A reader has asked how Full & Final settlements (F&Fs) would affect her credit rating which is currently looking good as her debts were all defaulted and have dropped off her credit record.
A full and final settlement happens when the creditors agrees to accept an amount which is less that the total owed to settle a debt, and agrees that the debtor will not be pursued for the remainder. For more details, see this Guide to Full & Final settlements.
This article looks at how F&Fs are shown on a credit record in the two different situations:
- where the debts are still showing on your credit record, and
- where the debts have already disappeared.
Lenders often say that a partial settlement will be very bad for your credit record… but often it won’t be! So it’s good to know all the details.
Some different names for this
F&F settlements are often called partial settlements, because you don’t pay the full amount, only part of it.
Creditors usually mark the debt as partially settled on your credit record rather than settled.
If the debt has previously defaulted, the term settled is not used and the term satisfied is used instead. A F&F settlement on a defaulted debt is then marked as partially satisfied. I talk here about settled debts because that is is how creditors normally talk to you, even though the credit record term is normally satisfied.
Debts that still show on your credit record
When you settle debt, partially or in full, the balance is set to zero. The debt will then disappear from your credit record six years after the original default date.
If the debt hasn’t defaulted, it will disappear six years after the settlement date. But it is unusual for a creditor to accept a F&F unless a debt has defaulted. You may want to ask for a default to be added, see What should the default date for a debt be? for more about this.
It is common for a creditor to tell you that the debt will stay for six years from the settlement date.
This isn’t right if there is a default date on the record! It will drop off six years from the default date whatever you do.
How does a partial settlement affect your credit rating?
Your credit score is a complicated calculation looking at lots of different factors.
Partial settlement is a marker against a debt, That marker isn’t taken into account in the credit scores published by Experian, Equifax and TransUnion that you see when you look at a credit report.
Lenders don’t use the credit scores that you can see. Each lender can have their own rules about what is on your credit record that they want to take into account.
So it’s possible a lender may see a partial settlement marker and decide not to lend to you. This is only really likely though for very large credit applications – mortgage or car finance say.
Most lenders won’t care if you have partially settled the debt. They may think it’s good that a debt is gone – because with one problem less, you are more likely to be able to repay what you borrow from them!
And some lenders will reject you just because there was a default, even if you have settled the debt in full!
So it can be hard to decide if paying the extra money is worth it – there may only be a tiny number of lender that may make a different decision if you partially settle or fully settle a debt.
Think about the size of the discount you can get and how long the debt will stay on your credit record. For example:
- if the creditor will accept £500 to settle a £1,500 debt that is a big discount. And if the debt will drop off in the next year, it’s probably a good idea to grab it!
- if the creditors will only accept £1,300 to settle that £1,500 and the debt is still going to show for another four years, you may think it’s worth paying more to get the debt marked as fully settled.
The rest of your financial position also matters:
- with lots of problems on your credit record, getting one debt marked as partially or fully settled probably won’t make much difference at all;
- if you can’t afford to repay all your problem debts, it’s usually better to settle as many as possible partially, rather than take longer to repay them in full.
Wanting a mortgage is the most difficult situation – I look at it in detail in Will partial settlement make getting a mortgage harder?
Debts that have disappeared from your credit record
A defaulted debt drops off your credit file after 6 years, which is why the questioner is no longer seeing these old debts on her record. But would settling one bring back the debt? You can see why she wouldn’t want her new, clean credit record spoiled by having some partial settlement indicators added to it…
The answer is simple – after a defaulted debt has gone from a credit record, it will never re-appear. You can offer a F&F settlement on these debts and not risk them coming back and damaging your credit score. If a creditor tells you that a partial settlement will be shown on your credit record for another six years, they are wrong.
This also applies to CCJs that have dropped off after 6 years. They will not reappear if you settle them with a partial settlement.
Once a debt with a default or a CCJ has gone from your credit file, the only lender that will know about it the original creditor. So don’t make the mistake of applying for a mortgage to NatWest if you originally defaulted to RBS, or to Halifax if you defaulted on a Lloyds debt.
Unfortunately people are often given wrong information about this by customer service staff at debt purchasers.
Why offer a F&F if the debts have disappeared?
You might wonder why the questioner would bother making Full and Final offers on debts which have disappeared from a credit record. There are two reasons why trying to settle old debts is a good idea:
- a debt that isn’t showing on your credit record still exists. Unless it is statute-barred the creditor can still chase you for the money. See Do I still have to pay a debt which isn’t on my credit record? for more details.
- if you apply for a mortgage or a re-mortgage the lender is likely to ask about all your debts, not just check your credit record.
So as defaulted old debts can often be settled for low Full and Final offers, it makes a lot of sense for the questioner to try to deal with hers.
Getting settlements on old debts
No calls about a debt for years?
Improve your credit score for a mortgage
Sandie says
Hello, just need some help on the following, we currently have debts that are in a DMP company and we have recently gone direct to the companies involved who have our debts. We wrote to cabot asking for F&F on about 6 accounts some they have discounted some they haven’t.
I have been told the ones they haven’t reduced is because there was a ‘pre default’ on the account before they took over but there has been none since and we have been paying now for approximately 8years. Trying to get ourselves sorted and now we will not be able to do so :0(
Is it common practise that these companies do not reduce debts because of this reason?
Thank you.
Sara (Debt Camel) says
can you give some details about the original debts – what type of debt, who from, when did the account start?
do these debts show on your credit record?
Sandie says
The original debts came from various credit cards/loans we now pay a monthly amount to Cabot through a debt agency. An arrangement does show on my husbands credit report from Cabot but they only put it on there in the last 6months which is odd as we have been paying them for years! The debts started 8 years ago. Thank you
Pam says
Hi,
I have a default on my account by shop direct for £2961, but the default balance is £1984. This was added on 26/6/2013.
This debt goes back to 2006, but I only checked my credit record last year and I have found a letter with default date back to 2012.
Iv requested a signed credit agreement several times, but nothing was found and in 2013 lowells contacted me to say the account had been passed back to shopdirect and closed cause no signed credit agreement was located.
I have been reading on internet (legalbeadles) that people have been taken to court , even with no signed credit agreement and lost and received a ccj, I don’t want this to happen .
Should I contact them regarding full and final settlement and if so how much should I offer. I’m having sleepless nights over this.
I definitely can’t afford the full amount , but if I have some idea off what to offer I can try and raise that amount. And what amount do I work on, the debt amount £2961 or the default amount £1984. I really need closure in this as I’m going through a difficult break up and these arrears are stressing me out.
And also what do I put in the letter so they can’t come back to me in future?
Sara (Debt Camel) says
If they couldn’t find the paperwork for the account in 2013, I don’t think you have anything to worry about. You could call National Debtline 0808 808 4000 to confirm this. I don’t know what Legal Beagles case you are referring to but no CCA agreement is an excellent defence. Also the fact it has gone quiet for 4 years means the creditor doesn’t think they would win either.
Pam says
Iv phoned national debt line and they said don’t worry, but it’s just stressing me out so much . The default letter I have is for Jan 2012 and they added a new default in July 2013, so this is about 1 1/2 years extra I have to wait to get it off credit file . I just thought if I off F&F and request they go back to date Jan 2012 my credit file will be sorted by Jan next year.
Sara (Debt Camel) says
Well it’s your decision if you want to offer a f&F settlement – but you absolutely shouldn’t be thinking of borrowing the money to do this.
If you really want to do this , I would suggest making it a VERY low one as this debt appears to be unenforceable. I would be thinking £100. Point out in your letter that they are unable to produce the CCA documentation so the debt is unenforceable. And say your offer is conditional on them agreeing to correct the default date to Jan 12 as per the letter you have, attach a copy of it.
Stan says
I have been with a debt management company for 9 years and recently I wanted to settle my debts so asked them for a settlement figure from my creditors…they came back with a figure which I duely paid… they have now come back to me a couple of months later saying that the creditors want more money…the people From the debt management company that we’re dealing with my account have left the company so I was wondering what rights I have or don’t have against paying the extra money ?….
Sara (Debt Camel) says
Who is the debt management company? What did you have in writing from them about this?
Stan says
The company is called Moneyplus Group….. I’ve had no written information from them it was all done over the phone
Sara (Debt Camel) says
If you think your phone calls were clear that you wanted to offer the money in a full and final settlement, then you should put in a formal complaint to Moneyplus, email is good complaints@moneyplus.com. They will still have the phone recordings.
Stan says
Yes I could complain but do I have any rights in not paying the extra money ?
Sara (Debt Camel) says
I can’t tell if the creditors have a right to ask for this – they may have agreed to a F&F and be trying it on.
Or Moneyplus may have not explained the full legal situation to you – in which case you could ask for compensation.
Or Moneyplus could have been negligent in not asking for confirmation from the creditors that this was being accepted as a full & final settlement.
Legally there is also a different situation if the settlement money was coming from a third party – a relative say – and not from you.
Fiona says
Help please! I have offered to settle my Iva, I have offered 2720 I have 20 months left paying 134 pm, I have received a letter saying my Iva company (Harrington brooks) will be taking my offer to my creditors in 6 weeks 14th July (I made the settlement offer on the 21st April), but are charging £500 for an early settlement fee and £400 for a variation meeting? WHAT!! Is this correct? An extra £900 ? Can they do this? What happens if my creditors say no? I’m lucky that my partner has offered as a gift to settle the debt let alone an extra £900? Thanks
Sara (Debt Camel) says
I don’t think you will be asked to pay these fees, they will be deducted from the money your creditors get. And I think the early settlement fee replaces some of the fee they would be charging for the rest of your IVA, it’s not an entirely new fee. Ask HB and they will confirm this.
If your creditors says know, then you can use the money from your partner to make the monthly payments. It won’t make a lot of difference to you probably – an early settlement doesn’t remove the IVA from your credit rating, it is there for the full 6 years.
steve says
Yes thats right i agree with sara they cant put 900 fees on top of the original debt
Steve
Carly says
Hi Sara,
We are approx 18k in debt with an active DMP. We are due to complete on our house sale next week and are going into rented accommodation for 12 – 24 months to try and rebuild our credit a bit.
We have defaulted on 21 of the 26 credit accounts we have and most of these defaults date back to 2012/13. Would it make a massive impact on our credit rating (418 and 512 with Noddle) if we make F&F offers? Ideally would like to clear all debts for 10 – 12k if possible.
Thanks.
Sara (Debt Camel) says
F&F offers won’t directly reduce your credi score, but they may make some lenders less prepared to lend to you, especially mortgage lenders. See https://debtcamel.co.uk/dmp-partial-settlement/ for more about partial settlements and looking towards getting a mortgage.
In your case, it sounds as though all the defaulted accounts will have disappeared from your credit record in 2018/19. If you stay renting until these have gone no-one (except the creditors with the defaulted accounts!) will ever know that you partially settled them.
Lou says
I was trying to figure out something with F&Finals. We are on a DMP (have been for four years), many of our debts were owing to HSBC and Lloyds bank, and are thinking about doing F&F’s, but are hesitant because we wish to get a mortgage (in 3 or so years, when the defaulted debts fall away and we have had time to save in our new debt free lives -woohoo!). Our only reservation is, if we do a F&F and it falls away from our credit score as it should after six years, would we affect our chances of getting an mortgage with either of these banks/ their sister companies as they will have their own records/ history with us. Or does this also get shredded after six years too. We would prefer to have as many doors open as possible when it does come time to get a mortgage and would be helpful to know if doing F&F’s will affect us in this respect. Thanks for you help!
Lou says
Sorry, have just found this page which answers my questions: https://debtcamel.co.uk/dmp-partial-settlement
It is a shame but as we would prefer to have open doors for the best possible options for ourselves, we will have to think carefully on whether a F&F is for us.
Thank you for such an informative site!
Sara (Debt Camel) says
In your situation, I would probably go for F&Fs for four reasons:
– you will have more money for a deposit
– there are plenty more places to get mortgages form, ruling out HSBC & Lloyds is not really a problem.
– you should try to avoid applying to anyone you have previously defaulted to. Whether you settled the debt fully or partically makes less difference that the fact you defaulted!
– if the debts have been sold to a debt collector, the original creditor will have no idea how you settled the debt.
Lou says
I find this is a very good point: – you should try to avoid applying to anyone you have previously defaulted to. Whether you settled the debt fully or partically makes less difference that the fact you defaulted!
I never really saw it this way, but you are right the prejudice from these creditors will already be there in the form of a default should they choose to scour their own records, in which case how the debt is settled is neither here nor there as their background on us has already set the outcome and there is no ‘changing their perspective of us’. No point in being a martyr about it.
Thank you as always!
abdul says
Please i need advice please, i owe Lloyd bank £2400 from November 2012 and the account as been transfer to Lowell group because i default payment but i have an agreement to by £60 monthly have paid £500 so far but have been offer an agreement to pay part payment of £900 for them to clear my debt as partial payment. is it a good deal ? if yes is it going to affect my rating in future for mortgage or loan.?
Sara (Debt Camel) says
If you currently owe 2400 then an offer to settle for 900 isn’t bad. Can you afford this much?
Has this debt been marked as defaulted? What sort if debt was it, and when was the account opened?
steve says
I would say it is a good deal and pay that amount to clear it and then thats one less thing to worry about. It drops off your credit file from the date you defaulted from. Hope this helps
Ash says
Hi I have one default on my credit file for £999 to NatWest it was put on there in may 2013. It is the only default I have on my file, I have never heard from them or had them contact me in all these years but this one mark is holding me back and I am looking to get a mortgage as soon as I can clear it. What shall I do with this? I contacted eqifax and they have spoken to NatWest and said it’s unsettled and they can’t remove it until 6 years is up or I pay the amount in full or at a discount rate. But will paying a lower rate affect my score when applying for a mortgage as it might show at part settled… am I correct? What’s the best thing I can do? Thank you Ash
Sara (Debt Camel) says
Is this debt yours? If it isn’t you should challenge it.
Assuming it is your debt, then you need to settle it. Whether paying a lower amount will matter if you want a mortgage is a difficult questions, see https://debtcamel.co.uk/dmp-partial-settlement/ which looks at this exact issue.
You should also do this asap as most mortgage companies will not consider you for a mortgage unless all your defaults were settled more than a year ago.
Tom says
I have a partially settled debt on my credit report which is worrying me as im now applying for a mortgage. The debt was originally with cap one and was for £800 defaulted in 2013 and settled 2016 with cabot. Just wondered if this would be a problem when it comes to my mortgage application. Thanks for your help.
Sara (Debt Camel) says
A rule of thumb is that there are some high street lenders who don’t mind a default provided it is over 3 years old and was settled more than 12 months ago. But go through a broker, not direct to a lender.
Simon says
Hey Sara
I understand your post but just want clarification.
Santander – I defaulted Aug 2011, I settled at a reduced amount in Sept 2016. I paid in one full go. It’s cleared off my defaults but is in closed account and shows satisfied. Should this be removed or will it stay on till 2022? Will this record affect credit applications?
Hoist – I also had another debt from Aug 2011, I cleared it by monthly installments and paid my last one Jan 2017. I arranged this in Sept 2016 so the report shows settled in Sept 2016. How does this affect me?
I’ve noticed that the Santander one shows green from the day of default.. But Hoist shows red all the way till Sept.
You said Settled and Satisfied are interchangeable,is that the case here?
Do I need to get these two records removed?
Sara (Debt Camel) says
is a default date showing on the Santander record? the Hoist record? for the Hoist record, who was the original debt with and what does that show?
what credit report are you looking at?
Simon says
I’m looking at Noddle,
For Santander, I can see
Account start date
10/12/2008
Account end date
11/04/2016
Payment start date
10/12/2008
For Hoist I can see
Account start date
08/10/2008
Account end date
01/09/2016
Opening balance
£ 749
Repayment frequency
Monthly
Date of default
22/09/2011
Default balance
£ 749
Seems like a difference due to the payment in full and monthly?
The Hoist one is actually a HSBC account. But Hoist were managing both. When I paid the Santander one in full they pulled me up on this one so I set up the DD. Surprised the Santander one doesn’t say Santander.
Also say in 5 years I approach these banks. Will they know I was once in serious debt with them?
Rose says
I have defaulted joint debts with my ex husband (joint mortgage 8000 in defaulted 2013 and unsecured loan 2100 – defaulted in sept 2017 – not sure why so late as all debts was not paid since the same time 2013) there were originally 3 but I paid of the other one. The debt company that bought the 8000k suggested me to partially settled the debt for my behalf and said what ever is left will be chased to my ex. As far as I know joint debts is you a are liable for the full amount? They said they will do a letter that said I have partially settled and debt charity confirmed that, even if they take me to court for the rest, they wont win as that’s the same as fraud. Advice?
Sara (Debt Camel) says
Which debt charity? Have they seen the wording that the debt collector used?
You may want to ask them to correct the default dates see https://debtcamel.co.uk/debt-default-date/ but you can d this after the F&F is settled.
andy says
Hi, I have 4 creditors (2 loans and 2 credit cards). I have defaulted in the last year on both credit cards and one of the loans. I am up to date with the other loan. I have just sold my house and due to complete soon. I will be in the position following the house sale to partially settle at least one of the 3 defaulted amounts and depending on what figure they accept, possibly 2 of the defaulted debts. Its highly unlikely I will be able to clear all 3 of the defaulted debts. I am intending to continue with the ‘good debt’ that I have as I hope continuing to stay up to date with this loan will help repair my credit rating which has taken quite a savaging. Is it worthwhile partially settling the other defaulted debts at this stage and what effect will that have on my current credit score and the direction it takes in the near future? I currently have arrangements with each of the 3 defaulted debts, repaying a small amount each month.
thanks
Andy
Sara (Debt Camel) says
Carrying on paying the undefaulted loan normally is a good idea – this will stay on your credit record, looking good, from 6 years from the point it is paid off.
How large are the defaulted balances? How long ago were the defaults? How much to you hope to have after all your sale & moving costs?
Terry says
Hi Sara
I have an old debt that has come off the credit report, (over 6 years old) I haven’t Paid anything for about a year and haven’t heard anything from them. it used to be called welcome finance and they sold the debt as I think they went into administration. does this debt still stand?
if I pay the full and final settlement to the debt collection agency it will not go back on my credit report as settled will it?
thanks
Sara (Debt Camel) says
The debt is still legally due, not to the debt collection agency. It can’t be statute barred as you have been making payments to it within the last 6 years.
If you settle this debt with a F&F, it will not reappear on your credit rating.
Allyson says
Good afternoon, my husband and I started a DAS IVA in January 2011 and after selling our home at the start of the year we managed to pay off my husband’s (his being the larger amount). This was completely paid off at the start of October and they advised they would update the register. My question is 1 the IVA is still showing on his file 2 it is showing January 2012 not January 2011 as the start date so is there a reason it is dated wrong? The DAS use Thinklink as there distributer and neither of them can give us any answers.
Thanks.
Sara (Debt Camel) says
Which firm set up your DAS?
Allyson says
We went through our local council but Thinklink are the administrator
Scott says
Hello. I was made bankrupt in May 2012 and discharged in May 2013. All of my credit accounts entered default status around the time of my bankruptcy, apart from my mortgage with Santander. My mortgage was never entered I to default and I’m unsure why? Having looked at both my Experian and Equifax credit reports I can see the following information :
Start Balance- £0
Default / Delinquent Balance- £0
Date Satisfied- 28/04/14
Status- Settled
Are you able to shed any light why this should be, or give me any pointers, so that when I contact Santander I can atleast have an idea what to say to them?
Sara (Debt Camel) says
If there is nothing negative on your mortgage record, you should leave it as it is, not ask for a default to be added!
Scott says
Sara, many thanks for your sound advice. I will provide you with a little more information about this. Looking at the payment history of the report it shops an AP at point of bankruptcy in 2012. Thereafter, it shows some 1’s for various months as well as the odd payment I made. It then shows 2’s, 3’s, 4’s, 5’s, and 6’s for the whole of 2013. In 2014 it shows 6’s for January and February, green in March and S in April. There is no other information for the rest of 2014 to date.
Should I still follow your original advice, or do something different? Thank you.
Sara (Debt Camel) says
OK, so there are adverse markers there. Read https://debtcamel.co.uk/credit-file-after-bankruptcy/ which has a section on mortgage debts after bankruptcy.
Scott says
Thank you Sara. I followed the advice in the link you provided and contacted Santander. I spoke to a very sympathetic agent who agreed that a default should have been applied, especially due to the number of missed payments back in 2012. She has opened a complaint and hopes to get this resolved for me with a default date of May 2012. I sincerely hope they follow through with this. Thanks again.
Steve says
Hi Sara,
I made an irresponsible lending complaint about a loan I have with 118 money last year,it went to the ombudsman and they never upheld,so obviously I have accepted and carried on with the payments,the halfway period on the loan has just passed and if it goes full term I will have to pay £1579 over the next 12 months,i have asked for an early settlement figure this morning,and the figureI was quoted was £1298 which hardly seems fair,paying off a loan 12 months early and only making a paltry saving,do I have grounds for complaint or I have basically agreed to these terms when I signed up for the loan,and are stuck with it?
Sara (Debt Camel) says
You could ask for details of how they have calculated this and also for a copy of your loan T&Cs if you don’t have them. The calculation (including any extra charges) will be set out in the T&Cs. The figure may well be right.
NB it’s nearly £300 off – worth having!
Adel says
Hi Sara,
I’ve been in a DMP since 2008 and have recently been given money by my parents to settle me debts. I have settled the smaller ones fully and have noticed that this has had a beneficial effect on my credit rating even though none of the debts were still showing on my credit report. I have two larger debts of £9k and & £4K (neither of which show in my credit report) that I ideally would like to do a F&F settlement for. I’m confused because in your article it says that where a debt doesn’t show on your credit report neither will a partial settlement and yet my 0 balances have been reported (with positive effect on improving my credit rating) even though they no longer showed on my credit report. I’m working hard to repair my credit rating so that we can apply for a mortgage in a year or so and have managed to get into ‘fair’ so I don’t want anything to adversely effect this.
Also on a side note, I had a credit card with co op that they chose to close because I didn’t use it. There was nothing owing on it. But I see that it shows on my credit report recently as having money owing and as me making a late payment. The credit card account was closed about 3 1/2 years ago.
Sara (Debt Camel) says
Are you saying the settled debts have reappeared on your credit record? Is there a default date showing for them?
The co op card you need to complain and ask for this error to be removed.
Adel says
No the settled debts have not reappeared, they don’t show at all but since I’ve paid them my credit score has improved and the person who took payment said they would be reported as settled. Am I wrongly assuming that this was what was responsible for improving my score?
Sara (Debt Camel) says
“Am I wrongly assuming that this was what was responsible for improving my score?”
Yes, that is wrong. What is not on your credit record – these settled debts – has ZERO affect on your credit score. So settle those other debts for as small an amount as posssible!
Jade says
Hi everyone,
I’m in need of help. I have been financially suffering these last four months, due to a salary decrease. I have paid all my other monthly commitments apart from one my HSBC loan. This is due to it being my largest monthly commitment. To cut along story short Hsbc have offered a settlement of half the debt, saying if I accept this will put down as a partial settlement and they will close all my account with them. I’ve tried to get advice on how bad this will affect me on my credit report and will I be able to get a mortgage within the next year with my partner? Some say this “partial settlement” on your report will cause most lenders to avoid me, some say it won’t really affecf me and then others say no way will I be able to get a mortgage. Can you help? I don’t want to accept anything till I know how this will affect me.
Sara (Debt Camel) says
You probably already have late payment or default markers on this loan on your credit record. Because of these you will not be able to get a mortgage until after the debt is settled – and even then you will probably have to wait a year.
So the question isn’t really how mortgage lenders view a partial settlement – it’s whether you have any better options? If you can’t afford to repay the debt in full, then a partial settlement now is going to be a lot better than anything else, as to a mortgage lender it will show that from this point, you don’t have any financial problems. Only making monthly payments or, worse, ignoring it is going to be much worse for a mortgage application in the next 5 or 6 years.
Some mortgage lenders will care less than other ones about a partial settlement. A sensible approach would be to settle the debt now (I am assuming you have the money for this settlement?), wait a year and then talk to a mortgage broker. Do not apply directly to a mortgage lender and, of course, don’t even think of applying to HSBC!
Oz says
Hi
Can anyone help? I have been making F&F offers to a number of debts that I have had for some years (all in excess of 6 years). Nothing is showing on my credit report (except my mortgage). I have just paid LINK a partial settlement for a Barclays loan (Paid £4k on a £5k loan). Link have told me this will show on my record. I have never seen a default from Barclays, although it was showing as ‘Arrangement’ or something like that for a few years. It has now disappeared altogether from my report. Can LINK put this back onto my Credit File showing as partially settled even though its not been showing for a while?
Thank you in advance for your help.
Sara (Debt Camel) says
My guess is that Barclays defaulted the account over 6 years ago which is why it isn’t visible anymore. (I assume you have checked your credit records with all three credit reference agencies? See https://debtcamel.co.uk/best-way-to-check-credit-score/) In that case the debt should not reappear from Link.
Dave says
One of my creditors removed a default from my credit file early (still had 4 years before it dropped off).
I settled the debt about a month before it was removed, I expected the default to be marked as satisfied but it disappeared instead.
I’m not complaining that it’s gone as I’ve been working hard to improve my creditworthiness as I would like to buy a home at some point in the future. Just out of curiosity, what effect does a default being removed early have on a credit file and creditworthiness? Is there a possibility that the default could reappear at some time in the future?
Sara (Debt Camel) says
“what effect does a default being removed early have on a credit file and creditworthiness?” It can only help!
“Is there a possibility that the default could reappear at some time in the future?” I don’t know. It doesn’t sound as though it should have gone, so it may have been an error?
Lou says
Hello,
I am hoping for some advice on full and final offers.
We (myself and my boyfriend) are hoping to be able to pay off our debts early (within the next six months). We have been on a DMP since 2013.
But are unsure on who to make our F&Final offers to. We seem to have accrued the same debt collection agencies for our accounts, but are not sure whether it is wise to approach these managing credit agencies or the original creditor? Debts listed below:
Cabot Financial (Europe) Ltd- Originally: Hitachi £219.94
Cabot Financial (Europe) Ltd -Originally: HSBC £505.70
Cabot Financial (Europe) Ltd -Originally: HSBC £566.59
Wescot Credit Services – Originally: Lloyds £481.71
Wescot Credit Services – Originally: Lloyds £996.21
Wescot Credit Services – Originally: Lloyds £1,511.57
Wescot Credit Services – Originally: Lloyds £790.37
Do Westcot and Cabot have the authority to accept a F&Finals as I believe the debts are managed, not purchased by these agencies. Along with this is it okay to send a collective F&F offer or should we do so for each individual account. All debts defaulted in either 2013 or 2014.
Thank you for your insight!
Lou says
Along with this we would like to ask if you have any advice on how much % we should be offering?
We have made regular payment to our DMP without issue (£152 per month) and have been doing so since 2013. I imagine they will likely consider this when looking on whether to accept a F&F or to wait it out on the DMP payments? So not sure what a good starting point would be? We see some contradictory advice online about what is a good starting point.
Sara (Debt Camel) says
Well you have c 5k of debt and you are paying £1800 a year to it. So they aren’t likely to accept a low offer as they will get the full amount in under 3 years.
Sara (Debt Camel) says
The debt collectors will normally have authority to accept/decline a F&F. It’s best to make the same offer (60% or whatever) to all your creditors and tell each what you are offering the others.
Lou says
Thank you for your clarity and help! It can be confusing with all the contradictory messages. If we tell all creditors same thing / clear about offers to other creditors is this more likely to assist an acceptance? I was wondering if it would leave creditors thinking there is more (overall) cash then we are offering them (individually) and that they could push for more? Just wondering what your thinking is behind giving creditors full visibility with the f&f offers? Thank you Sara!
Sara (Debt Camel) says
Full visibility is better in my opinion. So everyone knows they are being offered the same as everyone else.
Lou says
Thank you for your help and advice!
Kelly says
I have 2 defaults on my account that are currently affecting my score from 2014, currently paying £1 a month token payment on them but would it be worth me asking for a full and final settlement figure or would this hurt my credit score even more? Both are quite low amounts £190 & £210 and I have been paying £1 a month for 4 years+ so I’m wondering what they would likely accept. Failing this I’ve heard that you can write to the company that gave the default and asked for it to be removed, would this be possible? Thanks
Sara (Debt Camel) says
Paying a default will not actually improve your credit score – see https://debtcamel.co.uk/defaulted-account-credit-score/. but it will get rid of the problem debt and stop any chance of a CCJ.
How much they will accept depends more on what you can afford. If the money is coming from someone else, then showing you can only afford the 31 token payments could mean that they would be happy to take £40-50.
Frms will only remove a default if there is a good reason – see https://debtcamel.co.uk/get-rid-of-a-default/ for possible ones.
Sarah says
Hi,
Can anyone help me. I’m looking at making full and final settlement offers on my accounts. What’s the lowest reasonable offer that can be made? I’ve had most of these debts for nearly six year and for about the last three I’ve been making £1 a month as all I can afford. My parents are going to help me but would like to have an idea of how much. My debt totals around £10000. Any ideas on a percentage to calculate a full and final settlement on each would be great.
Sara (Debt Camel) says
Do you have a house with equity? If you don’t, 20% could be a reasonable offer.
Scott says
Hello Sara
I just wanted to give you and update to see if there is any further advice you could give me. In the end I got nowhere with Santander. They refused to enter a default on my account. I took my case to the Financial Ombudsman and they just got back to me with a response:
“The credit report shows the mortgage account with Santander as settled on 28 April 2014, instead of defaulted when the complainant entered bankruptcy in 2012. A £0.00 balance was reached on 28 April 2014, and this is the date Santander has recorded the account ‘settled’ on the complainants file. The credit report shows the highest status Santander recorded on the account was ‘6’, meaning at least 6 payments were outstanding when the account was settled. As explained above it’s not inaccurate for Santander to record the account as settled. Santander has let me know they’d only record a mortgage account as defaulted if they’d have
started repossession of the property. Having considered the information Santander has provided, I think the information they’ve recorded on the complainants credit record is an accurate reflection of what happened. Because of this, I won’t be asking Santander to do anything differently”.
Scott says
I replied the Ombudsman to tell them I’m unhappy with the decision, I believe they are looking at the case again. The Ombudsman said that a default would place me in a worse position than I am at the moment. This is strictly not true because if my account was defaulted it would by now have dropped from my credit file.
As it stands I have no idea when this account will drop from my credit file. Do you have any advice?
Thank you.
Sara (Debt Camel) says
Well the points that you need to make are that your mortgage debt was included in your bankruptcy and that your very patchy payment record shows that no effective arrangement to pay was in place in 2012 or 2013, so the credit record is inaccurate and misleading.
Scott says
Thank you Sara. I will drop another email to the Ombudsman to make this information clear. Not sure why this information wasn’t obvious to the Ombudsman when I supplied them with all my records. Thanks.
Lou says
Hi Sarah,
We (myself and boyfriend) partially settled some old (about 5yrs) debts with Lloyds (via Westcot). The wording on their letters to settle were as such. ‘Please not your payment of of a partial settlement will result in the account being recorded as ‘partially settled’ on your credit file. This information will remain on your credit file for 6 years from the date of default. If you are in a position to repay the full balance your credit file will be recorded as fully satisfied for this account. ‘
Looking at our credit files (about 2 months since settling) they have lowered the balances but have not marked our file as partially settled either and the accounts are still open. We are growing concerned they are not going to zero our balances and would appreciate your insight on the following:
1. Do they have to zero balances to mark as partially settled or ‘should’ they?
2. If they do not zero the balances will it matter as these defaults will fall away in the next year (i.e: off our file)
3. We are hoping to get a mortgage (in about 2yrs when credit files have cleared from defaults from creditors plus some time to save for a deposit), how will this affect things if they do not zero balance?
4. Can we complain to them to nil the balance and mark as partially satisfied and close the accounts?
Thank you so much for your help! I do feel something is a bit amiss as hey recently ‘updated’ our files but only the balances to what we have paid.
Lou
Sarah says
Hi I’m in need of some advice please. To cut a long story short I’m in 21k of debt between 3 credit cards and a personal unsecured loan. Through divorce, house sale and purchase and a criminal law solicitor due to my ex husband. This has accumulated in the last 3 years and I am now struggling to pay off the debt. I pay over £550 in debt a month and never missed a payment. I have a mortgage and have 70k equity in the house but I’m on a five year fixed rate mortgage, so can’t touch it at present. I’ve looked at a secured loan to consolidate the debt and reduce my monthly payment amount but the interest and broker rates are expensive. I’m a single mum and only work 3 days a week. Can you advise on what the best course of action is here to reduce my monthly payment for the debt please. Thank you
Sara (Debt Camel) says
Don’t get a secured loan at a poor rate of interest is my advice! These loans have variable rates, they could go up next year, your house could then be at risk.
Will you be able to work more days in a few years?
Sarah says
Hi yes I will be able to go back to working full time hopefully middle of next year. Do you have any advice on what I could do to reduce the debt repayments as it leaves my with nothing to live off. Thank you
Sara (Debt Camel) says
In that case you could look at a debt management plan as a temporary solution, just until your income goes up. The downside of a debt management is that it harms your credit record and will make it hard to remortgage at the end of your mortgage fix. But talk to StepChange https://www.stepchange.org/ and see what they say about a DMP and about your other options.
Dan says
Hi Sarah,
Just had a full and final (partial) accepted my MBNA, they said they will not send paperwork to confirm this agreement until payment is made, but the agreement exists? Is this correct. They also mentioned that the debt could be sold at any moment and the offer is valid for a short period of time.
Is this normal procuedure for defaulted debts and acceptance of settlement? Im worried they might mug me off and sell my debts of after our agreement
Dan says
Hi Sarah,
Just an update i got them to confirm on the phone that the debt is settled, cannot be recovered in the future by anyone at MBNA or externally. I settled this morning and they will send me a letter in the next few days to confirm.
I asked for call to be recorded and this settlement will be marked partially settled and stay for 6 years
Geoff says
Hi, hope someone can help. I intend to make a final settlement payment on two debts. both will be partial. one has a default that will expire in two years, the other has no defaults and currently doesnt show on my credit report. by making partial payments on both, will this negatively affect my credit score when i re-apply for a mortgage in two years time. many thanks. Geoff
Sara (Debt Camel) says
the one that doesn’t show on your credit report – have you checked your reports with all three credit reference agencies, see https://debtcamel.co.uk/best-way-to-check-credit-score/ for how to do this?
Douglas says
Hi Sara,
Just had a good read about your article and I believe you could offer me some help as I have found the article to be very useful. Well my situation os a bit of a bother. I have two accounts recorded as defaults by the same company August 2014. One has a balance of just over 2000 and the other 1300. Now from the start I have always argued that I never defaulted as I was still actively making payments on the accounts. Account incurred compound interest at 49% APR on Buy Now Pay Later items on the original balance of £1500.
The default is due to drop off the accounts next year but for the balance of the £2000 I was taken to the county court. The court awarded me a variation in my favour agreeing to what I admitted I owed +£300 in costs at £15 a month. Claimant, he has received the variation bt asking a payment of £2400 at £15. The court awarded me £750 + £310 in costs at 15 a month.
On the debt of £1300 I have got them to agree to my initial balance of £350 to settle the account but the stumbling block is partially settlement. I was going to pay £10 a month default expires in August 2019.
Does the partial settlement really affect my credit rating or is it better than a default provided I can add a correction to the specific account in question for the lenders to see?
Is this debt still eligible after 6 years or is it statue barred? What happens when the default expires and I still owe some money to them?
Sara (Debt Camel) says
I think all your questions relate to the non CCJ debt where they have offered a partial settlement?
“Does the partial settlement really affect my credit rating or is it better than a default provided I can add a correction to the specific account in question for the lenders to see?” that is a confused question. A partial settlement is not an “alternative” to a default. It is in addition. Not sure how a notice of correction is going to help you at all?
“Is this debt still eligible after 6 years or is it statue barred?” if you have been making payments, it will never become statute barred.
” What happens when the default expires and I still owe some money to them?” it drops off your file but you need to carry on paying the debt or they will take you to court for a CCJ for that. See https://debtcamel.co.uk/debt-not-on-my-credit-file/
Douglas says
Hi Sara
Sorry for the confusion in the above text let me try bullet points.
•Debt with a variation offered by county court (£1100 to be paid at £15 a month) whose default date is 20/Aug/2014 what happens to this debt come 20/Aug/2020 after 6yrs. Is this debt still enforceable and does it appears on my credit file? Is this variation the same as a CCJ even though I was willing to go to court but the judge decided on submissions provided and asked for hearing date to be vacated since Lowell were willing to agree to a settlement plan but for a higher price which he refused.
This still in court with the judge as Lowell are telling me to pay £2400 at £15 a month so I went back to court including asking the judge to wave the additional fees as I have always maintained the same balance being owed n proof of unrecorded payments to the tune of over £500 btwn the time I am said to have defaulted.
• What is the difference between a Variation and a CCJ?
• Debt with settlement agreed over the phone no action has been taken yet as I refused the partial settlement and they said they will go back to the debtor and highlight the issues discussed but the offer still stands at £350. I was planning on paying £10 a month but the default date is 10/Jul/2014 what happens too when we come to 10/Jul/2020. Is this debt still enforceable and does it drop off my credit file?
Sara (Debt Camel) says
The court case – it sounds as though originally you were being given a CCJ which you did not defend but offered a monthly payment? But now you are trying to dispute the amount because the creditor has said it has increased? I can’t tell quite where you are in the process here but the end result sounds likely to be a CCJ for some amount to be paid at £15 a month. That will be a CCJ.
A variation changes the terms of a judgment (“varies them”). Typically it changes the monthly payments amounts. It doesn’t remove/delete the judgement.
I suggest you talk to National Debtline on 0808 808 4000 about your case or post on Legal Beagles forum: https://legalbeagles.info/forums/forum/legal-forums/court-claims-and-issues.
Not sure why you refused the partial settlement – unless you couldn’t afford it? If you are paying £10 a month this debt will always be enforceable even after it disappears from your credit record in 2020.
Bingo says
I have a minor question. People talk of the date a default goes on your record s being significant – as obviously it falls off your file 6 years later. But I have an account which has a marker showing month by month it is in default (ie the company seem to add this every month when the records are updated). Will the record cease to exist 6 years from the start date or 6 years from the last monthly ‘default’ record? Cheers.
Sara (Debt Camel) says
From the first date. The later ones don’t matter.
Michelle Buckley says
Hi,
I’m hoping you can help me?
If a person with 8 defaults is able to clear 7 of these via partial settlements, will this increase their credit score. The defaults started late 2015/early 2015 so not due to drop off for a couple of years yet.
This person is looking to obtain a mortgage and has been told the lender isn’t concerned about the defaults, just whether he will pass the credit score but we’re not sure that partially settling 7 of the 8 defaults will improve his score significantly enough?
Many Thanks
Sara (Debt Camel) says
“This person is looking to obtain a mortgage and has been told the lender isn’t concerned about the defaults, just whether he will pass the credit score”
That is VERY unlikely to be an accurate description. Did it come directly from the lender? Or from a broker?
The facts are:
– settling a debt, in full or partially, does not change your credit score from a credit reference agency at all.
– mortgage lenders don’t use a credit reference agency’s score anyway – they will use their own internally developed scoring mechanism.
Now I can’t say how any particular lender’s scoring works. But in general:
– mortgage lenders care a LOT if you have any defaults which have not been settled. So just settling 7 out of 8 is not good enough, all 8 need to be sorted.
– most mortgage lenders want the defaults to have been settled for a year before they will consider a mortgage.
– some mortgage lenders may care if the settle the debts partially, others won’t.
See https://debtcamel.co.uk/dmp-partial-settlement/ for more about the settle partially or in full issue if you want a mortgage.
Jay says
Hi
What would you do with a debt previously with mbna then sold to Idem over 6 years ago.
Reported on credit file only by Idem. As Mbna sold it over six years ago so it’s dropped off with them. MBNA won’t put a historic default on as the account is not being reported anymore and Idem won’t do it as they same I’m up to date with them.
Requested CCA from Idem, they can’t provide and say it’s not enforceable. If I stop paying them they say they’ll put a default on and if I agree a F+F they’ll mark as partially satisfied.
Thoughts?
William says
Hi, I have defaults ranging from 2015 to last month. Most of them have offered me a discount if I clear the outstanding balance. I might be able to lend the money from a family member to pay them. Will I be better off paying in full or accepting a discount. I would like to finance a car next year for £10,000.
Sara (Debt Camel) says
You have no chance of car finance at a half reasonable rate with recent defaults on your credit record, whether they are settled in full or not.
Honestly your best plan is to get F&Fs for as low amount as possible. That will probably be on the older ones, and pay token payments to the more recent ones until they are sold to debt collectors and you get offered better deals. And go for finance on a much cheaper, older car, go for a reliable make.
If your debts are extremely high, look at Insolvency options such as a DRO or bankruptcy and ask your relative to use the money to buy a car that you can drive. Talk to a debt adviser before getting into debt with a relative and taking out high cost car finance, as that route leads straight back to more high cost credit and more defaults.
Are any of your recent defaults on high cost credit? If so look to see if you can make any affordability complaints. You may be able to get amounts owed reduced or wiped if you had previous loans from that lender, or even get a refund which would help you clear other debt. See https://debtcamel.co.uk/tag/refunds/.
William says
Thanks for your reply Sara,
Would a fully settled default look any better then a part settled default? I have been offered a 20% discount on a £3,500 debt, is this a good deal. All my debts add up to about £6,500.
Thanks,
Will.
Sara (Debt Camel) says
I guess that is one of the older defaults?
Do you have car finance at the moment?
What has caused all these defaults? And do you have other debts which haven’t defaulted?
William says
Hi,
I don’t have a car finance and all of my debts have defaulted. My first account to default was a phone contact in 2015 for £700. Then I had credit cards and got myself stuck when getting balance transfers but keeping the old cards. Before I knew it I was £4,000 in debt with credit cards. I also had an account with Jacamo (Store Credit account) for £2,000. Last year I lost my job and couldn’t pay them so they have all defaulted. I still have a phone contact and virgin media on my credit file and they are perfect. Lowell owns my phone contact, Jacamo and a credit card that totals to £3,500. They sent me a letter last week offering a 20% discount.
Sara (Debt Camel) says
ok so first some general facts.
1) Paying off defaults doesn’t improve your credit score at all. But it may make some lenders more likely to lend to you.
2) settling a debt partially not in full, adds a flag to the debt which a lender can see. But it doesn’t affect your credit score.
3) some lenders may care about debts settled partially, others don’t mind just so long as you don’t owe anything there.
Then looking at your case.
– you managed to get into a real mess when you had a job but running up too much debt. Now you are hoping to incur a much larger amount of debt on car finance and also borrow money from a relative to settle your defaulted debts. This isn’t a sensible option.
– it is VERY unlikely you will be able to get cheap car finance deals with such a poor credit record even if you settle the debts in full.
– your defaulted debts will not be incurring any interest. To borrow from a relative to clear them is risky.
It would be much better to borrow £5k or whatever from your relative and buy a cheap car outright. No finance. Then use the £300+ a month the car finance would have cost – which you think you can afford – to repay your relative and to set up payment plans for the defaulted debts.
This is a much lower risk strategy. If your income drops, you can reduce your payments and not have the car repossessed. And after a couple of years, you will get much better F&F offers on the defaulted debts
William says
Hi Sara,
I’ll do that, thanks for your help.
Will
marc says
I have received a letter from link looking for a debt that defaulted 21/03/2013 which is more than 6 year ago now.
They have stated a date of 6/10/18 balance brought forward then a date again of 5/4/19 balance carried forward.
Will this be a default again and effect my credit rating as it has improved since having a bad spell when construction trade took a dive in 2013 I have a few credit cards also awaiting a brand new lease car coming in the next few months I’m trying to build my credit back up and not wanting this to be a new default or affect my credit rating.
Any help or advice would be great thank you.
Sara (Debt Camel) says
When you say it defaulted in 21/03/2013, do you mean that is when you stopped paying it? Or was a default date added to your credit record at that point? Is the debt currently showing on your credit record?
marc says
pretty sure that is the default date have not got the letter on me as I’m at work will have a check but that was the date on letter.
so will this be a new default do you think ? will this affect my credit file I dont have Experian I had just left my credit and got a card to build credit then have had a few more since then and just got accepted for brand new car so assumed my credit had improved and this would drop off from my file this year as they have even been in contact to offer reduced payment.
Sara (Debt Camel) says
Sorry but I’m not going to guess until I know what the letter said AND you check your current credit records. See https://debtcamel.co.uk/best-way-to-check-credit-score/ for how to check your credit records with all three credit reference agencies, not just Experian, for free.
Marc says
defaulted credit report date 21/03/2013
Sara (Debt Camel) says
A debt with a default date of 21/03/13 should already have dropped off your credit record. Are you sure it says a default date? or a missed payment date? What report are you looking at?
marc says
I signed upto credit club and there is no sign of it on my account the letter says that is the date of the default, what I’m trying find out can they default this again or are they just pestering me hoping I will pay or acknowledge the debt ? what do I do for them to stop sending me letters ?
Albort says
Here is my situation. I had to leave UK in June 2013 due to huge immigration mistake. Long story short, I have left some unpaid balances and did not have a chance to pay them earlier. I came back in July 2015 and had to start from the very beginning. I have recently checked Experian and it shows 5 defaulted accounts and balance of around 5k. I was preparing myself to start paying it off but someone advised me to check my credit report on Noddle and Clearscore. Here is where the funny part starts. Noddle shows me 10 defaulted account, 13k in balance and unknown to me amounts/ accounts. Clearscore does not show any defaulted accounts but gives me low credit score. I am confused and scared as I am not prepared to pay such money. Also do not know where to start. I have read online that debts are being statued barred if no communication was made between creditor and borrower for more then 6 years. Does it mean that my debts will be cleared within few months? Will it still affect my credit score? Thank you in advance for any help.
Sara (Debt Camel) says
there are 3 different credit reference agencies:
Experian
Equifax – which is what the Clear Score reports on
Call credit – which is what the noddle report is on.
It is common for these to be very different – for example most high cost credit only appears on Noddle. You need to produce a “combined” list of your debts acorss all three reports. A few debts will show on more than 1 report, but many will only be on 1.
The reason you may not recognise some of the names on Noddle is because the debts have probably been sold by the original lender to a debt collector.
“I have read online that debts are being statued barred if no communication was made between creditor and borrower for more then 6 years. Does it mean that my debts will be cleared within few months?” See https://debtcamel.co.uk/statute-barred-debt/ as this is not as easy as it might sound.
I suggest you talk to National Debtline about your situation, whether any of the debts are likely to be statute barred soon, and what your options are.
Jay says
I have now settled all my debts that were no longer being reported on my credit file, using the CCA agreement request and then settling for around 5%.
I have two debts remaining,
Idem which has the AP and DMP markers against it. They have confirmed they are unable to provide the CCA agreement.
Link financial which has no markers against it. Not responded to CCA agreement request in 2.5 months.
Neither has a default against them. I explored getting them added but was unable to as original lender sold the debts over 6 years ago.
With current payments these would be cleared in around 8 months.
My question is, is there any value in agreeing reduced settlements with either of these two? or would the partially settled marker be detrimental?
Ali says
Hi Sara could you kindly advise what is the best way out as main lender has passed default loan account to debt agency, if i settle will it says partial settlement on my file which i dont want to have
Default date shown on credit file or 17 July 2013.
It was originally personal loan account with Lloyds.
Now debt collection agency is collecting minimum amount on behalf of bank
Sara (Debt Camel) says
The lender should not mark a debt as fully settled if it has only been partially settled. I understand why you may not like this, but the lender is not being unreasonable or difficult, just accurate here.
BUT in your case it doesn’t matter very much. The debt will not stay on your credit record for 6 years from the settlement date – it will drop off your credit record in July this year whether you settle it in full, partially or there is still money owing. So after that it won’t make any difference whether it is marked as fully or partially settled.
Robert G says
Hi
Back in 2008 I received a £2000 payment into my Santander account, thinking it was a payment for work I left it the standard 10 working days to clear the Cheque, I withdrew £1000 from this amount for a Visa Application. after wiring the money to my partner I received a phone call from the bank that the amount needs to be placed back into my account as it was a mistake at the banks end. they proceeded to close my account and put the amount owed into default. in October 2017 the debt was sold to Cabot Financial, who this month offered me a FF that I paid of £248.03. This closed the balance. my question is will it be removed from my credit report from the first default of 20 June 2008, or end date of 7 September 2013, or October 2017? different credit reports have different dates for this Debt. one other thing is I never signed any loan application for this Debt. Also do I need to approach the credit agencies to get the dates corrected?
Sara (Debt Camel) says
Does this debt currently show on your credit record? If it does, what is the default date on there?
Robert G says
yes it does, but the start dates are different for each of the credit reference agencies. keep in mind I never signed any paperwork.
threesixty has it as October 2017
Equifax has it as 2008-06-20
Creditwise has it 12 nov 2017
Credit Karma has start date 20/06/2008 Default date 07/09/2013 (no payments made)
So as you see it is all over the place, what date does 6 years start from?
Sara (Debt Camel) says
I have never heard of threesixty. Creditwise should just be reporting on Equifax data.
It doesn’t matter what the “start” date for the debts is, what matters is what the default date is. A default should have been added sometime back in 2008/9. When doesn’t really matter, as a default that long ago will have vanished from your credit record.
You need to aks Santander to add a default date back in 2008 to all three credit reference agencies. Then Cabot should use that date.
Gavin says
Hi this article and site has been so much help thank you but could you answer a query for my circumstances please? I have had a dmp with payplan for nearly 20 years. I have 19k outstanding now after paying half from 7 creditors. A family member has offered to lend me 5k for full and final settlement. All my debts are that old they are not on my current credit report and defaulted over 6 years ago. As the debts are so old does this improve my chances of them accepting this figure? Any advice appreciated. Thank you
Sara (Debt Camel) says
Nice relative! But if you don’t mind writing a few letters, you could possibly save them some of the money.
Read https://debtcamel.co.uk/settlements-old-debts-cca/. That reader sounds like you doesn’t he… except your debts are even older! Honestly there is a VERY good chance that most of your creditors will not be able to produce the paperwork. That could leave one or two creditors to agree a settlement with.
Gavin says
Thank you I will definitely look into this. If I was planning to make the offer in Dec or Jan would it be too early to ask for the evidence of the agreement now?
Lastly if by some miracle they find them all what would be an acceptable offer do you think? Do I go in with 5k for all or lower? Thank you!
Sara (Debt Camel) says
If you ask now, you will usually have a pretty good idea in 2 months time whether the CCA agreements can be found or not. So that will work for a January offer to settle. I will bet all 7 can’t be found! But yes, 5k sounds like a good offer, perhaps 4k ie 20p in the £.
Gavin says
Ok thank you again although I’m a bit sacred to stop paying when they can’t find the agreement. I pay all my debts through payplan. Will they not like me asking for evidence first or is it standard practice ? Last question sorry
Sara (Debt Camel) says
It’s routine for a debt collector. They won’t be happy you now know your rights, but there isn’t anything they can do except look and see if they can get the CCA agreement. You won’t get nasty letter or calls about trying to evade your debts or anything.
You can always offer them £50 to settle if they can’t find the agreement.
Michael Matthews says
Hi
I had 3 debts with HSBC which are now with HSBC repayment services (HRS). On my credit file, it shows that all my 3 debts (unsecured loans, cc, overdraft) are defaulted from 2017. I’ve been in a DMP for 2 years now and I want to know what is the best way to make F&F? Should I write to HSBC repayment services with F&F or shall I stop paying my DMP for few months hoping that HRS will sell my debts further and then get in contact with the new collection agency? Thank you!
Sara (Debt Camel) says
Do you have money saved up for a F&F offer? how large?
Michael Matthew says
Current up-to-date debts:
HSBC repayment services (cc): £4000
HSBC repayment services (pers loan): £8000
HSBC repayment services (OD): £1900
I now have £7500 and I could pull together another £2000 by end of February. That the most money I’ll ever have (girlfriend parents wanting to help me) so it’s either they accept that or I’ll have to stick with my DMP.
Thank you in advance for your advice.
Sara (Debt Camel) says
How did you get the 7500? Some windfall or have yiu been saving it up?
Michael Matthews says
My girlfriend’s parents will give it to me to clear my debts.
Chris Owen says
My creation finance account closed after I haven’t used it in years, bought 2 things 3 years ago but paid in full which £0 owing for last 3 years. But they put a settled on my account which has caused my credit score to plummet, I’ve never missed a payment as I paid in full just confused. Credit score has gone from very good to fair
Sara (Debt Camel) says
A settled marker by itself shouldn’t make a huge difference unless this was the only “active” account on your credit record before? Assuming Creation didn’t also add a default or a late payment as well.
Sophie Wilding says
Hello,
My husband has defaults that are due to come off Aug/Sept next year. He was wondering if to just ride it out (we want a mortage asap) or should he pay partial settlements now? If partial doesnt make a difference really for the credit file should he just ride it out? He got into debt through the lure of lending he couldnt afford but left it too long to do anything about it.
Sara (Debt Camel) says
He needs to repay defaulted debts before making a mortgage application. Not because it will improve his credit rating, it won’t, but because he is pretty unlikely to be offered a mortgage if the debts aren’t settled!
Also if he tries to “ride it out” he may be taken to court when you are in the middle of a mortgage application.
Most mortgage lenders like to see debts having been settled a year before. So you may decide to settle them now and apply early next year. Or to wait until all the defaults are gone later next year. You could talk to a mortgage broker about timing.
For the issue of whether it matters if you pay a partial or a full settlement for mortgage applications, see https://debtcamel.co.uk/dmp-partial-settlement/.
Syed n says
Hi Sara,
I want to ask you something I offered partial settlement to creditors and they accepted it. Will it still show on my file And is worth doing or not the accounts are already defaulted.
Any help will be great
Sara (Debt Camel) says
How long ago were the debts defaulted?
Ashley says
Hi Sara. Ive been lucky enough to save each month for the past year since sorting my life out. I have 5 defaults across 3 credit agencies on my file. None of huge amounts, the amounts are
£45 (I know right) -lending stream
£651 – capital one (limit of £200)
£145 – capital one (limit of £200)
£425 – sll capital (payday loan showing as unsecured loan)
£1030 – MMP financial (Confused with this one because there been no payments since April 2018 but credit file says open and just missed payments)
Also a £1900 CCJ in feb this year I settled (Was a debt made by an ex when i moved out so never saw any letters)
All these debts are between 13-17 months old from the default date. I’ve reached out to some, awaiting replies from others and 1 creditor (lending stream) wont accept a lower payment to “clear” the debt, was being cheeky offering half given they gave up chasing me march last year.
SLL came back with a 35% reduction and said the following. Our offers are in full and final settlement, once paid, your balance will be marked zero and account closed.
My question and sorry this thread is long. Is given the time left, how I’ve improved my life, savings etc. Do I settle for lower amounts and it be a fresh start in a way, or for the sake of a mortgage in a year or 2, have to pay these all in full?
Sara (Debt Camel) says
Lending stream – had you borrowed more than once from them before this last loan?
Same question for the payday lender where the debt has been sold to SLL Capital?
And same question MMP?
The reason for asking these questions is if you can win an affordability complaint against the lender, you may get a refund of some interest 9always good!0 but also you would get the default deleted if the last loan was considered unaffordable. See https://debtcamel.co.uk/payday-loan-refunds/. Getting rid of some defaults would be a great move.
With a CCJ on your record, having the odd partially settled debt seems pretty unlikely to make a difference to a mortgage lender, so it’s probably best to settle as cheaply as possible. You are going to find it hard to get a mortgage with a CCJ on your record unless you have a very large deposit.
Ashley says
Good morning Sarah. Unfortunately unlike previous payday loads both MMP (Swift Sterling) and SLL (Mr Lender) were one off loans which at the time were taken to cover other loans. Foolish yes. Could I afford them, well no, at the time I was spiraling quickly.
With regards to settling I’m still unsure whether to just leave the debt or, proactively reach out. The deposit we are looking at is about 30k. Houses round here range from 110-150k.
Sara (Debt Camel) says
“With regards to settling I’m still unsure whether to just leave the debt or, proactively reach out. ”
That is hard to tell. They are pretty recent defaults.
With a CCJ and payday loan defaults, you are going to struggle to get a mortgage. You MUST avoid more CCJs. Accepting any offers may be good.
Sara (Debt Camel) says
MMP is in administration. There is a chance you may get a good settlement offer from them or the debt may be sold to a debt collector that will take an offer.
Ashley Davis says
I think maybe clearing everything may help. I just had an email from MMP who have said the debts been returned to the client. So would I need to contact Swift Sterling? £600 out of the amount is interest they have added. My concern is its not showing as a default. Just an unsecured loan with missed payments every month. Not sure what to do with this because I could potentially avoid a default due to their negligence.
Sara (Debt Camel) says
I know, it’s tricky trying to decide what to do when they may realise they have made an error.
Ashley says
I guess I can only see what they come back with. Trying to clear my old debts as best as possible can’t be looked at as negatively then leaving it surely?
Ashley says
Hi again. Since speaking with you earlier a family member has lent me the money as they didnt want me to use all my savings at once. Therefore I’m going to be contacting the companies/debt collections listed on my file and paying in full.
I’m aware my default wont just vanish sadly. But this would appear better moving forward compared to a full and final settlement? Correct?
Martin says
Hi there.
I have just recently paid off 2 defaulted credit cards ( partial settlement) 2.5k between them.
I am now looking at ways to improve my credit score. I have started paying £70 into LoqBox, I have 12 payments of £70 then at the end they say my credit score should go up and I’ll also have roughly £800 saved. Is there anything I could do more? I never get accepted for any credit.
Thanks
Sara (Debt Camel) says
How old are the 2 defaults? Do you have other ones?
Martin says
They went into default in 2017. That’s all my debt paid off, nothing else to pay! I want to hopefully get a mortgage in a couple of years. I just need to try and focus on improving my credit score but I find it hard to get accepted for anything.
I’m in a good position financially but I don’t know where to go from here
Sara (Debt Camel) says
so the defaulted debts will disappear from your credit file in 2023.
I suggest you don’t do anything except keep on with just the LOQBOX payments for another 6 months or so.
Then have a look at getting a “bad credit” credit card https://www.moneysavingexpert.com/credit-cards/bad-credit-credit-cards/. When you get one, use it for something small every month and repay it in full every month on time. That gives the best boost to your credit record.
And start saving harder if you want a mortgage. Getting a good deposit is even more important as your credit record will sort itself out given time – but a deposit won’t save itself.
Martin says
Will it affect my chances of getting a mortgage if the 2 defaulted account show up as partially settled?
Ok so I should just keep paying into my loqbox account for the next 10 months and do nothing else?
I have been putting £300 to the side each month to save for a deposit
Is there nothing else i could do just now?
Sara (Debt Camel) says
Partially settled debt is a difficult question, see https://debtcamel.co.uk/dmp-partial-settlement/. It doesn’t hurt your credit score. many lenders just like the old debt to be settled. And particle settlements let you do that sooner which is all good. A few mortgage lenders may prefer you to have paid in full, but avoid those by applying through a broker when you are in a position to buy a house.
The only real way to improve credit scores in your situation is to let the defaults get older and drop off and to start getting some new positive marked on your credit record. But the new positive marks count for less than the black default marks so it’s a slow process. And every time you get new credit your credit score takes a hit for the first few months…
Hence my suggestion to stick with LOQBOX for 6 more months and then apply for a bad credit card. One card, not two or three! And avoid expensive commitments such as car finance.
Slow and steady on the credit score front plus building a healthy deposit will get there.
James says
Hi Sarah
When I 1st contacted you a 4-5 years back you gave me great advise which I was very thankful for, but I need a bit more please.
I settled 4 debts at 30% but and am still paying 6 others at £1. My credit score which went from 72/990 to 990/990 over the years as debts fell off the agencies and I ensured no other payments were missed. I moved my mortgage deal where we had been stuck on a high rate and have taken out a car loan and got a couple of credit cards which I played to help get my score back up.
However, I wrote to the 6 in April to try and agree 6 more settlements but Santander use solicitors who did not reply or when I chased up again in May. Then today I get a demand for full payment of £11k, which is not going to happen. Is this typical of Santander or Drydens?
Since getting into the original debt, I am now carer for my disabled wife, and a diabetic losing site in both eyes and am now on UC. Other creditors have been supportive but Santander/Drydens are NOT. I kept paying the £1 every month & I offered 5% settlement 2 years ago and 15% last year which they countered at an unaffordable 50%. I have no capital but was willing to cash in a small 25% tax free lump sum to split across the 6 creditors.
What do you think about Santanders position? Can they take me to court and get a CCJ in this scenario, are they usually such a pain?
Thanks in anticipation of your reply
Sara (Debt Camel) says
do you have balances on the credit cards?
James says
Hi – Thanks for the quick reply
4 are old credit cards with Cabot for £21,000 total approx, who have proposed 70% discounts (£6,900) one with via Hoist (for Westcot/Lloyds) who have offered 40% off £9,800.. Santanderis is £11,000 and they proposed 50% last year.
I have settled 4 other smaller ones last year for around £1500 total against £7,000 debt.
All 10 of these went to default around 12 years ago in the 2008 ‘recession’ when my business went down and my wife became disabled in an incident. I have been paying £1 per month on each, every month, but am trying to agree achievable settlements. The Santander demand via Drydens Fairfax is a blow, especially when I don’t get replies to my proposals and then I just get a demand for the full amount.
I am confident in handling all these debts but any advise would be much appreciated re Sanatnders demand..
Regards
James
Sara (Debt Camel) says
OK, so I suggest you read https://debtcamel.co.uk/settlements-old-debts-cca/. those are old credit cards and I would not be surprised if at least one of them, possibly more, cannot produce the CCA agreement os you could simply stop paying.
That would give you more money to settle the Santander debt if you have to… You cannot MAKE them accept a low offer…
But I think as this debt is sold old and because you have been caring for your wife and now have health problems yourself, you should ask Santander to write off this debt.
This is pretty unusual but in your situation it is worth a try. Read https://debtcamel.co.uk/debt-options/less-common/write-off/ which looks at how to do this.
James says
Hi Sarah – Many thanks for your previous reply, your help is much appreciated.
OK, so I sent the requests for the copies of the original CCA Agreements on the 19th June. Nearly all wrote back saying they will take it up with the original lender and will be back in touch, but they are all past the 12 day ‘rule’ of supplying the agreement, and none of them have so. Westcots, however, have now written to say that their client (Hoist for lloyds) has been unable to locate any agreement but suggest I write to Lloyds direct asking them for a ‘Data Subject Access.’. Is it now time to write a write off request letter? Does it go to Westcot or Lloyds? Do you have a relevant template letter link? I don’t want to ‘just stop’ paying without doing it properly. Many thanks in aniticipation of your reply.
James
Sara (Debt Camel) says
Westcots, however, have now written to say that their client (Hoist for lloyds) has been unable to locate any agreement but suggest I write to Lloyds direct asking them for a ‘Data Subject Access.’.
LOL. Nice try Westcots… that is the last thing you should do. You do not want the CCA agreement to be found…
You can ask Hoist/Westcot to write off the debt because of your health problems but if they refuse I suggest you simply say you will not be paying them anything as the debt is unenforceable. Why be bullied into offering a settlement amount when you need that money to look after yourself and your wife?
James says
Many thanks again. I will use this process for them all as they reply appropriately re the copy of the CCA. I will keep you informed. You are a star!
Sylvia says
Hi. I have a debt with moorcroft which I have been paying for a few years £10 a month and have about £900, would it be worth offering 10% to clear? Also Cabot about £4000 @£10 pcm.
Sara (Debt Camel) says
What sort of debts were these originally?
Do Moorcroft own the debt or are they collecting on behalf of the original lender? Are you saying the balance is now 9000?
Michael says
I am in a position where I have about £6500 owing altogether (down from about £9000 this time 2 years ago when I first started to get myself in order). There are a variety of debts – payday loans, credit cards, phone contracts all stemming from younger me being an idiot with money. All bar 2 of my debts have defaulted or been taken further and I have payment agreements set up for quite a lot of my accounts ranging from some being paid off early next year to some which are on long term payment plans for a small amount per month to get DCA’s off my back at least temporarily until I can commit more.
As it stands all the black marks (CCJ’s and defaults) will be off my record in January 2026, by which time I will have long since paid off what I owe at my current rate of repayment and hopefully I will have saved up a decent chunk of a deposit to a mortgage as well. I’m also keen to start getting some positive marks back on my file as well as the only thing going through it is currently my phone contract and I want to have some history towards getting a mortgage but no one will touch me other than guarantor loans right now.
My query is that one of the undefaulted accounts is with Piggy Bank. It is currently in a £20 a month payment plan with £140 left to pay so should be cleared in December. They have offered me a 40% settlement so I’m wondering if it’s worth taking, getting rid of them completely (partly because they are an utter pain in the a***for not taking payments correctly) and crack on with starting to clear another outstanding debt. What I want to know is really, regarding my credit score, is it worth me taking the discount and getting rid of a creditor for good with a view to a short term improvement in my score and bringing me closer to getting accepted for a small credit card again. Also what’s the likelihood that if it was the solitary black mark in six years time, would it affect a mortgage application.
It’s worth pointing out that although the amount sounds trivial, it would likely put me at a little more ease regarding my debt and how much is left as it feels like I’m getting nowhere right now.
Sara (Debt Camel) says
How many loans did you have from Piggybank before this one? Is it marked as being in a payment arrangement?
pat hughes says
Hi
Could you offer some advice please?
In approx 2013 my son took out a credit card with a well known food retailer, he then add is then girl friend to the account as a 2nd card user but with the account still being in his name.
He then didnt use the card and the sole user was his then girlfriend, he a letter from said company saying that the account had not been paid, and questioned her about it {by text message which he still has} and said she had just forgot to send the payment to the company this sound quite reasonable so my son thought nothing more about it. The girl friend carried on using the card. unknown to my son she had changed the address from his address to her address so letters no longer came to him and changed all the other contact information so my son was unaware of anything.
Then in 2017 my son and the girl friend split up she continued to pay the credit card unknown to my son on the min amount, however towards the end of 2019 my son started get letters from a debt collection company. The ex girlfriend had stopped paying the card and done a runner but had been kind enough to change everything back to his name. I am aware that the account is in my sons name but the when his ex changed the details on the account isn’t this a form of taking responsibility for it? Now he faced with £5,000 worth of debt that he hasnt clocked up id there anything you can suggested.?
Sara (Debt Camel) says
I suggest he send the credit card lender asking for copies of all his personal information.
He should be looking for the request to change the address on the account – who asked for this and how?
Pat says
Hi sara
It was requested by his ex girlfriend by telephone
What difference would it make
As debt company say its in his name there fore his problem
Sara (Debt Camel) says
Well the question is, as it was his debt, why did they allow anyone apart from him to change the address?
I suggest he asks the lender this… if they says this is in the terms and conditions or something, he should ask where.
Pat says
Hi sara
She had permission to speak about the account.
Sara (Debt Camel) says
oh. ok he can’t then complain about that. Then this his debt. Unless he wants to try to sue her for the money (which may well be very difficult) there is nothing he can do. He needs to make an arrangement to pay the debt and if he has other debts to and is struggling, I suggest he takes debt advice: https://debtcamel.co.uk/more-information/where-to-get-help/
Martin says
Hi there
I’m looking to get a credit card but I have poor credit (276 on clear score). I’ve recently paid off my defaults and 4 months into paying a loqbox account. I want to get a credit card to pay my petrol once a month to help boost my score but I don’t know what cards I will be eligible for or what cards best for me. I don’t want to do searches incase it affects my credit score. Could you help me or give any advice on the matter.
Thanks
Sara (Debt Camel) says
I would give it a couple more months. Then have a look at https://www.moneysavingexpert.com/eligibility/credit-cards/ to see what you might get – that only does soft searches so they don’t go on your credit record.
DiamondGeezer says
Could you offer some advice please.
I have a Barclaycard credit debt from quite a few years ago that seems to have been passed onto Linked Financial now for about £3000.
I’ve got link Financial chasing me now. So far on my credit file, it doesn’t actually show up adversely with an OK Status.
The status shows as:
Limit: No Limit Reported
Payment made on time
But I have been working hard to make my credit file better and don’t want this to negatively impact my file. I can pay the entire thing off – I wouldnt be happy about it, but if it means that my credit file stays in tact that’s fine.
However, I wanted to find out if any of these solutions might work and not adversely impact the credit file.
1. Make a settlement offer. They will allow me to pay off £1800 for full and final settlement but they will report to credit file as partially settled.
2. I could pay half the amount due and then pay the rest as monthly installments.
3. Pay the full balance off, (I have the money but i was hooping to keep it as money for a house deposit, which is the rreason im clearing up my credit file.)
Thanks
Sara (Debt Camel) says
have you been making payments?
They will allow me to pay off £1800 for full and final settlement but they will report to credit file as partially settled.
This is what they have said or are you assuming it?
DiamondGeezer says
I have not made a single payment since Barclaycard closed the account. What i dont want it to do is go intto default. It’s not in default yyet.
Sara (Debt Camel) says
So is They will allow me to pay off £1800 for full and final settlement but they will report to credit file as partially settled.
what they said to you? Did the person saying this seem aware there was no default recorded?
DiamondGeezer says
I checked on my credit file. And there is no default recorded. The Barclaycard closed the account back in 2016. Since 2016 Link Financial seem to have had it..The balance has remained the same, payment statuus reported as ok. They said if i was to pay the partial settlement offer it will be recorded as partially settled on the credit file.
Sara (Debt Camel) says
So you could go back to them and say you would be able to get that amount but only if they can confirm that no defaults or missed payments will be added to your credit record. You understand it will be marked as partially settled but you are do not want a negative mark added.
Robert Garrett says
I had something similar happen to me, I paid the debt off in full 12 days after finally being notified there was an default against me. this remains on your credit record for 6 years. so don’t even think of looking for any credit. mine was for £112 and this is stopping me from getting a mortgage for even the council house that I’ve been in for 10 years.
Darren says
Hi, I’ve just had a full & final settlement accepted on a defaulted account for 15% of the debts value, the company has entered into administration and require I make the payment within 2 days. Is they any need to verify that they’ll update with the credit referencing agency to say it’s settled or are they required to do this by law and hence no need to ask them?
I don’t want to poke the bear with any requests that aren’t necessary.
Thanks for your time.
Sara (Debt Camel) says
they should do it. provided you have something in writing to say they have agreed to this F&F it should be OK.
Darren says
Great, I’ve gone ahead with the settlement, thank you so much for helping
James says
Hi Sarah – continuing my strand above, I wrote to the remaining creditors/account holders on August 5th by recorded delivery to request compassionate write offs and have heard nothing back from all 4 since. I have continued to pay the £1 per month in Aug,Sep,Oct. I don’t want to just stop paying and create a hornets nest so am thinking I should email them and attach a copy of the write of letters saying I have not had a response yet. Do you think I should also stop paying the token £1’s, do you think they have not replied as I am paying the £1’s?
Many thanks James.
PS, you do a great job for everyone in this site, many thanks on behalf of all.
Sara (Debt Camel) says
So none of them have produced the CCA agreement? Or sent you a reply saying a CCA is not relevant for this debt?
It’s now been 2 and a half months. You could wait another month and then just stop paying. Talk to National Debtline on 0808 808 4000 if you are uncertain about this.
James says
Hi Sarah
Only Santander’s solicitors replied saying they have forwarded my letter to Santander who will contact me directly. I will sit tight for another month.
Many thanks James
Sara (Debt Camel) says
Well Santander are VERY likely to be able to produce the CCA agreement. if they do, ask them to respond to your request for a write off.
Martin says
Hi there,
I’ve got a new credit card (£200 limit) and I have set a direct debit to pay the full amount of the balance on the first of every month.
I’m just wondering if I use it , can I pay the balance of right away?
For example, just say I used my credit card in the shop and I spent £10 on it, could I just pay that balance off right away? Is that the best way to avoid interest and would it be good for my credit score?
If not, what would be the best way to use it?
Thank you
Sara (Debt Camel) says
The best way to use the card to improve your credit rating is to use for something small each month – less than 350 so you are using less than 25% of your credi limit.
Then don’t pay it off straight away but let it be paid in full by DD. You don’t get charged interest the first month (well not unless you take cash out or use it for gambling or the lottery – then you are charged interest right away.)
Andrew says
Hi, we are almost 6 years into our DMP and are now in a position to make full & final settlements. All of our debts were defaulted fairly early on, so I understand that partial settlement won’t cause a new marker for 6 years. Can I just check though, is this still the case where the debt was sold on to a debt recovery company?
Sara (Debt Camel) says
yes, it is still the case. The debts should have a default date on them and will drop off 6 years after that date, whether they are settled in full, partially settled or still being paid.
You may want to read this first before making an offer: https://debtcamel.co.uk/settlements-old-debts-cca/