Default accounts

lemmony_2

Hi,

I'm not sure if this is the right board, I tried to post about this last week but for some reason it never got online.

I just wondered if someone could help explain to me what a 'Default account' is? I understand that if you have a loan/cc and you miss over 8 payments that it goes into default and this massively affects your credit rating and stays on your record for 6 years.

My boyfriend has managed to pay off some substantial debt in the past few years and recently requested his credit report to see what was left. Two accounts on there are marked as "default" and both have an outstanding balance. On one of these the current and default balance are the same, on the other the current balance is less than the default.

Where does he stand with these two accounts? One has been in default for over a year and the other about 6 months, although it looks like it's been bought by a debt company so not entirely sure when it actually ended. No one has approached him to pay them back (or even let him know they're in default as far as i know) and if they did we currently couldn't afford to pay them off. Will these get wiped after so long or is it something that is still gaining interest and will need paying back?

Any help would be appreciated as it's currently an unknown!

Mara69

Simply put, a default is when someone misses a payment. Could be on a credit card, loan, catalogue. Missing one payment = a default. They stay on your credit file for six years. Yes, they should be paid.

osborn99

Mara69 wrote: »

Simply put, a default is when someone misses a payment. Could be on a credit card, loan, catalogue. Missing one payment = a default. They stay on your credit file for six years. Yes, they should be paid.

Wrong. Missing a payment will say missed payment on your credit report.

If you can't pay the debt you can ask the company to default the account or continue to miss payments and they will pass the debt on to a 3rd party and put your account in default,

The good side to defaulting is it will freeze your interest and it will make it easier to repay with lower monthly payments. The downside is you will find it hard to get credit for the next 6 years.

I'm afraid your default will last 6 years from the date it defaulted paid or not.

You are not paying interest but you have to pay it back. Eventually they will trace your BF. The 3rd party will go through all your finances and you only pay what you can afford. It's best to call the 3rd party now than them to chase you because they won't like it and might not be very helpful.

Tixy

lemmony wrote: »

Hi,

I'm not sure if this is the right board, I tried to post about this last week but for some reason it never got online.

Your post from last week is here with some responses https://forums.moneysavingexpert.com/discussion/comment/54073571#Comment_54073571

A default is registered when the agreement has broken down. Its typically registered when a debtor falls between 3 and 6 months behind with payments - though the guidelines on registering defaults are a lot more complex than that.

When an default is registered on your credit file there is no guarantee or obligation that the creditor must freeze interest. Most credit agreements allow interest to continue to be added even if a debt is sold to a third party.

The best way to try to get interest frozen is to keep in touch with the creditor, explain why you cannot afford repayments, offer to pay what you can afford and ask them to consider freezing interest.

As he has just got a copy of his credit file he may well find that his creditors or debt collectors do get in touch to start chasing these debts again.(This is because he has just provided or confirmed his address).
If he cannot afford to repay in full he can always offer monthly payments at a rate he can afford.

The accounts and defaults drop off his file 6years from the date of default on the file, regardless of whether paid or outstanding at that point - though that wouldn't mean that he no longer owes the money.
If they remain unpaid its possible his creditors would attempt to obtain a CCJ against him - which would then be on file for a further 6years.