Debt Camel

Answers to questions about debts and credit ratings - in plain English!

Will partial settlement make it hard to get a mortgage?

Ms F asked:  “I have been in debt management for five years after my marriage breakdown. After an inheritance, I want to pay off my DMP as it will carry on for years. I could pay in full but my house needs some urgent work and my car is on its last legs.

I asked about my credit score if I offer a partial settlement and was told this would show as partially settled on credit score file. Will I still be classed as a risk for years to come? For my credit rating would it be best to pay in full? I want to move house in a couple of years and an wondering if a partial settlement will stop me.”

partial-settlement-dmpIt sounds like a simple question, but the answer isn’t straightforward as debts in a Debt Management Plan (DMP) can be marked in different ways on your credit records:

  • a debt which has been defaulted will drop off your credit file six years after the default date. This is going to happen whether it is paid in full or settled partially;
  • a debt that is marked as AP (arrangement to pay) or DM (debt management) will stay for six years from the date it is are settled.

So you need to check your credit records and see how each debt has been marked.

What should have happened for this case?

Debts should be marked as defaulted when you are between three and six months in arrears. If, like Ms F, your DMP has quite a way to go, I’m guessing that your monthly payments are quite low. So your debts should probably have been defaulted in the first year of your DMP.

In that case, if you settle the debts partially now, all trace of them will be gone in a couple of years when you move house. A mortgage lender will never know you had a DMP at all. (There is one exception here. A mortgage lender can see their own internal records which may go more than six years. If you are worried about this, make sure you apply for a mortgage to a bank you didn’t owe any money to!)

If your credit record has debts with a much later default date, you can ask for this to be corrected. This also applies if the debts aren’t marked at all as defaulted at all – then you can ask for a default to be added which will mean your credit record becomes “clean” sooner. See What should the default date for a debt be? for more details, including template letters for you to use to get this corrected.

What if your DMP was more recent?

If your debt management only started two years ago, the decision would be harder. Then defaults will still be showing in a couple of years time when you may want to move house – and so will the fact that you made a partial settlement.

Some banks will not consider you if you have any defaults, especially for their best deals. Others will consider you with some defaults, for example if the defaults are over three years old and have also been settled for more than a year before you apply. This is definitely a situation in which it’s a good idea to talk to mortgage broker about who to apply to as they should know who will and won’t consider you.

There isn’t a “right” answer here as it will depend on your particular situation:

  • if you can’t repay your debts in full, I would say it’s generally better to go for partial settlements now, rather than to prolong the DMP until the debts can be repaid in full;
  • your creditors may not accept a low full and final settlement offer after only a couple of years. You may decide that there isn’t any point in getting a partial settlement marker on your file if it’s not going to save you much money;
  • if you are not short of money so you could repay the debts now, be able to afford the deposit for your next house and you want to move soon, then full payment is the sensible option.
More Debt Camel articles:
Does credit improve when a DMP ends?

Does credit improve when a DMP ends?

A guide to partial settlement offers

A guide to partial settlement offers

35-40 year mortgages - be careful!

35-40 year mortgages – be careful!

Comments

  1. I have been under a DMP for the last 4 years and currently owe about 11,000 pounds to different creditors. I have just received some inheritance and I would like to pay off everything that I owe. What is the best way to pay off my entire debt? Should I call my creditors individually myself or go through my debt management agency – Stepchange to make the payment?

    I just want the fail proof way of settling the debt without any further complications and improve my credit score.

    Reply

    • I suggest you tell StepChange that you have the money to make a full settlement and ask if they can get final settlement amounts for each creditor. This is the simplest approach as if you contact your creditors yourself and pay them, there may be a StepChange payment going through at the same time so the balance the creditor told you to pay wasn’t correct.

      Reply

  3. Hi

    Helpful article thank you, but I do have a slight variantvin circumstances.

    I’m on a DMP and have been for awhile, with a long way to go. All the accounts defaulted, which have dropped off now as 6 years have past. However, two of them are still marking my credit report as ‘DM’ and I can’t be 100% sure these were defaulted ones. I think they were. If they were defaulted (but expired)and I was able to offer F&F settlement, would I have a further 6 years to wait for all trace of the DMP to clear or, would they disappear as a result of the default expiring? If they didn’t default then I’m guessing there is another 6 years ahead of me?

    Reply

    • Something that is marked as DM has not been defaulted. You need to ask for a default date to be added, see https://debtcamel.co.uk/dmp-credit-rating/. If this isn’t done they will stay there until 6 years after the date they are settled, fully or partially.

      If your DMP is going on forever, you need to work out how to settle all the debts, not just the ones that still appear on your credit file, see https://debtcamel.co.uk/debt-not-on-my-credit-file/.

      Reply

      • Hi I’ve just checked my credit report and found my limited company phone bill has been defaulted. I called EE to settle and was informed that due to my company being dissolved I can’t make payment. So do I have any grounds to have it removed from my personal credit file?

        Thanks for your help

        Reply

  4. i have a few dmp arrangements. they are a number of years old and most appear to have dropped of my credit file although I am still paying them. If I was to fully or partially pay these off would they appear back on my credit file at all or would they now be gone completely

    Reply

    • Can i double check this as i have had contrary advice from payplan…

      I now have a clean credit record after 6 years. I’m still paying payplan a monthly fee which they distribute between my creditors. Two of those creditors have a charging order on my property and i need to pay these off before i can complete my remortgage. I was hoping to partially settle those but will that affect my new remortgage offer? If i partially settle will my credit report have entries added saying partially settled given that the original debt entries have dropped off? If i settled in full, would it day satisfied or settled or nothing at all?

      Thanks

      Reply

      • There are several bits to this issue, so there may not be a simple answer.

        1) if you partially settle any debt which has dropped off your credit records because it defaulted more than 6 years ago it will NOT reappear and spoil your clean credit record.

        2) if you have a charging order on your property, this often means that you have a CCJ. If the original debt has dropped off, the CCJ may still be showing. there is no way to make a CCJ as partially settled. Even if you were to settle it fully, it will be marked as settled but will stay on your credit record for 6 years from the judgment date.

        3) having a DMP in progress will usually make it impossible to remortgage at a good rate. the mortgage lender will be able to see your DMP from your bank statements, even if your credit record looks clean.

        So settling the debts with a charging order with a partial settlement may well be a very good idea – but it doesn’t necessarily mean that you will be able to get a remortgage.

        Reply

      • Thanks so much for the speedy response. This website is amazingly useful!

        Regarding point 2, there’s no ccj showing on my credit file. The charging order was put on in 2007 which only shows on the title deeds of my property. A high street lender has already done its checks and made me a mortgage offer, which is now with their solicitors. I didn’t realise there was a charging order to clear until the solicitors contacted me. So in this instance if i partially or fully settle would it appear as a statement on my credit report if there’s no corresponding ccj currently appearing?

        I will have to settle one way or the other in order to proceed with the remortgage, i just don’t know how this affects my credit record if there are currently no outstanding debts on there ( which is why I’ve been offered the mortgage in the first place)

        Thanks so much for your kind help!

        Reply

        • There can only be a charging order if either it was a secured loan from the start OR there was a CCJ and the creditor then got a charging order OR you agreed to a charging order being added.

          As you don’t seem to know much about it, my guess is that there was a CCJ and then a charging order. I don’t like guessing in these situations bit if there was a CCJ in 2007, then this would have dropped off by now.

          Assuming there was a CCJ, then if you settle this debt partially neither the debt itself or the CCJ will reappear on your credit record. You need to make it clear when you are offering the money that this is in final settlement of the debts and you want the charging order deleted from the Land Registry.

          Reply

        • Thank you for clarifying – that’s really helpful! You’re right i believe there were ccjs back in 2007 that have now dropped off my credit file.

          One last question that I’ve only just realised..
          What i have on my title deeds is two interim charging orders and not final charging orders. Is it true that for interim charging orders the conveyancer just needs to inform the creditors who made the interim orders that the property is being remortgaged (to move to a repayment mortgage and not releasing any equity)?

          The conveyancer was appointed by the lender and says that the interim orders need to be cleared before the mortgage can complete, I’ve seen several forum posts suggesting that this didn’t have to be the case for restrictions or interim charging orders though most conveyancers will always push to settle the interim orders.

          Can you shed any light on this at all?

          Thank you kindly :)

          Reply

          • If you are settling this debt, you want the interim charging orders removed – whether it’s essential for a remortgage or not. The Land Registry Customer Support helpline is often useful 0300 0060411.

  5. I really want to thank you for this website.So informative. In the last few days I have been trying to sort out my debts. In total it’s not up to £2000 but my credit score is bad.
    My question is this, From all that I have read, are you saying that If i settle a debt that was not on the defaulted column of my credit report it will still appear in my record from the date of settlement.

    I paid off a debt which was not under my defaulted column of my credit file. When I longed in today. I noticed the debt has now been moved to defaulted column of the report. What does this mean?

    Reply

  6. Hello,

    I have a defaulted payment from 2014 for approximately £1400. I didn’t even know I had it until recently so I set up an agreement to pay £50 a month, I’ve paid £100 up to date. I have however offered to pay £700 as a full settlement offer.

    My credit score is 680 (poor) but this is the only default on my score, everything else is green. Once I’ve settled this will it affect my score at all? Or will it literally stay at poor until 6 years have passed please?

    Reply

    • Once it is showing as satisied, your score will start to improve. It won’t be great until the default drops off, but it will be going up. If you want a mortgage, it may be possible to get a mortgage at a reasonable rate of interest once the default is over 3 years old AND once it has been settled for more than a year. But make sure you go to a broker, some high street lenders may reject until the 6 years is up.

      Reply

  7. Hi there,

    Thanks for this great site – really helpful. I have an ongoing payment plan on an old Barclaycard debt and have recently had a PPI claim on this upheld. The compensation payment is greater than the current debt, but I do have other old debts and I want to make full and final offers on the Barclaycard one and use the rest to make a substantial payment to a Capital One arrangement. I wonder if you can advise me that this is a good idea? The sum owed to Barclaycard is £5451 and they have said they will accept £3552; the PPI payment is for £6127, leaving me £2575 to offer as a one off payment reduce my Capital One debt of £6621. I’ve been informed that the lowest Capital One would go on a Full & Final Settlement would be 70%, so £4634, but I could give them half of that – £2317, but would be interested to know if that would be worthwhile. I’m currently paying £69 per month to the Barclaycard debt and £129 to the Cap One debt and would be keen to reduce this if I cannot pay it off.

    Reply

    • Are you hoping that Capital One will reduce your debt by more than the £2575 you want to offer? I’m not sure if they will do that. Also it’s a good idea to cary on making your current repayments if you can so the debt is repaid sooner.

      Reply

      • I was hoping that if they accept the £2575 then I can reduce the monthly payments by quite a bit. With those greatly reduced and the Barclaycard out of the way, this would make a huge difference to my monthly outgoings and maybe even mean I could eventually get the Capital One debt out of they way as well. I want to retire in a 3-4 years with no monthly payments left to deal with, have also looked at an equity release plan for the house to coincide with this time and really just want to start planning a debt free retirement!

        Reply

        • Not sure I follow this – it doesn’t make sense to say you want to reduce your payments to Capital One so your monthly outgoings drop so you can eventually get the Capital One debt out of the way!

          Reply

  8. We’ve been in DMP with payplan for 10 years and are now looking to make f&f offers. Payplan have done it for us and we insisted on 30%
    All debts are defaulted and all but one has dropped off our credit files.
    Payplan have come back saying all those that have replied have counter offered. Some are 70%. Most are 80-90%
    Shall we go back with 40%? Seems harsh considering how long we’ve been paying and how long we will continue to pay if they don’t accept!

    Reply

  9. I have £17,000 worth of debt that I am paying to different creditors in small sums of £10 each per month as I only work part time. I also have a CCJ of £4776 that has a charging order on my home. Most of the defaults are in 2012 so are due to drop off my credit file next year I think. I am trying to re- mortgage my home to release some equity to pay this debt off but my credit score is terrible due to the defaults and I have been rejected. I have two questions that I hope you can help me with?
    When the debt drops off my credit file, will I be able to apply for a better mortgage deal?
    Should I apply for a bad credit loan to pay F&F payments to the creditors? will this better my credit score to be able to re-mortgage and pay the bad credit loan back?

    Reply

    • The debts dropping off your credit record won’t help – a mortgage lender doesn’t care about your credit score, they care about your underlying finances. A bad credit score is usually a sign of bad finances – but your finances are still going to be bad when the defaults have gone from your credit record. And the mortgage lender will be able to see this from your bank statements. With a low income and unpaid problem debt, you are not going to be able to remortgage.

      Getting a bad credit loan isn’t going to help at all – it is going to add another regular expense (repaying the loan). Repaying the defaulted debts is not going to boost your credit score either, see https://debtcamel.co.uk/defaulted-account-credit-score/.

      A better way forward for you is to look at increasing your income (could you work longer hours? get a lodger? See https://debtcamel.co.uk/improve/increase-your-income/ for other ideas). If you can save up the extra income you can then use this to make full and final offers on some of your debts. A more radical option is to consider selling the house, see https://debtcamel.co.uk/hard-choices/sell-house/. Sorry, there are no easy options in this sort of situation.

      What sort of debts do you have? How old are they, not when did you default, but when did you take the loan / open the credit card/catalogue account?

      Reply

  10. Hi I am getting really confused about settlements affecting your credit and wondered if you could help please?
    I have approx 6 debts that I intend to make partial settlement offers for. I defaulted on all of these debts in 2010. 4 of the debts have dropped off my credit file completely due to them being over 6 yrs old, but still exist so I want to get rid if I can.
    Despite being in communication with all of the creditors, 2 of the debts (both HSBC debts that were sold on to an unscrupulous debt collection agency) rather underhandedly obtained a CCJ at my old address In June 2014 (as i would not have been able to defend myself having received no paperwork after leaving that house some 6 yrs before!). I only found this out 2 yrs later as I never needed to apply for credit
    I want to apply for a mortgage later this year. I have spoken to a broker who said she had numerous lenders that will work with me as the ccjs are over 3yrs old.
    My question us this….. if I were to partially settle the ccjs so that I no longer have to worry about them, (assuming they agree to settle), will my ccjs stay on for just the remaining 2.5 years of the 6yrs since they went on the register or does partially settling them start the 6 yr process all over again??
    Thank you for your help!

    Reply

    • CCJs stay for 6 years from start date whatever you do, pay in full, settle partially or ignore.

      Reply

  11. Hi – I have 6 defaults which will all be off my file by Feb 2018, they have all been partially satisfied. I have one other default (for 18 pounds) that I never knew about. It was satisfied over 3 years ago and comes off my file in Feb 2019. When the partially satisfied files drop off my account will this affect my credit rating? All of my accounts are up to date and I have a 30% deposit for my next mortgage. Do you think I will get a mortgage?

    Reply

    • the defaults dropping off your credit record will make some improvement, how much depends on the rest of your record. With a CCJ still there, it is never going to get to good. You will find it hard to get a mortgage before this has gone unless you have a very large deposit.

      Reply

  12. Hi Sara

    Do you have any recommendations of Lawyers who can assist to get a CCJ set aside due to me having no opportunity to defend it with the claim being submitted at an old address, despite me being able to evidence they had been communicating with me for 2 years at my current address? I am struggling to find any that don’t charge a small fortune!
    Thanks in advance

    Reply

    • Talk to National Debtline or go to your local Citizens Advice – you don’t need a lawyer to apply for a set aside.

      BUT what grounds do you have to defend the Claim? Once it is set aside, it is usually immediately relisted as anew Claim – unless you are going to win this case it is better to keep the older CCJ as it will go from your credit record sooner…

      Reply

      • My case is quite complex. There are 2 CCJs from June 2014. The debt was incurred Dec 2009 – default notices April 2010.
        The bank haven’t followed the correct processes regarding chasing these debts as they have messed up with account numbers and balances allegedly owed on all their correspondence chasing the debt – therefore I hope to be able to argue that they have made themselves statute barred?
        There were originally 4 accounts with the bank – a credit card, a loan & 2 personal bank accounts (one £32 over drawn & another £260 owing). 1 of the CCJs I have for £8500 had been allocated to a bank account that the debt was NOT the loan account it owed on.
        It should have been allocated to the loan account, but I have had no correspondence about this loan account individually at all.
        The bank are suggesting that they later combined all 3 accounts in to one (loan & 2 personal accounts), but this has never been communicated to me and again isn’t reflected in their correspondence from their own internal debt collection departments/solicitors (& later 3rd party debt collection companies) as these letters specifically highlight the bank account numbers that had minimal amounts owing on them (£300 total) not the loan account number.
        It’s a long shot but I am hopeful that a lawyer could get the CCJs overturned and at the very least negotiate a minimal settlement of the debt that is actually owed?

        Reply

        • You won’t be able to argue the loans are now statute barred. Starting court action in 2014 will have “stopped the clock”, so although it is now more than 6 years since your last payment, the case will be reheard as if it was 2014. Whether the issues with making a combined claim for multiple accounts are serious enough for you to win a case, I don’t know. You could discuss your case in detail on the Legal Beagles forum, I am not a lawyer and can’t give advice on this.

          Reply

  13. my wife has a defaulted account and the account is paid off. the default date is 02/05/2017, it was paid off 26/09/2017. What process should i follow to clear the account. i want to buy a house

    Reply

    • Can you argue that the default was unfair? See https://debtcamel.co.uk/get-rid-of-a-default/. This is unusual but it’s worth checking.

      But in most cases there is nothing you can do about a default :( This means that you won’t be able to get a joint mortgage with your wife for several years – probably mid 2020 by which time the default is over 3 years old and has been paid off for more than a year.

      Reply

  14. Hi Sara

    My husband and i are saving and are hoping to go for a mortgage in Oct 2019, however i have a default on my Sainsburys credit card, default date being August 2013 which after 6 years will come off in 2019. Theres a balance off £2500 outstanding, i was thinking of paying a partial payment and clearing it but i have been told to ignore it as its due to come off my file next year and as its over 5 years old lenders wont be so worried about it.
    Can i Please get some advice. Shall i make a partial payment? or just wait till it comes off my file?

    Reply

  15. We recently found out that my partner had 2 CCJs placed on him in August 2017. He hasn’t heard from anyone in 4 years (possibly sent letters to an old address) . He has been offered a 50% partial settlement from the solicitors two weeks after making an arrangement to repay monthly.

    £4391.15 – Solicitors have offered 50% reduction to £2195.58 – This went into default on 09/11/2011 (so dropped off as over 6 years – just)
    £4892.28 – Solicitors have offered 50% reduction to £2446.14 – This went into default on 17/11/2011 ( due to drop off in 2 days as over 6 year)

    The letter says; “Upon receipt of the agreed partial settlement our client will update your credit file at the CRA. Your credit file will show that the account has been partially settled. This record will remain on your credit file for 6 years from the date of default”

    If we are reading this correctly – the defaults will both have dropped off in 2 days time so this won’t apply.

    Do you recommend we Partially Settle if the CCJ will remain there regardless will the credit file be any worse off for partially settling compared to fully settling? Assume they stay for 6 years

    The letter doesn’t state “full and final settlement” but does say: “”our client will not look for payment of the remaining balance owed and close your account.” Any advice appreciated. We only have a short time to pay this if we decide to partially settle to move on.

    Reply

    • Partial settlement on a CCJ – the CCJ will continue to show as not being settled – there is no way to mark a CCJ as partially settled.

      You will find it VERY hard to get a mortgage with CCJs on your credit record, even if these are repaid in full. Settling them partially would make this a bit worse, but even settling them in full is so bad you need to consider if there are alternatives.

      As you definitely want a mortgage I think you should talk to National Debtline on 0808 808 4000 about your options – one possible way forward is to apply for a set aside to get the CCJs removed and then to repay the debts in full to prevent new CCJs being applied for. Your credit record will then be clean – the defaults will have dropped off, no CCJs – but you will obviously have a lot less money for a deposit.

      Reply

  16. Hi, I have 3 debts that show on my Experian credit record as defaulting in February 2012, so I guess the DMP ends in February 2018? If I partially settle now (one lender has said they would settle a 12.5k debt which I’m still paying 70 pounds a month on for 8k which I think is reasonable), how will this affect my credit rating? many thanks for all your help.

    Reply

  17. My debt to a bank for 10,000 was being paid £100 per month for the last 4 years, this was due to 2 defaults on cc’s when my partner left me and I lost my job. Suddenly this debt has transferred to Westcot. I really need to Move due to work and my parents have offered an amount that might be accepted as a partial settlement. How will this be marked now someone else has taken over the debt? I’m worrying sick as I’ll have to sell the house to move yet won’t be able to buy. Please can you help!!

    Reply

    • Your debt has been passed to Westcot for them to collect on behalf of your bank there will be no difference to your credit record at all.

      BUT this debt is going to be a big problem for you getting a new mortgage even a partial settlement is accepted because there will still be a default on your credit record and it will only have been settled recently… most mortgage lenders will not give you a mortgage at a good rate until the debt has been settled for every year so I suggest that you settle the debt as soon as possible.

      Is your current mortgage portable? If it is, that may work. If that isn’t possible Or you may not be able to sell and get a new mortgage. Could you look at renting your current house out and renting yourself? Or whether it might be possible for your parents to act as guarantor on a new mortgage?

      Reply

  18. I owe £3600 on a credit card and am able to pay this off in full or maybe early settlement but am looking for a mortgage in the next 12 months not sure of best way forward, never missed a payment on my card. If I pay all off will this effect my chances of getting a mortgage thanks

    Reply

    • If you have never missed a payment, the card company is VERY unlikely to accept a partial settlement. Is this your only credit card?

      Reply

    • The best thing you can do for getting a mortgage is to repay it in full but don’t close it. Instead use the card once a month for something small such as a tank of petrol, and set up the card to repay the full balance automatically every month. This demonstrates that you have credit available but you don’t need it and you are using it responsibly – that’s what a mortgage lender likes to see. Good luck!

      Reply

  20. Hello,
    My question relates to the a debt which has been sold. The company to which it was sold have been trying to get me to agree to a partial settlement. If I do, and if I am able to convince them to remove the account from my credit reports, would there be much point to this. The original lender’s entry is still on the reports as “satisfied”, with a zero balance. Will this entry not still remain on the credit reports? It will not look as though I paid it off because the words “Debt Assigned to CAIS Member” are a dead giveaway. Anyone looking at the report will know it was sold but will not be able to determine whether or not I settled my debt. This seems like a negative effect to me.

    Reply

    • There is no reason why the debt collector should delete this loan. The damage anyway will come from the default on the original creditor record.

      Reply

  21. Hello,

    this site has been a beacon of knowledge for me for a number of years and i’ve now decided to comment!

    Long and short of the story is I have multiple debtors to a total of around 15k.

    £10k of the debt is split between 3 credit cards then the rest are loans etc.

    Most of these have been defaulted or in default for around 3-4 years now. I have always wanted to get round to sorting everything but the problem has been where to start to keep them all satisfied.

    I was going to put an amount a month aside, break all of them down into a percentage of this and aim to pay them all back in full. Now after taking some advice i have been advised to some effect that the damage is already done with the defaults and I am just as well off trying to obtain f&f settlements on the accounts to get them to drop off my credit rating as satisfied.

    Would you agree?
    I do not have any lump sums to pay the larger onesinstantly, but from wages I could begin to settle the smaller ones each month whilst paying a token to the rest and snowball them from the smallest up with the extra money that is aside.

    Does this sound a realistic plan of action?

    Reply

  22. I have a long term outstanding debt totalling £1,837 from a closed overdraft account. The account was passed to a debt collector by HSBC. The Default date is June 2013 so I’m well on my way to the 6 year drop off but I am looking to buy a home sooner than that and want to know whether settling the outstanding balance in full will make any difference to potential mortgage providers. i.e. if the full balance is paid and my credit report is marked as “settled/cleared” will it still impact me negatively? If this is the case, should I just leave it to drop off and make better use of the £1,837 by adding it to my deposit?

    Also, is it worth paying the full amount? If paying less in a “full and final” settlement will leave my credit file in near enough the same state from a lending perspective as paying the total amount I’d be best saving my money right?

    Reply

    • “I’m well on my way to the 6 year drop off” not really, most CCJs occur in the last year.

      “if the full balance is paid and my credit report is marked as “settled/cleared” will it still impact me negatively?” yes

      “should I just leave it to drop off” you have no chance of getting a mortgage with an unsatisfied default on your record. And if you get a CCJ that will wreck your credit record for another 6 years

      “is it worth paying the full amount?” that is the issue the article above looks at.

      Reply

  23. is it better then to get a debt defaulted than in an arrangement? Provident outstanding debt £3652 (this is over 2 loans) have been paying £10 a month for about 4 years yet they havent defaulted it just put as arrangement – will this stay on my file longer? I believe the default should have been Jan 2014. I have got an affordability complaint in against them with the FOS

    Thank you

    Reply

    • A default looks worse on your credit score for 6 years than an arrangement to pay, but then the defaulted debt disappears. An arrangement to pay harms your credit score for 6 years after the debt is settled, which will be a LOT lo9nger in your case.

      BUT at the moment I suggest you don’t worry about this until your affordability complaint is resolved, as if you win that all the arrangement markers will be deleted from your credit record.

      Reply

      • great thank you – provident rejected complaint so will wait for outcome from FOS. The remaining debt is all interest so hopefully it may be sorted through the complaint

        Reply

  24. Hi Sara,

    Firstly, thank you for providing such fantastic assistance to people on this site, I wish I had stumbled across it years ago!

    I am in the process of getting on top of my debt & improving my credit score after burying my head in the sand. It’s not huge in comparison to some others, but owe around £3500 in total, with a very Poor credit score of 180 on Experian & 238 on Clearscore.

    I am hoping to clear £1800 with Full & Final settlements when I receive £1000 inheritance in the next few weeks, however the remaining £1700 is from an account which defaulted back on the 2nd August 2012. My question is, is there any benefit to me paying off this £1700, or will it drop off my report on the 2/3rd of August 2018 due to passing 6 years?

    Thanks in advance

    Mark

    Reply

    • The £1700 debt – have you heard recently from the creditor? When did you last make a payment to this debt?

      Reply

  26. Hi
    I have been on a dmp for the past 8 years. All account off these debts are no longer showing on my credit score.
    Would you advise against calling my creditors to negotiate a reduced full and final payment. As I am now able to do so .

    Reply

  27. Hi. I had 2 defaults in 2013 but the bank sold them to another company. This company have marked my credit score with another D and every time I pay its marked as a D. We wish to change our mortgage but this means that even though it will be off in a years time the mortgage company will know it’s a debt management company and they will see the D’s marking monthly payments. We paid in full two months ago but it’s still on there. Am I within my rights to ask for it to be removed now it’s paid in full? Not the original default just these extra marks due to it being passed on. (I’ve never missed a payment since arranging to pay directly with the bank – it was credit cards when I lost my job) thanks

    Reply

    • No you can’t ask for the default to be deleted, these extra Ds are always added, it is an accurate record of the problems on the account. When it drops off you won’t have a problem with a new mortgage lender. Whilst it is there you will have problems for the next year – after that many mortgage lenders won’t mind as the default is old and will have been settled more than a year ago.

      You may be able to remortgage now with your current lender – they often dont check credit records if you just want a new fix.

      Reply

  28. So the D’s will be there 6 years from my final payment not just 6 years from the date of default? My Barclaycard account did not mark like this, just the Natwest one that was sold on. . We would ideally like to buy a new house not remortgage as we need to move location.

    Reply

    • The Ds stop when the account is settled. And the account – with all the Ds disappears 6 years after the first default date, so next year.

      Reply

      • Thank you so much for your reply. I was so worried as I thought that this new company that’s took on the debt has to stay on my account for 6 years as they’ve only just appeared on my credit report in the last 6 months. Are there any specialist mortgage advisers that might consider is now?? I’ve no other adverse credit history. Many thanks

        Reply

  29. Hey there, thanks so much for all the excellent info on this site! It helped me when I was working through everything and continues to help me now. I had a number of debts on a DMP and I’m now completely debt free. I’m keeping a close eye on my credit reports and I have about 18 months before all of three of my default accounts will drop off.

    However, I partially settled a debt in Feb 2016. In hindsight that was likely a poor decision because that debt had never defaulted. Is it worth me writing to them to try and apply a default in retrospect so that I end up with a completely clean report in 18 months? I was marked in early arrears for 3 months in 2012, then marked in arrears for 1 month in May 2013 before being marked arrangement to pay from there onwards.

    I’d really appreciate your advice with this.

    Thanks in advance!

    Reply

    • Well you can try. But you may well be able get a mortgage in 18 months time with an arrangement to pay that has been settled at that point for 3-4 years. So if getting default added doesn’t work, you may still be OK.

      Reply

  30. Hi Sara,

    Must a partial settlement be recorded with a ‘nil’ balance on your credit file or can they (creditors) record it with an outstanding balance? If so how does this affect things?

    Thank you

    Reply

    • The debt should show a zero balance outstanding. because that is what you still owe!

      NB this doesn’t apply to CCJs where it is not possible to record a partial settlement.

      Reply

      • It’s for a defaulted account, so should fall away after default then. My concern was they could put ‘partially satisfied ‘ with an outstanding balance and then when I go for a mortgage I ‘technically’ have outstanding debts. But if they MUST zero the balance to partially settle it that is a relief! Thank you for helping!

        Reply

  31. I have not got any defaults on my credit card accounts but have made partial settlement agreements with a few. What I would like to know is if the “partial settlement” marked on my credit file will still affect getting a mortgage even though there is no DMP or defaults at all, just late payment markers and the partial settlements. Also does it make a difference if you have a few partial settlements or just one? Does that affect it? I also have some settled in full. Thanks.

    Reply

    • How long ago were these settlements? And how long ago were the start of your problems with these accounts?

      Reply

  32. Hi Sara

    Very helpful site, I was wondering if you can assist me as well.
    I have 12 defaults on my file. All of them are from over 5 years; 8 of them have been fully or partially settled and the other 4, I pay the company monthly.
    I’m thinking of getting a mortgage now, do you think any lender would lend to me? Would a higher deposit help; paying 15% rather than 10%?
    Also! If I partially settle all other debts , would that be looked as positive when I apply for mortgage and help the application ?
    Will really appreciate your advice
    Thank you

    Reply

    • “do you think any lender would lend to me? Would a higher deposit help; paying 15% rather than 10%?” No, except at a dreadful interest rate.
      You need to settle or partially debts you have defaulted on. It would be better to use some of your deposit money to do this. Then wait until all the defaulted debts have gone from your credit record – which should be quite soon it sounds like!

      Reply

  33. Hi,

    I have one negative account from payday uk/instant cash loans on my credit file dating back to late 2012. On my file it’s marked as DM, for a few months back then I did sign up to a DMP however the company I used were taking too much and I thought it better to go alone, I managed to pay off all my loans except this one as they constantly refused to enter a payment plan with me. My question is will this drop off my credit file even with the non active DM still attached? I want to go for a mortgage next year and am worried this will really harm my chances.

    I look forward to your reply.

    Many thanks.

    Reply

    • If there is no default, the debt will drop off 6 years after the date the debt was settled.

      Have you looked at whether you could get a payday loan refund? If you win an affordability complaint for this loan, then you will get a refund but more importantly all negative marks will be removed from your credit record. See https://debtcamel.co.uk/payday-loan-refunds/

      Reply

      • Hi,

        Thanks for replying. I don’t think there is a default as the history on my report just says DM. However if I settle the debt now then I assume I will have to wait another 6 years for it to fall off my credit file.

        I have emailed several payday lenders with the help of this site already, some have replied tho I am still awaiting a response
        from payday uk. I have a reply from SSL capital, I am unsure of who they represent tho.

        Again thanks for your help.

        Reply

  34. Hi, would really appreciate some advice please. My husband and I have ended up with a significant amount of debt which is showing as defaults on our credit file. (£30k in total over 6 credit cards/loans. All off which have been on payment plans with the individual companies) We have sold our house in order to pay the debts off & start afresh debt free. Initially we thought about renting a property but sadly we are struggling to find anything suitable. Will it be possible for us to get a mortgage once we have completed our house sale & paid the defaults? And should I offer reduced settlements to try & and keep some of our house sale money to one side and use as a deposit? Or will making reduced settlements affect us negatively? We have never missed a morgage payment in 17 years or council tax, utility bills etc; just the cards & loans. Thanks in advance.

    Reply

    • Partial settlements – it’s a hard call. It may depend how large a discount you can get – if the defaults are recent and the debts haven’t been sold to a debt collector it may only be small.

      But it may not be easy to get a mortgage immediately even if you settle the debts in full as most high street lenders prefer defaults to have been settled for over a year.

      Reply

  35. I am in the last year of a dmp 12 months to go and all my defaults no longer show in my cc file as of this month

    With 12 months left and nothing on my credit file should I offer F&F as it won’t effect my credit score now they no longer show OR could they re-appear

    Reply

    • Yes, the debts will not reappear if you settle them with a F&F.

      But be realistic, if there is only 12 months to go, most creditors won’t offer you much of a discount!

      Reply

  37. Hi there. I have a debt…I’ve only recently (last year or so) had correspondence from a debt collector, asking for 8k to be paid to clear a debt. I agreed to pay, so long as they could prove they owned the debt and everything was above board… I received no replies to this request (which I thought was dodgy, so I didn’t chase it)
    fast forward a year and today I received a letter offering me a partial settlement of 10% (£800) to clear the debt and be marked up as a partial settlement.
    Im just wondering if i should pay this. The default date was 26/04/2013. I’m just wondering what happens after 26th April this year. Will the record of this disappear from my file or will it stay on there because I haven’t made a settlement, either in full or as a partial settlement. If I did make a partial settlement for the 10% would the partial settlement only show until 26/04/2019,then all traces disappear, or if i accept it, will it stay on my account as partially settled for a further 6 years?
    I’m not trying to worm my way out of paying anything, Just with it being so close to the end of the 6 years from the default date, I don’t know whether partial settlement would be a detriment to my credit score for a longer period or not. Also, is this the debt collectors last ditch attempt at getting some money before its potentially “stricken” off?
    And, could they file for court proceedings before 26th April if I don’t pay anything?
    Thanks in advance!

    Reply

    • I assume that you do remember the debt. You may not be sure exactly how much is owed but you don’t think this is a case of mistaken identity, because if it is you should follow a different route.

      What sort of debt was it originally – credit card, loan, overdraft or something different?
      When you say you agreed to pay provided they could prove they owned the debt, did you specifically ask them to produce the Consumer Credit Act agreement for the debt?

      Reply

  38. Hi,
    I have been in a DMP for past 10 plus years so all default notices have come off my credit record and it is now looking good. We have come into some money and wish to clear the DMP, they have offered us 2 options – full payment or they will negotiate for reduced rate but have warned this may show as a partial flag.
    My concern is we are hoping to move house this year and I dont want this to affect our credit rating when we remortgage.
    Any advice is greatly received.
    Many Thanks

    Reply

        • ok, that is very misleading advice from them.

          If a debt is still showing on your credit record, it will be marked with a partial settlement flag.
          But any debts that have dropped off – and all yours have – will not reappear whatever you do.

          But before you try to settle these old debts, read this: https://debtcamel.co.uk/settlements-old-debts-cca/. If you have loans, credit cards and catalogues (not overdraft, or odd debts such as mobile debt) that are more than 10 years old, there is a very good chance they cannot produce the CCA agreement. Then you could settle them by offering an extremely low amount – or indeed just stop paying them.

          You might also make the offers to the rest that can produce the CCA agreement yourself, rather than going through GP.

          Reply

  39. I have asked myjar to add a default date from back im 2012 when I had originally defaulted. There is no marker on the account. They said they can’t do that. Is there anything I can do?

    Reply

  40. My husband & I have been on a DMP with Stepchange since Jan 2008. With 20 creditors we have paid over £80k including lots of interest as this wasn’t stopped on some of the debts. In hindsight, we should have probably gone Bankrupt as had no assets.
    We now have 3 debts left with a total of approx £25k. One of these is with Idem for £19k outstanding (already paid over 9k since being on the DMP) which was an old Lloyd’s loan of £25k.
    I have recently sent CCA letters to these last 3 creditors and they have until the end of the month before their 12 days are up.
    My husband has recently cashed in an ex SERPS pension he didn’t realise he had so we now have £40k to enable us to finally try and offer f&f settlrments to pay off the debts.
    Most of our debts were defaulted so have fallen off our credit files, and after using credit builder cards and paying off each month, we have very good credit scores now.
    I have 3 debts on my credit report that are settled in full in historic, but show as Arrangements to Pay. Two of these will fall off at the end of this year, but my Barclaycard one was only settled last year and it shows AR markers up to 2015, so these will still show for another few years at least.
    Is there any chance Barclaycard or the other 2 will apply earlier defaults so these fall off?
    What are the chances of being approved for a mortgage if we manage to have a decent amount left over for a deposit after settling the debts?
    Many thanks.

    Reply

    • Those sound like very old debts so the chances are at least one of the three will not be able to produce the CCA agreement. possibly all of them! there is little point in making concrete plans until you know the answer to this and this will take more than the 12 days thr=eoretically allowed. You will need to wait until the end of March before you can start to feel confident the debt purchasers can’t produce the CCA agreement.

      In the meanwhile, you should definitely ask all three of the original creditors that did not default you to add default dates, including Barclaycard. See https://debtcamel.co.uk/debt-default-date/.

      Once the debts are paid off, you will need to wait a few months so that the bank statements you supply to a mortgage lender don’t show recent payments to StepChange.

      Reply

      • Thank you for your quick reply. Should I still make my monthly payment to Stepchange for these debts whilst I am waiting for them to send the CCA agreement?

        Reply

        • Hi Sara,
          With regards to my post in February, I managed to get Barclaycard and the 2 other creditors who didn’t default me, to remove the AP accounts, so my credit file is now clean.
          I have not received the CCA agreements I requested from the 3 creditors that I still have outstanding balances.
          Idem has written to the original creditor to see if they have it; Capquest have just supplied a copy of a default letter with an address we have never lived at, with a few old statements, but requesting we set up a payment plan, and Link Financial have not even responded to the CCA request.
          If we make no further payments to these debts, can the DCA’s harm our credit files by doing Table 1 “outstanding debt” searches? Are these searches seen by lenders? I’ve read conflicting reviews regarding this.
          Many thanks.

          Reply

          • Good news about clearing up your credit record & good news about no CCAs! It has now been a couple of months, so you can reasonably tell StepChange you want to stop paying those three debts until a CCA is produced.

            The debt collectors can only do 2admin” searches on your credit records which are not seen by other lenders.

  41. Hello, please can you help?
    My daughters boyfriend has a previous mortgage shortfall for £55k from about 10 years ago. He acknowledged the debt as he’s been trying to settle it within the first 6 years of them chasing.

    He wants to settle it but cannot fully settle the full £55k. If they accept a full and final settlement of a lower amount, will this stop him getting a mortgage?
    With a partial settlement will it drop off after 6 years and allow him to get a mortgage? The shortfall debt is mostly mortgage debt and not fees. His credit report currently shows the mortgage as settled and 0. If he gets a mortgage and buys a house, is it likely they’ll take him to court to sell their house? My daughter has £70k equity to invest in the property to allow them to buy a house together – could they take this?

    Thank you

    Reply

    • If they take a F&F then he should avoid applying for a mortgage to any lender who is part of the same group as his previous lender. Now and in the future for remortgaged too. They will be able to see what happened from their internal records, not his credit records.

      It sounds as though his credit records are not correct at the moment. A default should have been added when the house was repossessed/sold. If that had been done 10 years ago, there would be no trace showing on his credit record now as defaulted debts drop off after six years. See https://debtcamel.co.uk/mortgage-repossession-credit-record/. So he should try to get a default date added back 10 years ago by complaining and taking the case to the Financial Ombudsman if the lender doesn’t sort this.

      If he does get a F&F agreed then that is the end of it and they won’t be able to later come after the new house. But if they are nervous about this, it is possible when they buy the house to legally set it up so she owns more of it than he does – they should talk to their solicitor about how this can be done.

      Reply

      • Thank you so much for coming back, you’re so kind to offer this service.

        We are worried that contacting the lender to get a default added will make them realise that the account was never actually settled and update it with the shortfall value and show as outstanding. Is this likely?

        While it’s showing as settled, we are wondering if they apply for a mortgage now, assuming they get one, and buy a house putting all the equity in her name. Then once he has the house and mortgage he agrees a full and final settlement on this debt – will this then drop off after 6 years? They are thinking of fixing the mortgage for longer than 6 years so it would be off his credit report at the point of remortgaging.

        Hope this is clear, thank you so much.

        Reply

        • It’s always hard to know what to say when someone’s credit record is wrong.

          Have you looked at his credit reports with all three credit reference agencies? The most likely reason for an account showing as settled when it hasn’t been is that it has been sold to a debt collector… which wouldn’t be bad news for you as it is often easier to get a debt collector to accept a F&F.

          If it hasn’t been sold, then it is wrong to show as settled, so they may re-add the balance, but if they add a default date at the same time then the record will still disappear.

          When they apply for a mortgage they may well be asked to list outstanding debts. This one would have to be listed even if it is showing as zero on credit record. Lying on a mortgage application is fraud. Also they may be asked if they have ever had a house repossessed.

          Reply

  42. I have an arrangement in place on my credit card for last 4 years. The account was closed and terminated but not defaulted. I am now going for a mortgage but the AP is affecting. My creditor has accepted half of debt as full and final. Is it wise to pay this or just keep to the AP which should be paid off in about a year.

    Reply

    • That is a hard decision as the article above explains. It may depend on how a particular lender views partial settlements. Your other option is to pay off the whole amount now, not stick to the AP. You could talk to a mortgage broker about the whole of your situation.

      Reply

  43. Looking for some advice please. We have been in a DMP for 8 years, owned our house. Outstanding was £62K built up over time and ill-health and loss of jobs. We have sold our house and plan to buy a retirement flat for £60K leaving £17 for a F&F settlement to 10 creditors. We have made offers, but has come back as rejected. Can these creditors demand full payment as we have sold our house? Any advice will be appreciated on the best way to approach this. Many thanks

    Reply

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