says
Yes I think it’s worth asking for a CCA before making any offers for old credit card debts.
Sarah says
Hi, hope you can help. I’m going for a mortgage at the moment but my open DMP (for 3 debts) is causing an issue. Two dropped off my credit report in Jan and one is due to go in September.
I’ve got a lump sum I can use as partial settlements for all the debts but I’m worried about how they will be marked in case I need to work with any of the banks in the future.
One of the debts is HSBC but has been sold to Intrum – I’m assuming that means there’s no point in paying the debt in full because as far as HSBC are concerned they’ve already got partial payment from Intrum? It’s the only one I could feasibly pay the full amount on but if it won’t make a difference to HSBC I’ll just offer a proportion to all debtors.
Once I’ve cleared these I’ve got a good wage and no debts – will I be OK to apply for another mortgage?
Thanks in advance for your advice.
Sara (Debt Camel) says
You need to settle the debts in your DMP. Ideally you need to have done this 6 months before a mortgage application for any debts not on your credit record (so the mortgage lender cant see the payments on the bank statements) and 12 months for any debts remaining on your credit record. So if you settle all three in the next month, you could look to a mortgage application in October with a clear credit record and no recent payments to the debts on your bank statements.
You can talk to a broker about whether you could succeed with a mortgage application before that.
I’m worried about how they will be marked in case I need to work with any of the banks in the future.
It is sensible to avoid applying for a mortgage to any banks you have had problems with in the past. Even if the debts were ultimately repaid in full.
Read https://debtcamel.co.uk/dmp-partial-settlement/ which looks at your particular situation.
Sarah says
Thanks, really appreciate the reply.
Sarah says
Sorry Sara, I have another question- have you heard of anyone asking for a default to removed once paid?
On the Money Saving Expert website it says the following, but sadly has no more info:
“…ask to make it a condition of settlement that the default is wiped off your credit report”
Sara (Debt Camel) says
You can ask but it’s rare for a lender to agree.
Rita says
Hi there,
American Express sold my 16K debt to AIC late last year and I pay £500 per month. Current debt is 15K with the next instalment due 1st March. I have received an offer to “settle the account a reduced balance of 7.6K”. It says that American Express would be advised and the “credit file updated as partially settled”.
My concerns are:
It doesn’t say Full and Final Settlement anywhere on the letter – do I need to be worried about the wording?
Am I better of accepting the offer (my brother will apply for a personal loan and lend me the money) or do I attempt to counter offer at a slightly lower amount?
Many thanks for your help
Sara (Debt Camel) says
how long ago did you open the credit card account? Can you really afford £500 a month? Do you have any other problem debts?
rob says
Hello I hope I can get some advise
I currently pay £275 a month 10 creditors on a DMP Iv been paying this now for 14 years I currently owe 18k seven years left to pay I currently have a excellent credit score and can get the funds through a bank loan to finally clear my DMP if I wanted to pay off my DMP with a bank loan would I have to say where I got the money from
Sara (Debt Camel) says
Why would you want to change a DMP where interest is frozen for a large bank loan where it isn’t? Any problems paying the bank loan and your credit score is back to poor again!
Also those debts must be very old. I suggest you read https://debtcamel.co.uk/ask-cca-agreement-for-debt/ as I would be very surprised if all of the 10 creditors can produce the relevant CCA agreement for the debt.
Tony says
Hi Sara,
Me again, I’ve been on and off and commenting on the different pages. I’m just so anxious about doing this wrong! I outlined my plan to make 5% F&F offers to my debt collections agencies, none of which could supply CCA agreements, on MSE forums and people seem to think I’m crazy to offer them anything. They suggest that without CCAs I should just ignore them completely and treat them as if they don’t exist.
Could you please outline the positives and negatives (particularly the risks) of doing this? For example, I know when the defaults drop off (and therefore it doesn’t have any effect on my credit rating) but at what point does it become fully unenforceable (i.e. even if they somehow found the CCA)? Is that what “statute barred” means? Do you know of any cases where they’ve said they couldn’t locate the CCA but then have later? Any estimate on the chances of that actually happening? (I made my CCA requests at the start of November btw)
Thanks again for all the help you offer and everything you do here!
Sara (Debt Camel) says
“on MSE forums and people seem to think I’m crazy to offer them anything. “
well they have a point! I don’t understand why so many people want to offer settlement amounts on really old debts that are no longer on their credit record.
The positives of not offering them anything is it saves you money and is easy. You just stop paying.
The risk is that they will somehow later find the agreement. The older the debt is – that is when you opened the account, not when you defaulted – the smaller the risk must be you would think.
If you look back through the comments on MSE you just don’t seem to see people coming back and saying after 9 months the CCA was found and they wish they had settled the debt. I can’t say how large the risk is though.
Tony says
Ok thanks. At the moment I’m thinking that I won’t bother then. Last question:
What date can I officially 100% know that they can’t do anything? It does sound unlikely that they’ll locate them but, for example, when can I stop updating them on changes of address etc?
Claire says
Hi Sara
My husband and I have a debt each with Cabot. They are both currently unenforceable and defaulted in 2006 so not reported by credit reference agencies. Cabot has been particularly troublesome phoning us both at least 4-5 times a week and writing weekly ( no reference after the initial letter to the fact that these debts are currently unenforceable). We have recently made an offer of 5% for full and final offer and they have come back with 15% counter offer. Is it worth hanging out and re offering a lower than 15% offer
Sara (Debt Camel) says
They are unenforceable because the CCA can’t be produced?
Michael says
Hi Sara,
I have 4 defaulted accounts on my credit report, all of which defaulted between May 17 and July 18. From a very difficult place I’ve got myself back on some sort of path towards repaying them all. I’m paying them back at £20 a month each, but this will take me until around mid 2023 to clear them all in full.
I am considering making partial settlement offers, but I am concerned that doing so would be worse for my credit rating than just leaving the current payments in place so I settle the accounts in full?
I’m planning on applying for a travel credit card in spring 2021 if I can get to a point where I’d be accepted.
Sara (Debt Camel) says
See https://debtcamel.co.uk/ff-credit-record/. Basically your credit score remains the same, some lenders may not like the partial settlement but other will just be pleased that the debt is resolved.
Chris says
Hi
I’ve been with Payplan over 10 years, started with £45k, down to £19k now. My experian rating is very high (979) and for some reason Payplan isnt mentioned on their report. I’m on a good salary but may be redundant soon and will likely see my salary drop substantially. So my 2 questions are: do you think my credit rating will take a big hit (i need to remortgage this/next year), and is 30-40% a reasonable offer or too low? Thanks.
Sara (Debt Camel) says
How many debts do you have in there and what sort of debts were they? Have they all been sold to debt collectors? Do any of them still show on your credit record?
Will you be able to afford the mortgage if your salary drops a lot?
Chris says
Hi Sara
Originally with Halifax, Barclaycard & Egg (7 accounts, but a long time ago debts were moved to (Cabot x2, Hoist x4 and Moorcroft x1). I don’t get any calls or stress from them they just send me an occasional monthly letter offering the standard 25-30% reduction if i clear the account (been getting those offers for years and i’ve ignored them so far). I’ve got about 8 years left with payplan but just want to get rid of this underlying stress of having a DMP.
Its impossible to say what my salary may be but i’m assuming i can get a modest salary in my field (mid-high 20s) in these crazy times (i’m on double that now) and the property is worth £120-130k, the mortgage is £54k so hopefully no problem with the multiplier. (By the way i’m with Landmark Mortgages, formerly known as NRAM, formerly known as Northern Rock, and as you will know they do not offer remortgages or fixed rates so i have to move to another provider- never defaulted on my mortgage payments btw although that might be irrelevant).
Sara (Debt Camel) says
So all your debts have dropped off your credit records? In that case your credit rating will not be affected at all if you settle with a full and final. Check your credit reports with Equifax and TransUnion, not just Experian.
I think you should look at asking for the CCA agreement for all the debts that were loans or credit cards, not overdrafts. See https://debtcamel.co.uk/settlements-old-debts-cca/. It may well be that some debt collectors can’t produce the CCA agreement and the debt is unenforceable – you can simply stop paying.
Chris says
My god, thats interesting!! Ok thanks, will do.
StillBreathing1985 says
Has anyone had any experiences with F&F since the Covid-19 issues? I was wondering if it meant creditors/debt agencies were more like to accept a lower offer? I’m desperately trying to clean mine as fast as possible (currently £39k spread over 10 lenders). I’m with StepChange, what should I tell them if I do get a F&F on some of the lower debts? I have about £3 and I’d like to try clear £6k if possible.
Sara (Debt Camel) says
how long has your DMP been running?
how much are you paying a month to the DMP?
StillBreathing1985 says
Hi Sara,
We are paying £501 per month. It’s been running for approx. 18 months now. And won’t be clear for another 6.5 years at this rate. We have made some savings since working from home, on childcare and travel etc. so have about £3k.
Debts are broken down approx. as follows:
£8,200 – Loan
£5,600 – Loan
£500 – Overdraft
£3,000 – Credit Card
£400 – Store Card
£2,700 – Credit Card
£2,000.00 – Store Card
£2,600.00 – Credit Card
£11,000.00 – Credit Card
£3,000 – Credit Card
TOTAL: £39k
Sara (Debt Camel) says
Has interest been stopped on all the cards?
Have any of them been sold to debt collectors?
Can I ask if you are buying or renting?
And are all your debts in your DMP?
StillBreathing1985 says
Hello,
All debts are in DMP. They have mostly been moved to debt collectors now (moorcroft, intrum, PRA, Cabot), I was going to approach the creditor ones first – made sense they would want to settle?
We own our house, but there’s not much equity in it. We only bought in 2017 with a 5% deposit.
Interest has been stopped and most of the debts sold as a lump sum.
Hope this helps?
Sara (Debt Camel) says
Debt collectors are MUCH more likely to take a settlement offer than the original creditor is! They didn’t pay much when they bought your debt and 50% would enable them to pocket a nice profit.
18 months is early for a F&F to be accepted, but 50% is not stupidly low and you have a good reason why you have been able to save up some money because of covid-19 BUT won’t be able to increase your DMP contributions when things are back to normal.
StillBreathing1985 says
Thank you for your advice Sara. Is there anything you would suggest that I tell StepChange is accepted? I know they don’t like people offering.
Sara (Debt Camel) says
I would just say that creditor X has accepted a settlement offer and can they remove it from the DMP.
Ashley says
Hi Sara
I have agreed a 70% settlement with satsuma loans saving around £400. If this was my only loan i would probably pay it off in full to reduce the impact on my credit score, however i have 4 other large loans that are ‘unenforceable’ and will be offering settlement figures to over the next month. Do you think theres any point paying the satsuma loan in full? If I’m soon to have 4 ‘part settled’ loans on my credit history is it going to make much difference having 5 and saving myself £400. Theres no real difference in all my default dates either. Many thanks
Sara (Debt Camel) says
A partial settlement does not affect your headline credit score at all. It may make some lenders less keen to lend to you. But if you have several unpaid defaults on your credit records (are these unenforceable loans still showing?) then a partial settlement I would guess will matter much less to other lenders.
Mike says
Hello Debt Camel,
I have a few credit card debts that I’m now unable to pay anything towards. This comes after failing health with MS. I’ve contacted the CC companies and have now defaulted for three months.
I roughly owe £12k to Barclaycard – account originally opened 20+ years ago.
£16k to MBNA – account opened approx 15years ago.
£5k to PayPal Credit – account opened 3 years ago.
It’s a huge debt, one that when came about by keeping a business running.
I might be able to borrow from a family member around £5k to make an offer for a settlement figure.
What do you think my credible best options are?
Kind Regards,
Mike
Sara (Debt Camel) says
Hi Mike, Do you have a mortgage or are you renting?
Mike says
Hi,
I have a mortgage.
michael says
Hi Sara,
I have been in a DMP for only 8 months. 19 k remaining. All original debts taken out within the last 5 years. £205 per month and 6 creditors. Paypal, everyday loans, newday x 2, very, barclaycard
I am self employed and do not own a property or vehicle. I am renting privately. Takings from self employment are down 80% and i have enough money for one or two more months payments at most. My parents have offered me 10 k to pay off the debts. Do you think it is too soon to offer my creditors this? If so, should i offer 40% to leave room for them to negotiate? Thanks for your advice.
Sara (Debt Camel) says
It is a bit soon. I suggest asking your DMP firm (who is it?) for a payment break for three months and review your situation at the end of that. Your priorities are your rent, council tax and utilities. And obviously food! Not your DMP.
Do you owe HMRC anything – you mustn’t use money put aside for tax to pay a DMP.
Sol says
Hi Sarah,
Excellent article. I have some debts linked to my old business (which is in liquidation via CVL, so we initiated it ourselves).
Funding Circle (personal guarantee, £29k) was taken out in mid 2017 and defaulted in September 2019 when the biz went into liquidation. Since then I have been paying them 50% of the contractual agreed with them. I’m currently on a 3 month payment break due to COVID19.
IWOCA (personal guarantee, £11k) – That was taken out in Sep 2017 and defaulted Sep 2019. Since then I have been paying them 50% of the contractual payments agreed with the.
MBNA – It’s a personal credit card that was used for the old business and the limit and balance is at £20k. This has not defaulted as I had been paying them on but was about 2 months behind before COVID19 came about. I have a 3 month payment break with them.
I have managed to raise some funds via a loan from a family member. It’s not enough to clear all of the above debts, but I’d say it’s around 60% of the total amount due. Getting these debts paid will reduce my monthly outgoings massively once work picks back up again after the lock-down is relaxed further.
The question is, what is the best negotiation strategy to use for each one of them?
Any information would be appreciated.
Thanks,
Sol
Sara (Debt Camel) says
So you can’t actually make any payments at the moment? How soon will your work pick up when lockdown ends?
Sol says
I can get a loan from family for paying off these debts (Full and Final). But my personal income won’t increase until probably July or August.
Thanks, Sol
Sara (Debt Camel) says
I was asking how likely your income is to rebound to previous levels. If you can argue it will take many months, your creditors may be more likely to accept a F&F offer.
Sol says
Ah understood. Well the truth is there is no certainty. But I would have to err on the side of caution and say it could take until the end of the year to get back to the levels it was prior to the lockdown. Thank you
Sara (Debt Camel) says
Well I would suggest offering them 50% now and going into detail about how long it will take for your income to recover. MBNA may well the the hardest one as you haven’t defaulted on it. If you get negative answers, then i suggest waiting a couple of months and then putting all the debts including the MBNA one into a debt management for a few months. Which won’t be paying them a lot. then repeat offer.
Liam says
Both my wife and I have historic debts which are from 2004-2010. None of them are showing on our credit reports. The debts are about £12.5k each and we are paying various DCA amounts varying between £1.50 to £10 a month and others nothing. We may have some inheritance coming. if we tried to negotiate part settlements with the DCA’s would these show up on our credit file being they are so old. Our current credit reports are now clear of these youthful past mistakes but we don’t want them being flagged up and potentially stopping us getting a mortgage in 12 months time.
Sara (Debt Camel) says
if we tried to negotiate part settlements with the DCA’s would these show up on our credit file being they are so old.
No they won’t. A debt which has dropped off your credit record as it had a default date more than 6 years ago can never reappear.
BUT read this https://debtcamel.co.uk/settlements-old-debts-cca/ before you offer any F&Fs… as the debts may be unenforceable and you may be able to not pay them anything.
Johnny thomas says
i have been on a DMP for many years and I have, what started off as a £20k debt with first plus taken out in 2006. This got taken over by Barclays and the debt sold on to Elderbridge in 2009 when we struggled with the payments (DMP in place at this stage). The balance is now 18k however the interest that they claim to have set aside is now £12k (rose by 1.8k in the last year alone). The APR is 9.37%. Basically, in the next 10 years at the rate I’m paying, the interest will be touching £50k. Is this right and is there anything I can challenge under the CCA and fair relationship?
Sara (Debt Camel) says
do you mean they are still adding interest? How large is the debt at the moment? how large are the rest of the debts in your DMP? are you buying or renting?
Johnny Thomas says
Yes, they are still adding interest however I’ve managed to sort with them now. However….. onto my next and final creditor with regards full and final settlement. It’s orignally a NatWest loan that we had a CCJ issued against in 2009. Current balance is 21k and we pay £110 a month. We live abroad renting. We would like to clear this debt so we can buy a house. The debt is currently being managed by Ascent Performance. I read on your original article that it’s uncommon to get F&F settlement on a CCJ. I was hoping to clear this with £4K that we have managed to save from relocating and selling some items off. What do you think our chances are and any advice? Thanks
Sara (Debt Camel) says
Not really, you just have to try.
Claire says
I have a payday loan with sunny and hot financial problems at the beginning of the year and put a payment arrangement in place I am now back I. Track and have asked if I can go back to paying the correct monthly payments prior to my problems they have said this is not possible bit have offered for me to pay £175 to clear and will be marked as partially settled ( I owe £595) is this worth doing and how will it affect my credit report with partially paid?
Sara (Debt Camel) says
This article looks at partial settlements and credit ratings: https://debtcamel.co.uk/ff-credit-record/. But my guess is your credit record is not good at the moment if you have had to take out payday loans… in which case a partial settlement will make very little difference and what Sunny is offering would save you a lot of money.
BUT before you make a decision on htis, can I ask whether you had a lot of loans from sunny before this one? If it was a lot, you may have a better option that could potentially improve your credit record.
Helen says
Hi
I have a DMP for around £8k, split across 3 credit card debts (2 were originally with NatWest, and the other with Halifax, and all 3 have been sold on twice, possibly 3 times). The debts are all about 10 years old.
The defaulted debts dropped off my credit file in November 2018.
I have recently received 2 letters inviting me to contact them to look at a settlement offer for the 2 (NatWest) debts, but there was no mention of settlement amount. I haven’t responded yet.
I have a lump sum of £2k; this would cover just under 30% as a F&F across all 3, or, just over 30% if across the 2 NatWest debts.
What would be the best approach here? To contact all 3, or just the 2 (NatWest), and continue to pay the DMP on the smaller outstanding one, until I find myself in a position where I could try and settle that too, at a later date? Would it be better to go in ‘cheeky’, with room for manoeuvre, up to the £2k I could afford (and I may come out lucky)?
Thanks :)
Sara (Debt Camel) says
I suggest you read https://debtcamel.co.uk/settlements-old-debts-cca/.
Helen says
Thanks! Very helpful!
Ben says
Hi thanks for all the great info
I have 4 debts now sold to PRA Group. I defaulted on all 4 about 12 months ago.
They have admitted one is unenforceable for about £7,350 (originally MBNA) – should I just not pay it now or get a F&F, part of me just wants it gone so they stop asking about it and no chance of it being sold on again. What sort of % will they accept for unenforceable?
Lloyds one that have produced the agreement and it is enforceable. Approx £7k.
Barclaycard (£13k) and Halifax (£5.5k) they are saying waiting for further documents still. They have sent some documents but say waiting for more and it is unenforceable in the mean time.
Sara (Debt Camel) says
If you had to make monthly payments to the debts, how much in total could you pay?
Do you have some money to make settlement offers?
Are these your only problem debts?
Emily says
Hi Sara,
Just looking for some advice really. I currently have a Barclaycard with outstanding balance of £3314.64, currently paying £33.51 a month on a repayment plan. They defaulted me in December 2018. They have offered me a full and final settlement offer of 50% of the outstanding balance. My question to you is would it be better for my credit score to pay the settlement? Or save and pay it off in full. Thank you.
Mel says
Dear Sara,
I have settled the debt (3k for 20% lump sum) via court mediation couple days ago. The mediator told me DCA will send me payment details and I thought I will receive it the same day, but nothing yet. The agreement from mediator was received the same day. The mediator also wrote to contact him within 5 days if inaccuracies found in agreement, but all is good. I just wonder if DCA is waiting for 5 days to pass and then they will send me payment details? I am just very eager to pay and move on with my life. Thanks.
Sara (Debt Camel) says
this is a court mediator? if it is then please talk to National debtline about any queries.
Mel says
Hello,
I have received a reduced settlement offer. I only have 4 days left to make a payment as I only received a letter 10 days later from when they sent it to me. I have called DCA and asked where to make a payment, but due to a bad network connection (on their end) I couldn’t hear half of what was said. Person on the phone said the payment plan was set up on their website, but if I log in I only see the full balance not a reduced amount and no any payment plan. I wrote them an email too, but in current environment everyone is very slow to reply. I don’t want to miss this offer, as it is 80% off. I want to ask, do I still need to request an agreement, or their offer letter and the phone conversation would be enough of the proof that the debt was settled, in case they will decide to chase me for the same debt again?
Sara (Debt Camel) says
Person on the phone said the payment plan was set up on their website, but if I log in I only see the full balance not a reduced amount and no any payment plan.
I think you need this to be clarified before you pay them anything I doubt the offer is going to disappear if you phone them up again.
Luke says
Dear Sara,
Hope you’re well. Firstly thank you for taking the time to help, it is very much appreciated. I would like some advice on some outstanding debts that have now both been passed on to debt collectors.
1- Barclays Credit card – 10k – defaulted 2016. I sent a Prove it letter last year and they responded to tell me they don’t have any and no further contact will be made until they do.
2- TSB credit card, overdraft and loan – 20K – defaulted 2016. I’m currently in the process of sending a prove it letter.
I hit hard times as was unable to pay any of my debt and obviously buried my head in the sand in hope it went away. If Capquest (TSB debt agent) can’t provide this information also, what is best to resolve this.
Would making a F&F offer admit to my liability? (Is there anyway to do it without admitting liability)
Would they still be able to give me a CCJ after requesting them to prove I owe the debt?
Would making a low offer (as that’s all I can afford) likely to be accepted as they can’t prove the debt?
I know neither will improve my credit score but is it likely to go statutory barred if I’ve request this information and they can’t provide it. Had no contact or token payments since it went into default apart from the prove it letter.
sorry for long post and hope it makes sense.
thank you, Luke.
Sara (Debt Camel) says
If Capquest (TSB debt agent) can’t provide this information also, what is best to resolve this.
Honestly I suggest you don’t count chickens but wait and see what comes back.
Michael says
Hi Sara,
I currently have 3 debts that I’ve disputed from back in 2016, I went throughout the complaints procedures with the banks and then the Financial Ombudsman with the result still standing.
Currently I need help with the below one (the only bank chasing payment)
Credit card for 5K after the FO decision in Feb 2020 they instructed a debt collector on their behalf, When the debt collector contacted me I send a prove it letter, they then responded saying if I dispute the debt I should contact the bank directly. I responded to this letter with a complaint letter stating I won’t be dealing with the bank directly as they have instructed you to act on there behalf, I again requested they prove I own the debt and I also requested they write off the debt as they can’t prove I own the debt. To this they responded again that I should contact the bank directly and they also request I provide them with medical history to back up my reasons to write off the debt. Do I provide them with medical records and income and out goings and see what they respond or do I take it further and issue a complaint to the FCA.
Thanks Michael
Sara (Debt Camel) says
then the Financial Ombudsman with the result still standing.
what was your complaint about? do you mean you won your case? or lost it?
Mel says
I have a default on my file for an overdraft current outstanding 733 pounds the debt is now with a debt recovery agency group.
I agree with Karen’s statement in relation to health, is it absolutely necessary to disclose my medical history to them for the sake of a F&F my offer to them was 480 settlement, i also had to complete an income and expenditure over the phone with the agent. They also asked me to provide a list of any creditors that i am currently negotiating with (not settled with).
As an anxiety disorder/ Depression sufferer for over 14 years i find this all very intrusive and personal to provide. Is this normal, its my 3rd time going through a F&F and no other creditor has asked me for such personal information before. I am now awaiting a reply to my offer, if they do ask for the above information, am i ok to state at that point i do not wish to continue with a F&F and continue on my normal token payments? Thank you in Advance
Sara (Debt Camel) says
You don’t have to provide this information, but it can help your request if you do.
It is normal for a creditor to ask for a list of your other creditors – not all do, but it’s not unusual.
Lee Moles says
Can I get some Advice on my Debt please
Took out a £15K loan with Barclays in November 2015
Made regular payments of £300 a month until July 2016 when I defaulted
The remaining debt was passed onto a collection agency who I pay £100 a month to
Debt is now currently down to £8,800 and the default has been in place for 38 months
Recently got approved for a mortgage via a broker where the rate is higher than normal. He suggested that within my 2 year fixed rate I try and clear this default.
Shall I try a F&F payment of say £4K or shall I carry on as I current am? Regardless of whether it’s partially paid or paid in full I assume the default will drop off my credit file in 2023 (after 6 years) or will it stay if I’m still paying in another 3 years?
Sara (Debt Camel) says
What is the interest rate on this mortgage? How large a deposit do you have?
The aim of clearing the debt is to enable you to get a new fix at a more reasonable rate after two years.
The debt will drop off your credit record in 2023 regardless of whether it is settled in full, settled with a F&F, still being paid or you stop paying (although if you stop paying you may get a CCJ which would be on your credit record for another 6 years).
So this debt will still be showing when you want to remortgage. If the debt hasn’t been settled you will have no chance of remortgaging at a good rate. You need To settled this in full or with a F&F as soon as possible to give yourself the best chance.
BUT a it may still be hard to remortgage even if the debt has been paid in full. The rule of thumb before the pandemic was that you needed defaults to have been settled for more than a year before getting a mortgage with a high street lender. What will apply when you come to remortgage in 2 years is uncertain. If the rule then is “all defaults settled more than two years ago” then you won’t be able to remortgage at the end of the two years.
So you need to know what the SVR (standard variable rate) is for the bad credit lender you are looking at. Because there is NO guarantee you will be able to get another fix at the end of two years at a better rate and if you can’t that SVR may be what you end up paying.
The three big unknowns are the state of the mortgage market, whether there will have been a second wave of Covid-19 and whether house prices will have fallen. If house prices fall 10% which is easily possible, will you still have a 15% deposit left to get a re mortgage?
Margot says
I had a credit card debt drop off my history after 6 years of default (token payments paid), only for it to reappear when the debt was passed to a collection agency. Is this right?
Sara (Debt Camel) says
No it isn’t right. The debt collector should use the same default date as the original lender. Ask the debt collector to correct the default date and take a complaint to the Finacial Ombudsman if the debt collector refuses.
Do you want to offer a settlement to this? If you do, read https://debtcamel.co.uk/settlements-old-debts-cca/ first.
Yash says
Hi Sara,
I have about £26000 (3 credit cards and a personal loan) They were all defaulted in 2015/16 and were transferred to debt collection agencies. Lowell bought Halifax credit card debt of £5500 and they added interest on it made it to £6500 and went to court and got a CCJ on it in 2016, I was going through a severe depression that time. During that period, I redirected my mails to a friend and didn’t collect my post until the CCJ was already issued against me. I live as a lodger. Unfortunately, my landlord was diagnosed with cancer and they moved him to permanent care home and He wants to sell this house to pay his nursing costs. I have to vacate this place soon, it will be difficult to pay the monthly instalments towards the debt. One of my friends has kindly offered to give me £5000. I composed a letter to be sent to all the lenders explaining my situation and offering them full and final settlement amounts in pro-rota basis. I called Lowell and they refused to take any offer of full and final settlement as it has got CCJ on it and asked me to pay £10/ month even if it takes 600 months to pay it off. I even said, it is ok for me even if they mark CCJ as partially settled. But they were not ready for it and wants the full amount or continue paying £10/month. Can they still enforce it even after 6 years after CCJ and get a fresh one against that debt and attach my property in future (If I were ever able to buy a house in the future)
Many Thanks & Kind Regards,
Yash
Sara (Debt Camel) says
Have the other two lenders accepted the offer?
Have you got somewhere to move to?
Yash says
Hi Sara,
I haven’t approached the other lenders yet. Lowell was my first call and I got worried as soon as they rejected the offer and didn’t approach others.
Nope. They haven’t put the property on market yet. The lady who has got the power of attorney is in constant touch with us. She has daughters wedding in October and she said she canT see iT sellinG before that. Probably we have about 6 months more (hopefully). I am thinking of moving to somewhere in the north for the time being as the renTs are much cheaper and it will still be working from home until mid next year as my line manager predicts.
Sara (Debt Camel) says
So my thoughts are:
– you can’t make a debt collector accept a F&F offer and they are less likely to do this where there is a CCJ.
– your most important thing is to find somewhere to live. With a CCJ on your credit record it can be hard to rent privately even if it is paid in full unless you have someone who could act as a guarantor. Could your friend offer to do this for you? It would be a bigger favour to you than a £5000 loan!
– once you have found somewhere to live, then you can consider what payments you are able to to make to your debts.
– at that point you should look at your options again. If you can no longer afford £10 a month you can ask for this to be reduced, armed with a new income & expenditure showing what you can afford.
– one option you should consider if you can afford to pay little to your debts is bankruptcy. But this is better looked at after you have moved as ba bankruptcy also makes it harder to get a new tenancy. Borrowing a lot of money from a friend can go wrong if you then cant repay it or they need the money back urgently for some reason.
– you can get a mortgage 6 years after bankruptcy. You need to think about how long it will take to repay your debts, to your current creditors or to your friend, because if that takes a long while it will be a VERY long while until you can start saving for a house deposit.
So I suggest you look at moving and then talk to National Debtline on 0808 808 4000 about all your options.
Yash says
Hi Sara,
Thank you for the suggestions. I believe I have a few friends who will be happy to be a guarantor for the estate agency when we move and rent a property.
Bankruptcy is not an option for me as I work for a government organisation and I will lose my job, if i do so.
I already had a chat with National Debtline and discussed options and they suggested me to continue paying whatever I can until my financial situation changes.
The money my friend offering is as a gift and I don’t need to pay him back.
Do you suggest me to speak to other three lenders and pay them off excluding Lowell as they are not agreeing to accept F& F?
Will this CCJ still appear even after 6 years on my credit file (2022) and the defaults?
Sara (Debt Camel) says
Bankruptcy is not an option for me as I work for a government organisation
Did National Debtline confirm that? Plenty of people who work for the government go bankrupt!
I already had a chat with National Debtline and discussed options and they suggested me to continue paying whatever I can until my financial situation changes.
That sounds sensible to me.
Do you suggest me to speak to other three lenders and pay them off excluding Lowell as they are not agreeing to accept F& F?
yes if they will accept your offered F&F
The CCJ will drop off your credit record after 6 years. But it will still be enforceable after that.
Yash says
I work in a sensitive role that needs security clearance and bankrupt people are not eligible
I will write to the other lenders and will update you the progress
Thank you so much for your help, Sara. Much appreciated
Kind Regards,
Yash
Mark says
Hi Sara, hope u are well and thanks for all your hard work.
I have a loan with 118 118 money which has been completely removed from my credit record due to them (not the FOS), upholding an ‘irresponsible lending’ complaint early last year. I have been paying £1 p\m since then as I have no income at all. My balance is approx. £1000 and I think it was defaulted a couple of years back. My mum is able to give me the money to pay it off as long as they accept a reduced payment of approx £500.
My question is if I make a mutually agreed reduced F&F settlement, can they put the loan back on my credit record showing the short settlement or does the “we will remove all negative information from your credit record regarding this loan” promise still apply?
Thanks (in advance)
Mark
Sara (Debt Camel) says
They shouldn’t put it back but it is worth confirming this when you make their offer. “My mother is offering £500 as a full and final settlement on the debt on condition the record does not reappear on my credit record.”
Mark says
Thanks Sara, much appreciated.
Martin says
Hello 👋
I’ve recently paid of my 2 defaulted credit cards and I have been paying into Loqbox for the past 4 months (£70).
I got an email from clear score saying I can get a capital one credit card. This is the first time in a long time that I have been offered a credit card because my credit has been so more but it is slowly improving.
Am I better waiting until I finish paying off LoqBox in 8 months and see if I get offered a better credit card? Or should I apply for the capital one credit card?
What is the best way to use a credit card? I know your meant to use it for small and frequent purchases. Does a monthly bill come off at the end of the month? I really don’t know how to use credit cards and just need someone to help me out a little bit.
Thank you
Sara (Debt Camel) says
How good is your will power?
If it’s good, then take the card now. You don’t have to use it for frequent purchases, just one a month is fine. One tank of petrol or a small food shop once a month. When you get the card you should be able to set it up so that your Full balance is collected every month by direct debit. Try to time the direct debit so its just eft you get paid so there will always be enough money in the account.
Apart from that leave your card at home and NEVER buy anything online or add it to your paypal account.
If your will power isn’t that great and you might be tempted, just don’t get the card in the first place.
Nicky says
Hi Sara
I am in a DMP (since 2017) with 6 creditors. Three have now been passed to PRA and all three are defaulted. I contacted them in June 2020 asking for CCAs and been advised in July 2020 that 2 of these debts are currently unenforceable as no CCAs available, for the other one they have supplied a “reconstituted agreement’.
I have the offer of financial support from a relative to make a full and final settlement on these. I am not sure whether it would be appropriate to offer different % settlement amounts to the PRA accounts? I would like to offer a lower amount on the two accounts that are unenforceable, but don’t know if it would be viewed unfavourably if made at the same time as a higher offer on the other account?
I could offer approximately 25% of the amount of the one that they have provided the reconstituted agreement for. I noticed that you have advised others to offer lower amounts e.g. 5-10% if a debt is unenforceable? My monthly payments are currently very low as my income has dropped significantly since March so I hope they may accept an offer.
Thanks for any advice you can give on managing multiple offers to the same creditor.
Nicky
Sara (Debt Camel) says
The two debts PRA say are unenforceable, are they showing on your credit records? Do they have a default date on them?
Nicky says
Yes they are on my credit record with correct default dates issued by original creditors within a few months of DMP starting.
Does a ‘reconstituted agreement’ sound above board?
Thank you.
Sara (Debt Camel) says
A creditor can supply a “true copy” of the CCA agreement but it has to contain the correct information. See https://debtcamel.co.uk/ask-cca-agreement-for-debt/#How_can_you_tell_if_it_is_right for what to do if you are not sure what you have been sent is right.
There is no need for you to make any offer to an unenforceable debt. They will simply drop off your credit record in 2023. I suggest stopping paying them and tell PRA that you will resume payments if they locate the CCA agreement.
I suggest you try to settle the enforceable one and make it clear the offer comes from a relative and it is only available to settle that particular debt. If PRA reject it, I suggest you carry on making your current low payment to that debt for another year and then try again.
Nicky says
Thank you for your help. I made an offer on the enforceable debt and they very promptly replied to say there was no settlement offer available – just the full amount. So I will do as you suggest and wait, continuing the low payments on that account.
Jon says
I’ve settled an old balance on a credit card through full and final settlement.
I paid but the remaining balance is still showing on my account but they said I won’t be chased and the account is closed.
I’m not happy with that, surely that can’t be right?
Sara (Debt Camel) says
but the remaining balance is still showing on my account
Do you mean the account with them? Or your credit record?
Jon says
On the account with them which apparently will remain on there.
As for the credit report, I haven’t given it enough up date yet
Sara (Debt Camel) says
That doesn’t matter, it’s normal. If they have told you the money was accepted and a full & final settlement you are OK
John says
Hi Sara,
I have a current account debt which used to be with HSBC. A £5k payment was taking from my account and I buried my head in the sand at the time not knowing how to deal with it. The debt was first sold to first credit and now Intrum deal with it. For the last 2-3 years I have been paying monthly and reduced the debt to £3k.
The account is defaulted as of February 2016 and so I guess drops away from Feb 2022 but i believe they could still raise a CCJ until then so i’m keen to avoid this as I want to look at getting a mortgage in the next 18 months. If I were to offer to pay £2k to partially satisfy the debt would this prevent a CCJ from ever being raised, and would it improve my chances of getting a better mortgage?
Finally, whilst difficult for you to say, do you consider it likely that Intrum would accept a £2k offer to partially satisfy the debt?
Sara (Debt Camel) says
How large are the monthly payments you are making?
Peter says
How would adding the original default date to the credit file help? Can the new creditor add a new entry to my file or can only the original lender add to your credit file?
Sara (Debt Camel) says
the current creditor would like to keep the debt on your credit record for as long as possible.
If the original creditor adds a default date then the current creditor has to use that default date. So if a default date is added that is more than 6 years ago the debt will immediately disappear from your credit record. That is removing a debt which currently has a DMP marker which is harming your credit record.
Peter says
Thanks so much – I will get right onto it
Hayley says
Hi Sara,
I have 8 outstanding debts which have all dropped off my credit file except for one which is showing as defaulted since 2018. The balance is around £900 and I was going to try and pay this in full as it is the only thing that is currently affecting my credit rating. I thought that it would be better for my rating to show as settled in full, but they have advised that it will show as satisfied as it has defaulted.
So my question is, seeing as though it is going to be on my record for another 4 years anyway, should I just offer a partial settlement and use the rest of the money to settle some other accounts. I am hoping to apply for a mortgage in the next year or so and would like to get them off my bank statements. Will it showing fully satisfied be any better for my rating than partially satisfied?
Sara (Debt Camel) says
Read https://debtcamel.co.uk/dmp-partial-settlement/
You have to settle ALL your debts before going for a mortgage, not just the ones on your credit record. As the mortgage lender will see the fact you are still paying them on your bank statements.
Also read https://debtcamel.co.uk/ask-cca-agreement-for-debt/. That might let you just stop paying a few of the ones that aren’t on your credit record. No guarantees it will work but you may think it’s worth trying.
Hayley says
Hi Sara,
That is why I thought that if I partially satisfied the one that is showing on my file, it would mean that I could use that extra money to clear a couple of the ones that aren’t quicker. I just don’t want the partially satisfied to go against me more than the default already is going to anyway.
Sara (Debt Camel) says
Read the article on partial settlement and mortgages.
Jacqui says
If a debt is not on your credit file and you pay it, does it update your file to say its paid? It is over 6 years old.
Sara (Debt Camel) says
No, it will never reappear on your credit record.
Jern Eight says
Hi Sara,
Your articles are ridiculously helpful. Thanks.
A few years ago after the breakdown of my marriage I had an insane plan to take out a pretty huge personal loan and finish myself off when the money was gone. For better or worse, I’m still here.
I owe around £16k and the original personal loan debt has been passed to BPO from Lowell (and on from the bank I originally defaulted on). It’s been nearly five years and I’ve never replied to a single letter. BPO have offered partial settlement if I pay 60% in full.
Realistically, the money would come from a friend who would offer the money and I’d pay them back as quickly as possible. I need to try and get the amount down as much as possible. Realistically, I can get about £3k together myself by selling assets and then the rest of it will come from the friend who I will pay back over a long period. I really don’t have much money to play with so I need to try and get this ammount down as much as possible so I can get my life back on track and stop these guys hounding me for the money I owe.
What do you think the best thing to do first is here?
Thanks very much for any advice you can give me :)
Sara (Debt Camel) says
Do you gave any other debts?
How much a month could you realistically pay?
John says
No other debts. About £150 month I would say?
Sara (Debt Camel) says
personally I think selling assets then owing a friend more than 5k to be repaid slowly is a worse option than owing a debt collector more.
Your options:
1) ignore them and wait until they send you a Letter Before Action (see https://debtcamel.co.uk/letter-before-claim-ccj/ for what one looks like). If they do you ask them to produce all the documents as that article explains. If they can produce the CCA agreement for the debts (see option 2 below) offer them one of options 3 or 4. If they refuse, get a good solicitor – firms will take on cases where the debt is more then 10k as they can win back their costs if they win.
2) ask them to send you the CCA agreement for the debt, see https://debtcamel.co.uk/ask-cca-agreement-for-debt/ which explains this and how to do it. (The downside of doing this now is it resets the statute barred clock. But with a debt of this size, the chance of this going statute barred without them suing you is very low anyway.)
– If they can’t then the debt is unenforceable and they can’t go to court so you can simply stop paying.
– If they can produce the CCA then look at options 3 or 4. If they say no, then fall back on getting a solicitor if they sue you.
3) say you can’t afford 60% and offer 3k. Borrowing money from a friend then you know you can’t repay in a few months is a bad idea.
4) offer them £150 a month.
NB make sure you can really afford this without it leaving you so short you have to borrow again. I recommend talking to a debt adviser who can look at what you can afford to offer and can give you an income & expenditure statement to back up your offer to show the debt collector.
5) look at bankruptcy or (if a debt collector says you qualify) a debt relief order.
Jern says
Thank you so much for this :). Incredibly helpful.
Tracey says
Hi,
I have been in a DMP for several years – I have managed to pay off a couple of creditors (one partially settled) and now have five creditors with a total debt of less than 3k.
I am on an interest only mortgage with just ten years to go and so need to remortgage fairly soon, extending the term and going on to a repayment.
My credit score is currently 538/710 (needs work).
I did have three defaults on my credit file but these have all dropped off this year. Surprisingly, my credit score barely increased when the defaults came off my credit file.
I may have a few thousand pounds shortly heading my way and want to know how much being in a DMP will affect my application to remortgage. Should I use the money to pay off my creditors and get out the DMP although if I am applying for a remortgage a couple of months later, will this make any difference?
Secondly, I was going to make a couple of partial offers in F&F settlement to the creditors due the largest amounts and pay the creditors owed less in full. Again, will this have too much of a negative impact on my credit file in terms of applying for a remortgage.
Obviously, I want to secure the best interest rate I can on a mortgage and thus maximise my chances – any advice would be greatly appreciated.
Thank you in advance for your assistance.
Sara (Debt Camel) says
Are any if the 5 remaining debts still on your credit record? What sort of debts were these, loans, credit cards, overdrafts?
How much are you paying to the DMP a month?
How Large is your IO mortgage? much is your current monthly mortgage payment? How long a mortgage term will you want? How old are you ?
Carly says
Hi Sara
Most of my debts have been defaulted and I have been paying small amounts to debt collection agencies for all, bar 2 (I have an informal arrangement with those) for nearly 2 years. Is it likely that the debt collection agencies will accept a full and final settlement? I was aiming to offer 50% to each? Thanks in advance
Sara (Debt Camel) says
how long ago were the defaults?
where is the money for this settlement offer coming from?