MONEY TRICKY TRICKS : WHAT ABOUT THE FUTURE?

Once you have made arrangements to pay debts at a small fraction of the original instalments, whether through a court or directly with your creditors or debt collection agencies, and have made payments over a period of time, it is worth considering making an offer for full and final settlement.

If you are paying only a tiny portion of the original instalment and your creditor knows that the debt will take years to clear, they will often accept a small portion of the total amount outstanding to fully discharge the debt.

The smallest amount of a debt I have managed to persuade a creditor (it was a debt collection agency) to accept was one third of the balance outstanding. Sometimes, in order to get the matter finalised and to obtain a cash payment far in excess of the instalments being made, a creditor will accept as little as 10% of the balance outstanding.

Once you have been paying greatly reduced instalments for a year or more you could try writing to the creditor with an offer to pay a portion of the balance in full settlement. You could try initially by offering only 10% of what you owe. This might well not be accepted, but in some cases they will settle for this, particularly if you are paying a debt collector who has bought the debt from the original creditor for only 10% of the balance.

If you have been paying something like one or two percent of the debt monthly for a year or two it can be quite an attractive proposition for the collector to receive even 10%. If they refuse, then offer 20% (if you can afford it) - and increase by increments of 10% until they do accept. Even if you end up paying half of what you owe, if you can manage to raise the money and you want to discharge the debt completely, then this is worth considering.

If you do wish to obtain credit in the future, then the chances of being able to do this within six years of the latest default notice or court order are slim indeed.

However, after a six year period, your records are deleted. You can write to the credit reference agencies at any time, enclosing a £1 statutory fee, and obtain a listing of all the records they have. If any records are still in existence after the six year period you can write to these agencies and insist that such records that are older than six years be deleted.