Default Notices & Payment Plan

[getoutofdebt]

I have several unsecured creditors and I have not been earning sufficient money (due to my employment situation in this climate) to be able to service the minimum payments on several of them.

I am now in the situation (after them having accepted a £1 payment for a short period) where two of them wish to default my accounts and either (presumably) pass on to a DCA or manage in house via collections. My credit rating was apparently "excellent" in January when I took a new mobile phone - I had been efficient in "robbing Peter to pay Paul" & thus far no defaults on the file.

My concern longer term is/was the impact of the default notices on my account and an inability to remortgage & obtain secured debt (believe me when I say that I do not intend to ever take out unsecured debt again!). Therefore, my main tactic has been to try and avoid any default notice on my file. However having now read a very helpful thread on this site entitled "Payment plan and credit report" it appears that I have been misguided in doing so.

My understanding from reading this is that if I get a defaulted account the notice/marker will automatically drop off after six year period - full stop.

However if I carry on trying to have a repayment plan with them then even if this arrangement carried on after the six years, as soon as 6 years is up the default notice drops off and my file would be "cleaned up"... Therefore better to get in now and "default away" as it were, rather than come to an arrangement whereby it could potentially go beyond the 'defined' six year default notice expiry ad nauseum.

I would be very grateful if anyone can provide some further guidance or point me as to where I can find more out about this.

Thank you very much!

[Celestine]

Re: Default Notices & Payment Plan

Hi there

Yes, you are right, default notices 'fall off' your credit file after 6 years. So if you have a 'long term' plan of recovery after 6 years from now, it would be better to be defaulted earlier rather than later.
However, please be careful, some companies sell bad debts to third parties and we have seen reports of 2nd defaults being applied by the third party later on, starting the 6yr default clock ticking again.
Keep a very sharp eye on your credit report. If you see any mention of secondary defaults being applied then you will need to challenge them robustly.

Good luck with your debt free journey x

[getoutofdebt]

Re: Default Notices & Payment Plan

Thank you very much Celestine. I really appreciate it.

So in fact, as I understand it, it would be better to get my "defaults" started now. That is get the mess 'finalised' and clear up thereafter.

For clarity when you state that a secondary default is put on the credit report by a third party who has bought the debt they are not entitled to do so - only the initial primary creditor with whom the debt was incurred?

Many thanks!

[labman]

Re: Default Notices & Payment Plan

Another good reason for having it default now is that it is then likely to be passed to a DCA. The DCA would be open, should you ever be in a position to do so, to reach an appealling F&F settlement with you. The OC would be more reluctant.

[getoutofdebt]

Re: Default Notices & Payment Plan

Thanks Labman that's brilliant. What you say makes perfect sense.

[Tommyboy]

Re: Default Notices & Payment Plan

Hello

Sorry to but in, I have a plan with payplan, how did you get them to accept £1 a month. Hope you don't mind me asking.

[labman]

Re: Default Notices & Payment Plan

You would be highly unlikely to achieve this through Payplan. Your level of priority debts doesn't sound high enough from your other thread to enable such a token offer on non priority debts.

If you were to go on a self managed DMP, it was is quite possible that you would be able to negotiate lower repayment levels than you currently have. I'm a bit concerned about how little disposable income you have at the moment. Has anything happened since you did your Income and Expenditure with them?

[jax50]

Re: Default Notices & Payment Plan

Interesting topic this one..my OC has kept the defaulted account and 6 years is up quite soon. Then it will drop off my CRA file forever. I wonder what they will do from year 7 onwards ? I guess the threat some DCA's give about marking your credit file will never apply to this account. As a matter of interest who is responsible for removing the reference on my CRA files...and what if they don't do it ? Do I have recourse ?

[labman]

Re: Default Notices & Payment Plan

It should drop off automatically. If it doesn't, it should be as simple s writing to the CRA and asking them to remove it.

[jax50]

Re: Default Notices & Payment Plan

I've just dropped a letter off the the OC to remind them, it should be their obligation to ensure all entries are removed in my opinion, and besides I don't know which agencies they have reported to, plus why should I have to apply for copies of them all..and then write to them all if need be...do they think I'm made of money...