Question about defaulting payday loan accounts

[highwire]

Hi there,

Quick question about defaults..... I understand that default notices and registering defaults on credit files are separate things. But I'm not sure whether one requires the other or vice versa?

To explain what I mean, I have a really old payday loan in arrears with PDUK (showing as 'late payment' on my credit file) and I contacted them to see if my account was included in the FCA write off order. They said it wasn't. When I asked what they planned to do with the account, they said it would eventually be defaulted and they would then decide whether to take legal action or sell the account to a third party.

Now my understanding was that when an account goes into arrears, the lender has a reasonable time to default the account (up to 6 months?), but are they legally allowed to default the account say 2 years or potentially 6 years down the line?

If this were the case, then a lender could screw your credit file for up to 12 years instead of 6 which would not only be unfair but an abuse of the system, no?

Does anyone know the actual law surrounding this? I won't be impressed if I get a fresh default on my credit file 3 years after my battle with payday loans is almost over....

Thanks in advance

[judgemental24]

Re: Question about defaulting payday loan accounts

The answer is no they cannot default the account further down the line say 2 years

To do that would not only deliberately circumvent the Default and Termination Regulations but also section 5 Limitations Act

Payday loans are short term 30 day loans and terminate after the 30 days are up.
That is when they can demand all sums due

[nemesis45]

Re: Question about defaulting payday loan accounts

Hi there,

Quick question about defaults..... I understand that default notices and registering defaults on credit files are separate things. But I'm not sure whether one requires the other or vice versa?

To explain what I mean, I have a really old payday loan in arrears with PDUK (showing as 'late payment' on my credit file) and I contacted them to see if my account was included in the FCA write off order. They said it wasn't. When I asked what they planned to do with the account, they said it would eventually be defaulted and they would then decide whether to take legal action or sell the account to a third party.

Now my understanding was that when an account goes into arrears, the lender has a reasonable time to default the account (up to 6 months?), but are they legally allowed to default the account say 2 years or potentially 6 years down the line?

If this were the case, then a lender could screw your credit file for up to 12 years instead of 6 which would not only be unfair but an abuse of the system, no?

Does anyone know the actual law surrounding this? I won't be impressed if I get a fresh default on my credit file 3 years after my battle with payday loans is almost over....

Thanks in advance

In reality now a debt is an asset of the lenders and they choose how they manage that asset, all lenders PDL's have there processes for dealing with delinquent accounts, using arrangements to pay instead of defaulting used to be seen as unfair if prolonged the ICO has changed its view on this.
Take Welcome Finance which leaves delinquent accounts dormant and defaults them just weeks before selling them many PDL's do the same unfair yes illegal or unlawful I don't think so.

The approach to use imo if one feels that the conduct of a lender is unfair raise a formal complaint with the lender, and the ICO and challenge arrangement to pay late default ( 6 months is it seems not as effective in claiming unfairness) as putting one at a disadvantage by extending the " life " of the debt.

nem

[Debt Camel]

Re: Question about defaulting payday loan accounts

I understand that default notices and registering defaults on credit files are separate things. But I'm not sure whether one requires the other or vice versa?

No , it's best to think of them as two completely separate things.

To explain what I mean, I have a really old payday loan in arrears with PDUK (showing as 'late payment' on my credit file) and I contacted them to see if my account was included in the FCA write off order. They said it wasn't

In that case, see if you can claim compensation because it was unaffordable (HINT almost all payday loans were!) or because you were treated unfairly when you were in difficulties. Or both! See http://debtcamel.co.uk/payday-loan-refunds/

When I asked what they planned to do with the account, they said it would eventually be defaulted and they would then decide whether to take legal action or sell the account to a third party.

Now my understanding was that when an account goes into arrears, the lender has a reasonable time to default the account (up to 6 months?), but are they legally allowed to default the account say 2 years or potentially 6 years down the line?

Let's step back from asking "what can they legally do?" because that isn't helpful. Instead ask "what should the default date for this debt be?" - to which the answer is pretty much what you have said. This article http://debtcamel.co.uk/debt-default-date/ looks at how to get a default date corrected / added / deleted.

Does anyone know the actual law surrounding this?

This isn't going to help. What matters is that you can go to the ICO to get a wrong default date corrected. And if the ICO says no (and they do seem to get this wrong in the case of secured debts) you can go to the Financial Ombudsman.

Incidentally, if in your quest to get payday loan redress you are awarded interest and charges by the ombudsman because the loan was "unaffordable", then they usually tell the payday lender they have to delete the credit file records. whether or not they are defaulted.

[judgemental24]

Re: Question about defaulting payday loan accounts

i should be able to clear this up within the next 28 days as i have just done an official complaint with the credit agencies and the ICO

I had a 30 Payday loan in 2007

The swines last year never defaulted me but they placed an entry on my credit file saying they closed the account in 2014, some 8 years after last cause of action.

This has the possibility of staying on my credit file until 2020


Mr xxx xxx
Address
xxxx
xxxx
xxx

Date of birth

Account type
Advance Against Income

Account number
**************
Account start date
/03/2007

Account end date /06/2014
Opening balance

£ 100
Payment start date
/03/2007

Repayment frequency
Periodically

[Debt Camel]

Re: Question about defaulting payday loan accounts

I had a 30 Payday loan in 2007

Then try to get compensation for these - 30 payday loans in 2007 is a clear cut case of the loans being "unaffordable" - the only way you could repay one and continue with your usual living expenses is to take another loan out. See http://debtcamel.co.uk/payday-loan-refunds/

I'm not saying the ICO won't sort out your default dates - this should happen.

But also claim payday loan redress!

[highwire]

Re: Question about defaulting payday loan accounts

Thanks for all the replies. Some conflicting ideas though between all three of you. It's not an immediate concern for me, but seeing as PDUK are being rather ambiguous with their intentions, I was just looking to clear up the facts.

I did apply for a DRO but I cancelled it after receiving Step Changes draft. They included family debts which I only mentioned informally, as well as my phone contract and car insurance. Including all of this would have caused more hassle than it's worth!

But back on topic, presumably PDUK cannot sell on the account or initiate legal proceedings without serving a default notice first? And surely if they did after 2 years+, I could argue they took an unreasonably long time to go about this thus abusing the Limitations Act? Same goes for registering a default marker on my credit file?

I have already had a complaint with them go to the FOS but it wasn't upheld despite PDUK raiding my bank account for half the balance leaving me over my overdraft limit by £350. This resulted in my bank account being defaulted and closed as I couldn't bring it back within the limit. The FOS did not consider this to be sufficient enough to warrant the remaining balance to be discharged. The FOS are extremely inconsistent and this really p*sses me off!

Even now PDUK have had the FCA intervene much like Wonga did, they are still not interested in showing any consideration or forbearance to me. I reckon this account will stay in limbo until it's statute barred!

[highwire]

Re: Question about defaulting payday loan accounts

Hi beagles,

Going back to my original post... I have been in contact with PDUK again because it looks like they're just leaving the 'late payment' marker on my credit file indefinitely. I've complained that they are unfairly prolonging the record on my credit file and that they have missed their opportunity to default the account over 2 and half years ago. They won't budge though.

I phoned the ICO today and they said quite clearly to me that the account shouldn't be reported as late payment for more than 6 months and agree they should have defaulted the account much nearer the missed payment date. I asked what legislation this comes under and I was told it's mainly the Data Protection Act and parts of the Consumer Credit Act.

So is it best to take the matter up with the ICO or the FOS? I've had bad experiences with the FOS but I've also heard the ICO are very hit or miss as well. I'm considering sending a letter of intended legal action to see if that gets their attention. What do you think? I can't have this sitting on my credit file for the next 10 years! (PS the outstanding balance is made up of interest and there was already a settlement agreed but they refused to put it writing so fell through).