What is a default?

boo80

I know this is a really silly question, but I have no idea what this actually means!! What effect does a default have on me? I have 3 creditors, if they all default me is it worse than just 1?

I sent my I&E to Cap1 a couple of weeks ago and they have given me the option of a short term payment plan paying about £110 per month with no charges and interest and no default, or a long term payment plan of £35 pm and no interest. Acording to my SOA I can't afford the 1st option but I don't want a default (even though I'm not too sure what this means lol)

The other thing is that they want me to sign the offer letter rather than print my name on it, is this right?

Thanks in advance, Boo.x

meerkat2007

I don't know about signing the offer letter, but this was my experience with Capital One:

Back in 2001, I had financial problems that led to a number of defaults, but Capital One was not one of them. They sorted out a long term arrangement instead, while other lenders defaulted me and passed the accounts on the debt collectors. Consequently, those defaults droped off my credit record in 2007, even though I am still paying a number of them off.

However, Capital One, which I finished paying in May 2006, will only drop off my record in 2012, and although settled in full, still indicates previous problems with maintaining my financial commitments. Had they defaulted me when everyone else did, Capital One would no longer show on my record.

boo80

So it would be better to go for the long term plan and let them default me? Thanks Meerkat

newlywed

A default is a black mark on your credit rating which stays there for 6 years from the date of default. It just means you will have problems getting any additional credit etc for the next 6 years.

Of course, if you can't afford your current repayments, then getting extra credit is a really bad idea anyway


If the short term thing means they'll mark your file as arrangement to pay then that will reflect badly on your credit file too - and possibly stay there till the debt is all paid off.

boo80

Oh I so don't want anymore credit lol! We rent at the moment though and it would be nice to get a mortgage one day. I guess I'm just going to have to accept that that won't happen for at least 6 years Thanks for the info

meerkat2007

boo80 wrote: »

So it would be better to go for the long term plan and let them default me? Thanks Meerkat

Boo80, I can only say that that is what happened in my case - I would not want to recommend one option or the other, I would just say that it's best to go with what you can afford.

meerkat2007

newlywed wrote: »

I've got two defaults - all the interest stopped when I got the defaults. It hasn't had any effect on me as we don't need a mortgage and I don't want any more credit.

The defaults will drop off my credit file a little while after the debt is all paid off (as the debt will take approx 6 years to pay).


However, one creditor has marked my file "arrangement to pay" and not defaulted me and I am unsure whether this will stay there until after the debt is all paid off - in which case it could be on there 6 years from the date I FINISH paying - in which case a Default would have been better as that's 6 years from the date of the Default notice.


Personally - I'd go for the option you CAN AFFORD - and then worry later if and when you want/need a mortgage

Newlywed, the "arrangement to pay" is what happened with my Capital One account. The "arrangement" will stay on your record until 6 years after the account is settled, rather than 6 years after the arrangement was originally made.

But I would second going with the option you can afford. That is more important than anything else. Far better to keep up payments that you can afford than overstretch yourself and, as in my case, put your head in the sand when you can't afford the payments, and end up with a CCJ (this was on another account, not the Capital One account, I hasten to add).