Settle debts or pay in full?

S

SillyBilly

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My bf has been talking to mabs and a suggestion has been made that his creditors might accept part payment of his debts instead of full payment. This seems a bit too good to be true (I've a naturally sceptical nature...) If he were to do this, would his ICB records still be clear after 5 years as they would if he paid the debt in full? What is the disadvantage in settling debts rather than paying them off in full?
Thanks!
 
What is the disadvantage in settling debts rather than paying them off in full?


Its to the borrowers advantage - he settles for less than the lender might be entitled to get if they pursued to the bitter end.

I have seen banks settle for less in extreme cases ( very serious depressive episodes) where the only way they could hope to get the full amount owed would be to repossess the family home. Banks will repossess but they prefer not to.

It may be possible to negotiate a lower payment but only if the lender / creditor is willing to forego the entire sum due for the sake of immediate payment.

mf
 
Banks are realists, they will rather accept 50% now than maybe 50% in dribs and drabs over 20 years. They very often will settle for 50% or less. It is not that uncommon. There are even businesses in the business of doing such deals with the banks on behalf of creditors in return for a fee of course.
 
Hi ,


I work in this area and have to advise you that if you settle the debt for less than its value , its a possiblity that the bank will write off the remainder of the balance , some banks in the extreme cases will ammend the icb profile for that loan as a "c" which means complete , but if your a normal joe who just got into hot water financially and looking for a quick way out.....ie offer to settle for less...the bank will leave the icb profile as "w" for write off...thus any other loans he seeks will possibly be hampered by this......even though your accounts are clear in your eyes.....theres still write offs on your record.
 
Also if you make any such deal be sure to get it in writing and that it is on the understanding that the payment is in "full and final settlement" of the debt.
 
the bank will leave the icb profile as "w" for write off...thus any other loans he seeks will possibly be hampered by this......even though your accounts are clear in your eyes.....theres still write offs on your record.
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Thank you for the help
! Just to clarify, will this "w" be on his record for more than 5 years?
 
Hi ,


Yes just to clarify , the "w" will be on his profile indefinately , unless the bank agree to write off but put up a code "c" to say complete........if not they will put up a different code which is "L" which means settled for less than the full amount and even if you clear the account in full the bad profile will be remain for 5 years from the date of settlement.......
 
so if they write off a debt its there for ever but if the SETTLE its 5 years .
 
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