Anyone cleared a debt...

[jack the lad]

Not my area of expertise, but surely if you offer a percentage of the debt, you still have another part of the debt which they write off. Won't your credit rating gets a black mark as a result? If it's in full and final settlement and there is no effect on your credit rating then why lend in the first place?

I was made redundant 16 years ago and this was definitely not an option I could take without affecting my credit rating. If you're in the position of not being able to eat, etc. then obviously your credit rating is not going to be a major concern but it is the first thing I thought of when I read this thread.

There is also "The Rule in Pinnel's Case" a 400 year old rule that you can't settle a debt once and for all by only paying off part of it. You have to do something extra or different (e.g. pay it in Euros or pay £x plus a £10 M&S voucher) to stop them still coming after you for the rest, even if they have said they won't. If you do it through a CAB they will help you to make it legally binding.

 

[Gromit]

I have never had a good credit rating, the limit I had on a credit card was something like £250. I don't intend to get credit for anything ever again in my life. Yeh I get penalized for not having a credit card, in that I can't hire a car etc which is slightly annoying, but I can live with that.

I don't understand why banks and other companies only give goods and services to people who have a little card which permits them to spend other peoples money? I for the first time ever have good hard cash sitting in my bank account, surely thats worth more than a bit of plastic?

 

[Eat MY Dust]

I've been there and done that. I had over £7k worth of very bad debt. I managed to get them to freeze the interest which really helped, and then they gave me the option of a lump sum (their suggestion). I ended up only paying half back.

I understand when people say if you can't pay it back don't borrow it, but when you're 18 and someone is saying "go on, take the credit cards" it actually really hard to say no. I think the interest on my CCs was about 23% apr (it was a good few years ago!). Technically I had probably only borrowed around £4k, the rest of final debt was all interest. TBH if I hadn't got the interest frozen, I'd be scared to think where I would have ended up!!!!

 

[Eat MY Dust]

Can I add CC companies don't help either. Why are they giving out people CCs with 10k limits on them? Surely there should be a limit applied to CC, much in the same way as mortgages. I know someone who had £30k on CCs and at the time that was probably his years salary!

 

[Fnaar]

Years ago if your TV was faulty you got a man in to fix it.

I remember that... a man with a brown 'lab' coat, about 3.30pm Christmas eve, usually.

 

[summerdays]

Years ago if your TV was faulty you got a man in to fix it.

This morning my daughter told me she needed new shoes... because the sole was detatching itself. I pointed out it could be mended - that the rest was perfectly serviceable, and that as kids we always took the shoes to the cobblers to extend their life.

Can I add CC companies don't help either. Why are they giving out people CCs with 10k limits on them? Surely there should be a limit applied to CC, much in the same way as mortgages. I know someone who had £30k on CCs and at the time that was probably his years salary!

Very true - I don't understand why they gave out so much credit to people who already had credit. I've only ever had one credit card at a time, and the odd store card - just to get the deal then stopped using them. I think my partner is very good at cash management so in someways I've had it easy.

 

[MarkF]

Not my area of expertise, but surely if you offer a percentage of the debt, you still have another part of the debt which they write off. Won't your credit rating gets a black mark as a result? If it's in full and final settlement and there is no effect on your credit rating then why lend in the first place?

The CC company took me to court, despite my efforts to pay the maximum I could afford at the time, which was (I think) £25 a month, I was mad, I was trying to repay the debt. I got a CCJ but the court recommended that I pay back only £5 a month, work that out!

So......the CC compnay has to admininster a piffling £5 cheque payment every month for god knows how many years or accept say, £1k immediately.

They would have had the repayment in full if they had not taken me to court. Once I had an entirely avoidable CCJ, no way was I paying it back in full. Gits!

 

[Arch]

I have never had a good credit rating, the limit I had on a credit card was something like £250. I don't intend to get credit for anything ever again in my life. Yeh I get penalized for not having a credit card, in that I can't hire a car etc which is slightly annoying, but I can live with that.

I would say, if you can get a credit card, then do so. You don't have to use it, unless you need to hire a car or whatever, and if you make sure you don't use it for anything too big to pay for there and then, you can simply pay it off interest free each month - that's what I do (get one with no annual fee, of course, if you can). I very rarely use it in order to get credit - and if I do, it's to get a month's grace at the most (like I just did on my Uni fees, because I knew I had a bit coming in, but not for a week or two.)

If you think you'll be tempted, then don't carry the credit card with you, unless you know you're going to need it on a specific occasion. You're just playing their game (IE the car hire company or whatever), but without paying interest to the bank. Also, I think there are some cases where you are better protected using a credit card, like online. Now that you're back on your feet, you just make sure you don't use the card more than you need to....

 

[Arch]

My other half has had to learn the hard way. His family have very little money anyway, and so he grew up not really knowing the value of money.

Interesting - I grew up in a not very well off family, and in my case it meant I knew the value of money very well! I also learned to appreciate the free and cheap in life.

 

[HelenD123]

I go one step further and have a cashback credit card so actually get paid (a very small amount) to use it. Credit cards are fine as long as you have the discipline to pay them off in full every month and/or use them sensibly like Arch.

 

[Kirstie]

Interesting - I grew up in a not very well off family, and in my case it meant I knew the value of money very well! I also learned to appreciate the free and cheap in life.

I think it was a case of him going out and getting all the things that had been denied him and then him not being able to deal with the consequences. If he wanted anything it was always 'no' or ancient hand me downs, and he got the crap kicked out of him at school for being the poor kid. He'd never been exposed to financial dealings of any kind - knowing the meaning of debt, what a high or low interest rate was, how long stuff takes to pay back etc. As such he really did have an astonishing ability to completely misjudge what he could and could not afford because any kind of money more than the bare minimum he perceived as luxury. Obviously that's not the way to go and he failed to get informed. It's a tough lesson but I think he's learned it.

 

[Gromit]

See thats what I mean, you get better payment protection if you use a credit card, money that isn't yours, that seems all wrong to me.

You should get better protection using your debit card after paying for goods and services with your own money, money that you have earned not money belonging to someone else.

 

[Kirstie]

Payment protection is in part a marketing ploy to get you to sign up to the credit card. By having you sign up, companies make much more money out of you in the long term than if they offered better terms with a debit card.

 

[Gromit]

Payment protection is in part a marketing ploy to get you to sign up to the credit card. By having you sign up, companies make much more money out of you in the long term than if they offered better terms with a debit card.

Thanks Kirstie, that makes me more determined not to have one.

 

[Arch]

See thats what I mean, you get better payment protection if you use a credit card, money that isn't yours, that seems all wrong to me.

You should get better protection using your debit card after paying for goods and services with your own money, money that you have earned not money belonging to someone else.

Yes, it seems mad, but it's a game, and you can beat them at it, by having a card with no annual fee, and then just paying off so that you never pay interest. HSBC give me a credit card, and get nothing from me for doing so, because I pay off each month. So I reckon I win.. As far as I'm concerned the money I spend on the credit card is mine, because I don't spend it unless I know I can cover it there and then anyway. I know that's a bit twisted, but it's how I stay in control.

I should probably get a cashback type card, like Helen, but I spend so little I dunno if it would earn me much. A friend of mine has an air miles card and by simply spending on that all the time (and paying off promptly), they get a 'free' trip to Europe every so often.