Damage limitation MBNA/Capquest "default"

ScouseGit

Company name: CAPQUEST (FORMERLY FTC) Account type: Bank Started: 18/07/1996 Default Balance: £4,925 Current Balance: £3,007

Defaulted On: 30/05/2009 File Updated for the Period to: 06/06/2010 Status history:
[] brackets indicate most recent months status [ 8 ]

Hi, I am hoping for some advice here. Due to family circumstances (my dad was ill while living abroad and I took my eye off my finances to go and look after him) I have ended up with the default shown above on my credit file.

I tried to settle the issue with MBNA at the last minute in 2009.

The weird thing is that I paid them the settlement fee by bankers draft, which they accepted [I was advised by the Insolvency Helpline to do this, and was told it would only be recorded as a "blip" and would not be registered as a default], yet MBNA subsequently sold the balance on to CapQuest and registered the default. I am now being hassled by CapQuest. The settlement amount I paid to MBNA was about £1900, about three times the amount of minimum payments I had missed on their account.

MBNA's excuse was that the default had been registered on the last day of May 2009 (on their internal system :mad: ) and they were legally obligated to inform the credit reference agencies. Nonetheless, they were quite happy to take the settlement cheque one week later! It looks at first glance that I have screwed up my credit for six years for the sake of the cheque being a week late!

What is the best course of action to minimize the damage done to my credit score?

Did MBNA act lawfully or fairly? Is there any scope for negotiations with them?

Would a "notice of correction" outlining the circumstances - that this really was a "blip" - cut any ice with future lenders?

Regarding CapQuest, would paying them the outstanding balance make any significant difference to the score, or would it just be throwing "good money after bad"?

izools

Did you get it in writing from MBNA that they were accepting £1,900 as the Full and Final settlement for the debt? Did you receive the default notice in writing? What date is on the letter? What date was the deadline on the default notice letter to rectify the default?

stephane_2

Did you get everything in writing from MBNA at the time that the £1900 would be a final payment for the account? If yes then all you have to do is send a copy of the letter to Capquest. If not then it is your own words against them. Who has registered the default against you, Capquest? Have they sent you a default notice? They are legally obliged to do so. If you decide not to pay then default will be on your file for next 6 years and cap quest will be harassing you for payment. What I would suggest would be to come to some sort of agreement with capquest so that if you were paying account that they remove default, but before paying then you would need to get everything in writing from capquest.

ScouseGit

izools wrote: »

Did you get it in writing from MBNA that they were accepting £1,900 as the Full and Final settlement for the debt? Did you receive the default notice in writing? What date is on the letter? What date was the deadline on the default notice letter to rectify the default?

The £1900 figure was mentioned in correspondence during May 2009, along with various other options, such as £117 (the oldest arrears) and a payment plan, or £80 per month (they would waive interest.) Various "deadline" dates were mentioned, such as "by May 19th" [on May 7], "today" [on May 8], "in the next seven days" [on May 18th].

Unfortunately, I did not return to the UK until the first week of June 2009, and, discovering the letters, immediately sought advice from the Insolvency Helpline. They advised me to send a banker's draft [not a cheque] for £1900 by registered post, with a letter "asking" that MBNA do not register a default. This I did on June 8th. On 15th June I received a letter from MBNA thanking me but advising that "due to the outstanding arrears your account has now defaulted and may be sold to a vendor in due course" [Note, on this date, 15th June, there were no arrears, since they had cashed the draft for £1900 and the arrears had only been about £700], and they continued... "in the meantime you must continue to make payments to MBNA, and as a goodwill gesture we have suppressed all interest and charges on your account so any payments received will reduce your outstanding balance."

I immediately phoned them, and the person at MBNA said the account had automatically gone into default on the 30/5/2009 (by the sounds of what he told me, it's a fixed monthly date - the last Saturday of the month) and there was nothing he could do. I was no longer a customer of MBNA and the outstanding debt would be sold in due course to CapQuest. About three months later CapQuest started hassling me with further "settlement offers", then statutory demands, now phone calls four or five times a day...

I do not know who registered the default or when. All I have is the printout quoted from CreditExpert in the original post...

stephane_2

It looks like to me that from what you are saying, MBNA registered the default. It was all well enough to send the money but what the insolvency debt line did not tell you was to get the request of the default removal in writing before sending the money. Now the remaining debt is with Capquest and they will be on your back until you pay for it, I would suggest that you offer them a full & final settlement in writing and you could start offering to pay as a F&F 25% of outstanding debt and see what they say. Unfortunately, it is extremely unlikely that MBNA will agree to remove the default so it will show on your file for the next 6 years, which will have a huge detriment on your credit file, but it is far better to have a default "satisfied" rather than unpaid.

ScouseGit

The Insolvency debtline suggested that they probably would not register the default, since the arrears were entirely cleared (and much more) by the £1900 a few days later. I read somewhere that this is industry best practice. Clearly not with MBNA! They didn't play a straight bat either. If I was no longer a customer as of 30/5/09 [as I was told on the phone], surely they could not accept a banker's draft on 8/6/2009, but should have returned it to me.

Anyhow, is it worth adding a notice of correction, explaining this bizarre sequence of events?

brians_daughter

in my experience a notice of correction will do nothing, lenders have to look at what you say but in reality (for me anyway) it meant nothing to the lenders i approached.

maybe worth asking 'never in doubt' to look at this thread... he knows about defaults etc and maybe able to assist.

ScouseGit

Anyhow, could someone give best advice on damage limitation?

Should I pay CapQuest the entire outstanding balance, add a Note of correction and hope for the best?

The only lines of credit I will be looking for in the next six years are likely to be buy-to-let mortgages.

izools

ScouseGit wrote: »

Anyhow, could someone give best advice on damage limitation?

Should I pay CapQuest the entire outstanding balance, add a Note of correction and hope for the best?

The only lines of credit I will be looking for in the next six years are likely to be buy-to-let mortgages.

First and foremost, the balance is not settled or satisfied.

MBNA stated in their letter that this £1,900 figure would be accepted in full and final settlement of the debt - but only if you'd paid by a given date. The advice you sought from this insolvency helpline was incorrect - despite the fact you paid the amount MBNA said they would accept as Full & Final, they are exercising their legal right to hold you accountable for the rest of the debt because you missed the deadline.

Balls I know, but this is how the land lies, it is legal, and there's nothing that can be done about it now that the debt has been sold to Capquest.

You will have a default registered on your credit file until 30/05/2015. At present it shows an outstanding balance. Once you have cleared the outstanding balance (your previous balance less the £1,900 you paid) the default will be updated on your credit file as "Satisfied" but will still be there.

My advice would be to write to Capquest, and offer £1,500 in full and final settlement of the £3,007 outstanding on the understanding that the default will be removed in full from your credit file and not just marked as satisfied.

They'll say no to start off with. That's fine, give it 6-8 weeks and offer the same again. If they say no again, you can ask them to propose a figure that would be acceptable in F&FS of the debt on the understanding that the default will be removed in full.

You'll have a bit of ping pong to play, but if you can convince Capquest that they only way they'll get a penny is to remove the default in full they may very well do so. Otherwise there's little point paying a penny - a satisfied default will still have a very detrimental effect on your credit rating.

ScouseGit

Thanks for the advice, but...

Just one question.

How can CapQuest remove the default if it was originally placed by MBNA?

izools

ScouseGit wrote: »

Thanks for the advice, but...

Just one question.

How can CapQuest remove the default if it was originally placed by MBNA?

The same way they can update the balance if you pay off any given amount.

They will either be working on behalf of MBNA with MBNA updating the CRAs, OR, there will be a deed of assignment of the debt from MBNA to Capquest which gives Capquest the legal right to update the account information on your credit file themselves