Defaulted on a loan....and didn't even know it!

Tombo46

Hello people. I've just joined this forum to try and get some help on a problem I've just come across.

It's going to sound really bad but I'll explain why later. I recently defaulted on a loan and didn't even know it. I only found out after recently trying to get a loan for business improvement and found no one would touch me, so I did a credit check etc...

I have (or rather had) a credit agreement with nationwide. It was a loan over 5 years and for 2 of those years I paid it off without any problems. I'd like to stress that I'm not struggling with debt, I have a couple of credit card's that I owe about £600 on (needed to fix car) and thats about it (other than the defaulted loan).

The reason I managed to default on a loan I wasn't struggling to pay off was down to a few things. Firstly, I took on a new business and as most business owner's would agree, with working 80 hours a week some things tend to get put to one side, one of those being checking my bank account! for year's everything had ran smoothly and the way I operated (as it's a long drive to my bank) was to wait until my balance when over it's limit and go and pay a chunk of money in to the bank. I understand now this isn't the best way to do things but I'd never had a problem before, providing I checked my balance every day. Unfortunately I somehow missed a payment on my loan and never realised it. Another contributing factor was that I changed address the same time I opened the business. There were a few complications telling some people my address had changed as it doesn't show up as a residential address. While I thought I had sorted it out with everyone it appears Nationwide are unaware of my new address so any letter's from them telling me about defaulting were not recieved.

I wan't to get things back on track to the way they were however I'm worried that if I contact them explaining things they will demand the full sum of money up front (nearly £4000). I have this money to hand but it is saved up to pay for my self assessed income tax next January. The question is. If I contact them, will they sort out a new loan to pay the existing one off? If so, are they likely to sting me on the interest rate? Can the default be removed from my credit score? And if they will not accept a new loan to pay it off, how will they go about collecting the outstanding debt from me?

I'm embarrassed by the whole situation to be honest. I'm a believer in paying my way in life and have a disliking to the "screw the banks" attitude a lot in this country seem to have adopted. It is money I owe, and I want to pay it back.

Any help or advice on the matter would be greatly appreciated.

All the best

Tom

CH27

It's highly unlikely you will get the Default removed.
Contact them & make an arrangement to repay the balance asap.

geoffky

talk to them as they might work with you..the default will stay..

Tombo46

So is it safe to say I can't borrow anything, even for my business in the next 6 years? Is there absolutely no way of rectifying this so the bank can get their money and I can have the default removed? If I include correspondence that shows I informed them of my change of address (as I received nothing telling me I had missed a payment) would this help?

Thanks again.

rising_from_the_ashes

Hi Tom, it's very unlikely that you'll get the default removed because, however you look at it ... you did default.

However, it's probably better to have the default showing as "settled" on your report.

If you phone them up/write to them, they make take a reduced figure, however this is likely to show on your report as "settled in part" rather than "settled in full". (Follow any telephone calls up in writing.)

As you say, letting your account run and run until it's over it's limit is not a great way to run it - if it's so far to your bank from where you work/live (my branch is around 80 miles away and the nearest branch 35 miles) then open a branch with another bank, pay money in regularly and transfer it online to your main account.

As time goes on, it may be possible for you to obtain credit (especially if there are no other issues and you have settled the debt in full) before the 6 years are up, but probably not for a while.

BitterAndTwisted

No, it wouldn't. You had an obligation to pay your loan and you didn't pay it. Not checking your bank statements for years on end is not mitigation. Well, not in this life it isn't. I'm afraid your lending plans are well and truly scuppered unless your business is a limited company and can borrow in its own right. Banks often insist on personal guarantees from the shareholders in any case, depending on the size of the loan.

Tombo46

rising_from_the_ashes wrote: »

Hi Tom, it's very unlikely that you'll get the default removed because, however you look at it ... you did default.

However, it's probably better to have the default showing as "settled" on your report.

If you phone them up/write to them, they make take a reduced figure, however this is likely to show on your report as "settled in part" rather than "settled in full". (Follow any telephone calls up in writing.)

As you say, letting your account run and run until it's over it's limit is not a great way to run it - if it's so far to your bank from where you work/live (my branch is around 80 miles away and the nearest branch 35 miles) then open a branch with another bank, pay money in regularly and transfer it online to your main account.

As time goes on, it may be possible for you to obtain credit (especially if there are no other issues and you have settled the debt in full) before the 6 years are up, but probably not for a while.

Thanks for the advice. The improvements to my business can be paid for off my own back so im not too worried about not being able to borrow, it just means it will have to happen next winter instead of now. I'll give nationwide a call and get the debt settled, then clear the small debt owing on my credit cards then I'll be completely debt free. Being debt free and not being able to borrow would probably do me more good than harm! Just angry with myself for not noticing it. Because I never received any correspondence I just assumed everything was fine which was a big mistake. I also feel slightly annoyed too as abolishment from lending because of an innocent mistake (be it on my part) is pretty harsh (but I understand the reasons why from the banks point of view).

I do however feel a bit hard done to being grouped with people who live beyond their means and go bankrupt. Kinda like a a guy who committed a smaller crime than a !!!!!phile but went to jail for the same amount of time.

I'll just have to take the good things away from it and try to learn from it.

As for the advice about the bank account, I didn't think there was anything wrong with the way I was doing things. I always covered the items for that day and often paid in a couple of grand at a time which covered me for a couple of months. I checked my account and I paid the money in to my account the same day the direct debit came out like I have it in the past. Unfortunately the bank still refused it for whatever reason. At the end of the day though, I should have checked! I did try changing my account though like you suggested. I opened a current account and requested to transfer everything over to the same bank I use for my business. It's been 10 months now and it's still not transferred. I did this because the bank I was using (Natwest) closed my local branch that was next door to my shop, taking £1200 a week of trade with it haha.

Thanks again for the help everyone. If anyone has anything else to add or any more suggestions that would be great.