Defaulting on Co-op Career development Loan repayments

[MiloSaint]

Hi,

This is my first post on LB and I wanted to avoid creating a new thread completely to see if I can get some advice on this existing one!

I've taken on a professional career development loan with Co-op in 2015 to fund a MSc and can no longer afford the repayments of almost £300 per month as initially agreed and signed contract. I've been explained by the bank that I cannot lower the monthly repayments and can only default on my payments and that eventually Co-op will pass on my debt to Wescot debt collectors. Despite of written warnings on every page of my loan agreement stating that should I default on payments at any point my credit history may be "seriously affected", I have been reassured by co-op on several occassions that although they cannot put this into writing to me they can guarantee that as it's a "government backed loan" as opposed to a normal loan and therefore my credit history will not be affected as I default on payments to Co-op Or even when they pass on my debt to Wescot. It is my understanding at this point that should I then default on my agreed payments with Wescot only then my credit history will be affected. My question is, can anyone confirm that this is in fact true for career development loans not affecting credit histtories upon defaulted payments with the bank? Any advice would be much appreciated!

Many thanks in advance.

[des8]

Found on another site:
With a CDL the bank it self is not lending you the money but the government, the government has no means of directly lending money to people so has to employ the services of a high street bank (profitable for the bank, thats why they do it). So the government loans the money to the bank then the bank loans the money to you on their behalf so in affect the bank is nothing more than a go between for you and the government.
...........
This ..... means you can default on the loan without incurring penalties financially or with your credit rating, this is what happened to me, I could'nt find work flying and could'nt keep up the repayments therefore I defaulted on the loan, the bank was'nt bothered and just froze the loan which meant no more interest was inquired and I was able to pay off at a rate of my choosing. The bank said it dosent affect my credit rating as the CDL contract was with the government and they dont hold records of peoples financial history, in future it may affect my dealings with that particular bank but no other bank as they dont know about the CDL.

Hope this helps and good luck.

[MiloSaint]

Found on another site:
With a CDL the bank it self is not lending you the money but the government, the government has no means of directly lending money to people so has to employ the services of a high street bank (profitable for the bank, thats why they do it). So the government loans the money to the bank then the bank loans the money to you on their behalf so in affect the bank is nothing more than a go between for you and the government.
...........
This ..... means you can default on the loan without incurring penalties financially or with your credit rating, this is what happened to me, I could'nt find work flying and could'nt keep up the repayments therefore I defaulted on the loan, the bank was'nt bothered and just froze the loan which meant no more interest was inquired and I was able to pay off at a rate of my choosing. The bank said it dosent affect my credit rating as the CDL contract was with the government and they dont hold records of peoples financial history, in future it may affect my dealings with that particular bank but no other bank as they dont know about the CDL.

Hope this helps and good luck.

Thank you Des8, just re-reading your reply here. So from personal experience you then made a repayment plan affordable for you with a debt collecting agency I assume? Did you ever have any issues taking out further credit/ mortgage etc? I was told by co-op that this loan will be passed onto DCA called Wescot and again assured me my credit rating/ history won't be affected. However I've read elsewhere that just by having a debt collection agency name show up in your credit history will be enough for banks not to want to lend to you. Have you come across anything like this at all?

[des8]

This was not a personal experience, but as I stated it was found on another site.

I believe that if the debt is SOLD to a firm like Westcot it can impinge your credit record, but not if they are solely acting as a COLLECTION agency

Checking with Amethyst

[Amethyst]

Hmmm. Does the loan appear on your credit file at the moment at all?

Regarding this

I've been explained by the bank that I cannot lower the monthly repayments and can only default on my payments

This is in their terms ( attached ) ( although you need to check your actual agreement and terms as this is the current ones from https://www.co-operativebank.co.uk/loans/career-development-loan#! )

- obviously it depends on your circumstances.

7. Deferring Repayments 7.1 We may defer the commencement date for your repayments where your circumstances are such that the PCDL scheme allows for deferrals, if, prior to the end of the Repayment Holiday (or at such other times as we may allow), you telephone us on 03457 212 212* (lines are open 6am - 10pm, 7 days a week) or write to us at The Co-operative Bank p.l.c., P.O. Box 200, Unit 550, Metroplex Business Park, Broadway, Salford Quays, Manchester M50 2UE. You may be able to defer your repayments if: • you are unemployed and claiming means-tested benefits; • you are employed and you or your partner are in receipt of one or more of the following benefits: Council Tax Benefit, Employment and Support Allowance, Housing Benefit, Income Support, Pension Credit or Working Tax Credit; • you are taking part in a Government Training Programme and in receipt of the relevant allowance; • you have to attend your course for longer than expected due to ill health or other special circumstances as provided for under the PCDL Scheme but excluding pre-existing medical conditions which were diagnosed prior to the start of the agreement; • your course provider ceases to trade and either (a) you wish to continue the course with another registered provider; or (b) you choose to complete your course without registering with another provider as long as you provide evidence to us that you have all appropriate course materials and the examination centre is willing to allow you to sit your examinations; or • you are pursuing legal action against the course provider to recover your course fees.

2. Default 2.1 If you: a) do not pay us any amount within 30 days of its due date; b) break any other terms of the loan agreement in a significant way; c) have provided to us information or made any representations which are materially incorrect or misleading; d) are declared bankrupt or have similar proceedings taken against you; or e) do not take up the course at the training establishment, or before it finishes, you cease to be enrolled on the course at the training establishment we have the right to demand that you pay us the outstanding balance under this agreement (together with interest) less any rebate to which you may be entitled. We will send you a default notice where we are required to do so under the Consumer Credit Act 1974.