Advice for a student in debt.

icouldnotthinkofaname

In a nutshell:

I'm a student that has currently around 6-7k debt from overdrafts, student card cards and catalogues etc. Never mind my student debt. Reason being, for those who are interested, upon dropping out of university the first time I stupidly began living off my overdraft etc (how much I regret that now).

Anyhow, after researching through this forum and learning about statute barred I wonder if the best course of action will be to actually ignore my debts. Don't get me wrong, I don't mind setting up repayment plans etc however my understanding is that even if a default has been paid for, it will remain on my credit file for a further six years. I cannot afford to wait this long.

A couple of defaults occured around 2008-09 therefore my credit file could be clear within a couple of years rather than another 6 + however long it'd take me to pay them off. I find it ridiculous that even if I won the lotto I wouldn't want to pay off my debts due to the fact I'd have to wait another 6 years!

• Is my understanding correct? Is this the best and quickest method?
• How come some listings on my credit file do not appear to be marked as defaulted yet I have not paid them in over a year? Would these drop off my credit file after paying or would the 6 year cycle thing come into play?
• Once my credit file is clear, would I take out a high interest credit card in order to rebuild my credit? And would I be able to even do this?
• I probably could not be able to return to the same companies that I owe money to if they have some sort of other record? How often do they keep seperate records?

Any help will be appreciated. Thanks.

ps: I have not acknowledged the debt in writing or made any part payments.

MusicalLawyer

You only get a default when the company put one on there. Example I have a catalogue debt which I got in 2009, I am on repayment scheme now but they never issues a default on my credit file.

With statute barred, that only works if the company hasn't contacted you at all in a 6 year period I believe. The best way is to pay them off. Even if you don't have a default on the account, by paying them off monthly you'll be making your credit better with each monthly payment you make so long as you don't miss any.

MusicalLawyer

If you defaulted in 2008, they come off in 2014. Wether they are paid or not.

icouldnotthinkofaname

KellyKing1987 wrote: »

If you defaulted in 2008, they come off in 2014. Wether they are paid or not.

But if I were to begin making repayments, the 6 year cycle would start again and 2014 would change to 2018? Is this correct?

"If the debtor acknowledges the debt in writing or makes a part payment within the original limitation period, then the time limits start to run again from the date of acknowledgement or the date of payment."

mrsb83_2

icouldnotthinkofaname wrote: »

But if I were to begin making repayments, the 6 year cycle would start again and 2014 would change to 2018? Is this correct?

"If the debtor acknowledges the debt in writing or makes a part payment within the original limitation period, then the time limits start to run again from the date of acknowledgement or the date of payment."

You are confusing default with the statutory time limit for taking you to court to claim the debt.

A default is a notice issued by a creditor and recorded on your credit file. It will fall off your record after 6 years.

A creditor must start proceedings for claiming a debt within 6 years of the last acknowledgement of the debt by the debtor.

Tixy

As said above - the defaults drop off after 6years. Starting making payments won't prolong how long they are on your file.

For debts without a default they drop off 6years after the debt is satisfied / the account closed.

If your debts are not due to become statute barred for another couple of years or more don't forget its quite possible that one or more might take court action against you - which would then leave you with a CCJ on file for a further 6years and mean that that debt would never become statute barred.

Have you checked all 3 of your credit files for defaults etc? it might be that some are only recorded on one or 2 of your files.

icouldnotthinkofaname

So in other words, my defaults will drop off my credit file once the 6 years is up even if I begin making re-payments on them now? I just didn't want to prolong my misery.

I've not looked at all 3 credit checks yet. Chances are the other debts have already turned into defaults but recorded on the other files? I just found it strange that on this particular credit report even though I had not made any repayments in at least a year they had not turned into a default.

Thanks for the help. Cleared up the confusion.

BlushingRose

KellyKing1987 wrote: »

With statute barred, that only works if the company hasn't contacted you at all in a 6 year period I believe.

I thought it was if you hadn't contacted them, made payments or acknowledged the debt at all.
I thought the companies could contact you as much as they like.

icouldnotthinkofaname

BlushingRose wrote: »

I thought it was if you hadn't contacted them, made payments or acknowledged the debt at all.
I thought the companies could contact you as much as they like.

According to other forums you are right.

Anyhow, just in case anyone stumbled across this, I found this from Experian to backup Tixy's previous comments:

"Settled accounts are kept on file for six years from the settlement date."

Therefore if I did begin making repayments on non defaulted debts, I'd have to wait another 6 years from the date I settled it. You are therefore better off letting a debt turn into a default and then waiting 6 years from the default date, unless of course you have the money to settle the debt immediately to then start the 6 year cycle.

Also accoring to James Jones, spokesman for Experian, if a CCJ is issued and you pay it in full off within the first month, the details gets removed from your file straight away avoiding the 6 year cycle. If you haven't got the money like most people won't have, you'll have to wait another 6 years.

To conclude: I'm probably not the first person to think like this but I don't see any incentive to pay off the defaults if they won't be removed any earlier. Meanwhile, if I set up repayment plans with debts that have not turned into defaults I'd have to wait firstly until I've settled it, and then a further 6 years to have them removed. I fail to see the point, its just prolonging my misery.

Some might argue that after 3/4 years of settling a debt your chances will still increase and you may even be able to persuade companies to remove them, but if it's going to take you 1-2 years to pay off the debt anyway then you are still waiting a further 6 years. Maybe immoral, but my credit file will hopefully be cleared in 4-5 years rather than a further 1-2 years to pay my debts, followed by another 6 years = 7-8.

Angry_Bear

I don't think Experian have given you the right info. See here http://forums.moneysavingexpert.com/showpost.php?p=50093723&postcount=2

Six years from the date the account was settled, or defaulted , whichever happened first.

So if you have a default and then a later settlement, it's 6 years from the initial default.

Tixy

icouldnotthinkofaname wrote: »

Therefore if I did begin making repayments on non defaulted debts, I'd have to wait another 6 years from the date I settled it. You are therefore better off letting a debt turn into a default and then waiting 6 years from the default date, unless of course you have the money to settle the debt immediately to then start the 6 year cycle.
This is incorrect. If you start making repayments now your debts will still fall off 6years from the original default dates - as has already been stated on this thread several times.

Also accoring to James Jones, spokesman for Experian, if a CCJ is issued and you pay it in full off within the first month, the details gets removed from your file straight away avoiding the 6 year cycle. If you haven't got the money like most people won't have, you'll have to wait another 6 years.
This is correct - you have 1 month to pay off a CCJ from the date it was issued - and if you do it is not recorded on the registery trust or your credit file. But creditors would issue court proceedings to your last known address - if you've moved and not told them your current address it might happen that you don't even find out about a CCJ within the month.

To conclude: I'm probably not the first person to think like this but I don't see any incentive to pay off the defaults if they won't be removed any earlier.
The incentive is that if you pay the debt off you won't be taken to court. And also if you pay in full whilst its still on your file - it will be shown as a satisfied default for the remainder of the 6years since the default. A satisfied default looks better than an unsatisfied one.
Meanwhile, if I set up repayment plans with debts that have not turned into defaults I'd have to wait firstly until I've settled it, and then a further 6 years to have them removed. I fail to see the point, its just prolonging my misery.
If they don't already have defaults then now is a good time to start recording positive credit history on your file by making payments. As these will stay on much longer than your accounts that are already defaulted, once the defaults drop off you will then be showing a history of repaying your debts.
.

At the end of the day you make your choice whethe to take your chance - if a creditor takes you to court and obtains a CCJ and you either can't pay it off or don't pay it off within a month your file will be wrecked for much longer.
Creditors (or debt collectors) are increasingly taking court action just before a debt becomes statute barred, so its quite possible yours could still obtain CCJs against you.