Information to help you deal with your CRF's

Moderators: TalbotWoods, JaneClack

Bykeith_uk
#471937 Any advice on this would be greatly appreciated.

I have been in a debt managent plan for approx 4 years now after a marriage breakup and have been paying the £400 /month with no missed payments. I have approx £9000 of debt remaining which under the plan will be cleared fully in 2 years. I have taken out a ' build your credit rating' credit card in the last year and am buying something and religiously paying it off in full each month.
On checking my credit score very recently this is at 999 which i believe is the highest it can be.
I have recently come into £5000 and I wish in a years time to take on a mortgage with my partner who has a fair bit of capital herself.

My question is do I :

1. Pay the £5000 to creditors leaving me with just one more year paying the debts and allowing me to get a mortgage.
or
2. Try to pay off debts in part with the creditors with the £5000 so i do not have any outstand debt. This will leave me with a year to save some additional money.

Option 2 to me looks the best option but my question is how will option 2 effect my credit rating as whilst being better off next year I do not want to jeopodise the possible mortgage application in a years time.

Again thanks for any advice.
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ByTalbotWoods
#471938 Hi and Welcome

Full and Final offers can work, but they must be dealt with properly or they fail at the first hurdle.

Things you need to consider when dealing with creditors/DCAs, is why would they accept a F&F. Consider that you are hoping to shave of £4K off the total debt. You are also already paying a significant amount every month and you have been a consistent good payer, so realistically you are asking to buy yourself out of the final year, but because of your good record, they may consider that waiting is a good bet financially for them.

OK some Creditors/DCAs will like the advantages of the F&F especially if they bought the debt from the original creditor, in which case your may be happy to take the payment and happily close the book. However, others may want their pound of flesh, especially if they are the original creditor.

So you need to think of why and how you can convince them.

Depending on the number and amount of debts you have left, you need to work out what is a fair and equitable amount to offer to each.

Please have a read of this Fact Sheet from National Debt Line, which explains the process in much more detail than I can at present.

https://www.nationaldebtline.org/EW/fac ... fault.aspx

One major tip I will give you is make sure that another person offers to make the payment, as this ties them into it being a legally binding Full and Final. If you offer it on you own, then we have seen some unethical DCAs sell on the balance and you get chased by the new owners!

Worst case is if they say no, then continue paying as normal and save the £5K for a better day!

Tim
User avatar
ByJaneClack
#471939 If you are in a non fee-charging debt management plan - have a word with your case officers as they see things like this every day and may also have some advice!
Bykeith_uk
#471945 Thank you very much for the comprehensive reply regarding F&F settlements which gives me a very good background of the workings of this. But obviously my final decision is very dependant, if I do take this option, on whether it will effect my good credit rating given I might be applying for a mortgage in approx a years time.
So in summary last question is - will this effect my credit rating in any way

Thanks again for your time.
User avatar
ByTalbotWoods
#471946 HI

Form what you have said, it appears that the accounts you have in your DMP may have alreayd have dropped off the Credit files, so no it shouldn't affect your CRF, but......

You must make sure you check all three credit files
You must make sure they cover the full past 6 years (often they only cover three years of addresses)
If you have moved at all you must make sure all the addresses are correct.
If you have moved make sure that ALL the last 6 years worth of addresses are checked

As often each of the three hold different information on you, but the norm is that an account will drop off the credit files 6 years form the default date, irrespective of if it is settled or not. Hence the hint to make sure that they are checking all the information!

Each mortgage lender has its own strict and varying system for credit scoring, so it is impossible to indicate if you would get a mortgage or not. I have seen people with gold plated triple A plus scores who were able to put down 50% deposits getting turned down

Tim
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