Lump sum settlement for less than debt amount.... advice needed - thank you!!! :-)

[sunnyside]

They would have originated pre-2007, probably 2005.

[Joanna Connolly Solicitors]

I have three separate debts which have all been sold to a debt collection company. They are for amounts of £394, £894 and £2,572.

I’ve defaulted on all three debts and have been ‘ignoring’ them.

I guess I was hoping that eventually if I leftest these debts long enough they would drop off my credit file… however I’m not sure whether that actually happens and how long it takes. And, my situation has now changed, and I’m looking to get a joint mortgage within the next 18 months to 2 years.

When did you last make a payment or acknowledge each of these three debts?

When (what month/year) were each of them defaulted and was that after your last payment or before your last payment?

If you don't need to remortgage for two years then it may make sense to leave these debts alone until nearer the time because any approach you make has the potential to reset the Statute Barred clock, or even encourage them to start chasing you again including issuance of a court claim if you make them aware of the timeline.

Debt collection companies don't own debts, they provide as collection service as an agent for the creditor. Is it possible that these debts have been assigned (sold) to a debt purchaser? *

*EDIT - our posts have crossed so I can see that these debts are now owned by Link and the original creditor was Co-Operative Bank

Di

[sunnyside]

Hi Di

Thank you.

For a while, I was in a DMP and paying a minimum payment back. I ended this arrangement around summer 2016. They show as defaulted around Dec 2016 (although call credit and equifax show slightly different default dates).

It's not a remortgage, it would be a first time mortgage. But wouldn't the mortgage company see that I have defaulted on these debts and just refuse me a mortgage? If they were settled wouldn't that look better? However - I only have half the amount as a lump sum offer. Which they may refuse and then everything is worse......

I don't know about the debt collection side. All I know is the same company is contacting me about all three. They are now responsible for collecting my payments and my debt is now with them...

[Joanna Connolly Solicitors]

Nowadays mortgage applications are scored on Affordability as well as past financial performance.

A debt settled or part settled may help to imply that you've got everything sorted now, but the Defaults would remain as a black mark on your CRA file until December 2022.

However this doesn't necessarily mean you'll be refused a mortgage but you may be limited to the lenders who will lend, and the interest rate applied could be higher than a normal High Street lender.

I would suggest that you have a chat with a mortgage broker who may be able to guide you since they should have a whole-of-market knowledge as to which lenders would be unconcerned, and which would be a no-no.

If you need a mortgage in less than 3/4 years (when the defaults drop off) then ask a broker about taking out one when needed, and then remortgaging to a better deal when the defaults have fallen off. However that would incur a second lot of mortgage associated fees.

Di

[sunnyside]

Thanks Di. So I am probably best to sit tight and not try to settle. Is it worth pursuing the unenforceable route or does that throw up new timelines etc as well?

[nightwatch]

the short answer is YES

[Joanna Connolly Solicitors]

Thanks Di. So I am probably best to sit tight and not try to settle. Is it worth pursuing the unenforceable route or does that throw up new timelines etc as well?

Well, two of these debts were current account overdrafts so s77-79 CCA may not be applicable unless they were arranged overdraft facilities which were renewed annually after 2012.

Were they?

Did you have PPI on the credit card? If so then consider whether a misselling reclaim could be made which would go to the original creditor (not Link) who must pay you direct if you're successful. That could put more money in your pocket to help with settlement offers.

Di

[sunnyside]

Thanks Di. No I don’t think they were renewed annually. So that means they are enforceable? The credit card I don’t think I had PPI but it’s worrh me reinvestigating. Is it worth pursuing unenforcability with the credit card?

[Joanna Connolly Solicitors]

The credit card I don’t think I had PPI but it’s worrh me reinvestigating. Is it worth pursuing unenforcability with the credit card?

Yes

You should send a s77-79 CCA Request to Link for this Co-Operative bank credit card from 2005 (assuming that's the debt you're referring to).

You can also send a Subject Access Request to Co-Operative bank to get the full history of the account, especially any possible PPI. The SAR is now free - no need to send £10.

Di