AP's or Defaults?

andy_P

Hi. Having asked for advice a few months ago you guys pointed me in the right direction with regards to how and in what order I ought to sort out paying off our creditors in order to plan for a mortgage application in 2014.

Briefly, entered an arrangement to pay with RBS, Barclaycard and LLoyds TSB in 2007 due to wife sudden and profound ill health that instantly lost her salary. RBS placed a DEFAULT on the account which they said they needed to do to freeze interest but the other two accounts have shown AP on my credit file thereafter, until Feb 2012 where I asked for them to returned to 'normal status' after having more money free following the RBS debt being totally repaid.

There's only £800 outstanding between the two debts and I'd like to pay them off over the next couple of months but that will leave the AP's showing for 6 years from the date of settlement. I have asked about the possibility of a small credit limit on the cards with which to replace the AP's over time but although they have both said I can apply for another card the accounts in AP apparently are no longer 'active accounts'.

If I leave the balances on the cards and make regular and timely monthly payments by Feb 2014 there will be 2 years of 'up to date markers' but knocking on for 4 years AP's prior.

Crystal ball time I know but there's a lot of knowledge on here. . .would the AP's as above rule us out absolutely from acquiring a mortgage in a couple of years time? Should I ask about the possibility of a retrospective DEFAULT similar to the RBS one on the grounds that according to FOS AP's should only be a short term measure if I've read that correctly. Two DEFAULTS along with the one already in situ from RBS would destroy my current credit file but would fall off after six years, just about within the time scale we'd like to secure a mortgage.

We've rented from the same landlord for the past 6 years so stability is there address wise and I am a band 6 nurse earning just over 27K at the moment but incremental pay increases will put me on 29K at the time of potential mortgage application (only been back in employment for 12 months due to caring responsibilities for missus and two young kids but will be 3 years at time of mortgage application). My wife is significantly poorly and is in receipt of DLA for life with both conponents HR, although a large percentage of this goes towards the care she needs for me to work full time.

Sorry to ramble but I really need to get my noodle around how significant the AP's will be even though they would be historic.

Thrugelmir

Settle the debt if its only £800. You are not in position to negotiate with your creditors. As a default in legal speak is a failure to make payments in accordance with contractual terms.

At least by clearing the remaining balance you will have a clean slate, on which to build a better credit record. Particularly if your plan is to obtain a mortgage in the future. Playing games gives the wrong impression as to how seriously you view the matter.

Wh05apk

They will be significant, and will vary from lender to lender, some will not touch you, others will depending on LTV/affordability will be. 90% will not happen for a long time, if you can get a 25% deposit, you could be in with a shout, this is definitely a broker case.

Dave_Ham

Hard call, although I think you may have options..

Defaults are certainly far worse than AP's and once your defaults drop off the credit files, you have scope.

Similarly you may have more scope with a bigger deposit as mentioned above..

Incidentally, who is your core bank account with - this may give an unexpected option or worst ways may buy you some additional credibility (dependent upon lender that is)

Also, some lenders will accept DLA and some will not, so again will make a difference.

All the best

andy_P

Thank you for your replies. The RBS default from 2007 (at the start of arrangement to make lower payments) is now settled and comes off my file in 2013. IF the Barclaycard and LLoyds accounts were retrospectively defaulted from the time the contractual payments weren't met (all payments in the arrangement have been made on time as you'd expect) they would also 'fall off' my file in 2013 and with a deposit of around 25K by 2014 (we've got used to not living on much so are saving everything we can) would a potential mortgage situation not look a whole lot healthier?

My current account is with Yorkshire bank and has been for around 20 years. Never been in an overdraft or had any bank charges or anything. It’s the sudden and unexpected loss of my wife’s salary and my exchanging my salary for Carers Allowance that has blown our plans out of the ocean.

re. paying off the £800. . .I want to do just that but that leaves the credit file with all those AP's from date of settlement which would be August 2012 until 2018 as I have no way of adding any other markers to those accounts. If the accounts were retrospectively defaulted I would marked as settled ASAP and the defaults would ‘drop off’ in 2013.

I absolutely don't want to appear to be 'playing games'. I just thought that there may be an argument that an arrangement to pay ought to have been a default considering it wasn't a short term measure? It would have been better (not morally which is why I sorted out the arrangement) but better nonetheless to not have paid nothing or just ‘token’ amounts and acquired defaults at the time.

I do thank the said companies wholeheartedly for allowing us time to repay our debts and am not trying to wriggle out of paying anything but there does seem to be a lot of posts on forums such as this regarding how people who have been 'defaulted' are in a better position over the longer term than the AP's staying in situ for six years after the account is settled. I just want to acquire the best outcome for our family now I have returned to my career and the missus is as stable as she's going to be.

Dave_Ham

I do not think they will retrospectively apply a default, almost sure they cannot..

I hope that you can get what you want and achieve the deposit you need.

Good luck