Credit Reports - AP or Default - which is 'better'

pmhtuk

Just a random chat with a friend brought this up, and I couldn't seem to find a suitable thread/post on here.

What would be 'better' long term, a AP marker or Default?

If someone defaulted on 1 January 2010, it'd disappear 6 years later

If someone AP-ed on 1 January 2010, it'd appear each month until finalised, and then drop off 6 years after that.

Am I missing something or does that penalise someone who's dealing with their debt instead of just defaulting and paying back a different way?

P.

Hatecreditors.com

In my opinion, AP Markers are worse than defaults for the exact reason you have mentioned.

One of my Barclaycards will be paid off in June this year. The final AP marker will therefore remain on my credit file until 2019. If they had of defaulted me when I started my DMP it would have dropped off in 2015.

So you're right, I'm worse off than someone who paid nothing at all. Justice??

michael1983l

Hatecreditors.com wrote: »

In my opinion, AP Markers are worse than defaults for the exact reason you have mentioned.

One of my Barclaycards will be paid off in June this year. The final AP marker will therefore remain on my credit file until 2019. If they had of defaulted me when I started my DMP it would have dropped off in 2015.

So you're right, I'm worse off than someone who paid nothing at all. Justice??

Just pay nothing at all then. There seems to be many drawbacks to facing up to ones debts when if you can manage to avoid them alltogether for 6 years you get off scott free. The debt laws in this country are stupid.

Kenny_B

Does your ecperian credit account show an AP on it?

Im in an agreement with my bank to pay an overdraft bit it doesnt show AP anywhere beside it. I had an account years ago which i settled but missed payments before hand and it shows as defaulted.

happy_bunny_2

They can and may give ou an AP then default you just before settled. Thus screwing you good and proper.

You then have to complain to try and get it moved back in time.

I would take a default every time, although if you don't pay enough you can get a CCJ for another 6 years.

Hopelessly_Hopeful

You can try to appeal quoting the ICO guidelines

Good luck

HHx

Trajal

Some very good factual answers here.

I believe there are two responses really and the correct response depends very much on your view of both your debt and the world in general. This may come across as a little preachy, but I don't mean it to be, I'm just talking about possible different viewpoints and not giving any judgement either way.

1) A default is better because you can probably only pay a lower % of the debt, while the record of the debt is entirely removed from your record six years after the date of default. This is very pragmatic and cheapest approach both short and long term.

2) An AP is better because you are telling people you have some problems but that you are being responsible enough to deal with them. You will have to pay the full price of your debt, it will most likely stay on your file for longer. But you will feel like you have done the right thing, both morally and from a macro-economic perspective.

Many people have defaulted or gone into IVAs/Bankruptcies who didn't really need to but it was the best for them. My view is that we should balance this against the moral and economic facts not just for ourselves but also for the country. When you borrow money, you pay it back, or at least you should, at a reasonable rate of interest.

Deliberately defaulting is a declaration against that principle.

I agree the debt laws are stupid in this country, as an AP should be a clear and obvious indication that someone has got problems but has come to an immediate agreement with their lenders. Sadly it does not.

In that context, i.e. what is best in terms of future lenders ever being interested in you again, a default is actually less damaging in the long term.

Hopelessly_Hopeful

Trajal wrote: »

Some very good factual answers here.

I believe there are two responses really and the correct response depends very much on your view of both your debt and the world in general. This may come across as a little preachy, but I don't mean it to be, I'm just talking about possible different viewpoints and not giving any judgement either way.

1) A default is better because you can probably only pay a lower % of the debt, while the record of the debt is entirely removed from your record six years after the date of default. This is very pragmatic and cheapest approach both short and long term.

2) An AP is better because you are telling people you have some problems but that you are being responsible enough to deal with them. You will have to pay the full price of your debt, it will most likely stay on your file for longer. But you will feel like you have done the right thing, both morally and from a macro-economic perspective.

Many people have defaulted or gone into IVAs/Bankruptcies who didn't really need to but it was the best for them. My view is that we should balance this against the moral and economic facts not just for ourselves but also for the country. When you borrow money, you pay it back, or at least you should, at a reasonable rate of interest.

Deliberately defaulting is a declaration against that principle.

I agree the debt laws are stupid in this country, as an AP should be a clear and obvious indication that someone has got problems but has come to an immediate agreement with their lenders. Sadly it does not.

In that context, i.e. what is best in terms of future lenders ever being interested in you again, a default is actually less damaging in the long term.

Agree entirely with this, the other challenge is though that despite begging some creditors they will not default you!

HHx

pmhtuk

Thank you for your responses.

I understand that morally it is right to pay off the debt, but the system doesn't work in that way. Indeed, I'd love to see 'Morals' in a mission statement or banking corporation annual report.

So in theory:

I have a loan with XYZ Bank for £120. I cannot pay the monthly payments and so agree with the bank to pay £10 a month until repaid. Let's not argue about interest etc, they're going to be nice and help me by not charging more interest at this time.

The bank adds a AP marker to my account, showing that I have a ‘problem’ but are resolving this with them. As such, this appears each month on my account until settled. As such, this will remain on my Credit Report for 1 additional year after the difficulties were encountered.

Option 2 is default. I default on the payment and then begin repaying this back to the bank through a debt collection agency or other way. The amount paid is still £10 a month, and so after 1 year this is repaid. Again, avoiding the interest/charges which are added to make this simple.

The debit is paid after 1 year, the default date was at the start of the process, therefore only 6 years apply after the first point when it was reported, as a default.

So Option 1 would add an extra year of ‘risk’ which many credit companies would avoid with the plague, whereas my friend in Option 2 is able in theory to access credit again as their account clears 1 year before me.

I can’t see the logic. Am I missing something?

Trajal

Nope, you have read it right. You are also correct in suggesting that it is without logic. There is no logic to it, it's blinkin' bonkers

Hopelessly_Hopeful

pmhtuk wrote: »

Thank you for your responses.

I understand that morally it is right to pay off the debt, but the system doesn't work in that way. Indeed, I'd love to see 'Morals' in a mission statement or banking corporation annual report.

So in theory:

I have a loan with XYZ Bank for £120. I cannot pay the monthly payments and so agree with the bank to pay £10 a month until repaid. Let's not argue about interest etc, they're going to be nice and help me by not charging more interest at this time.

The bank adds a AP marker to my account, showing that I have a ‘problem’ but are resolving this with them. As such, this appears each month on my account until settled. As such, this will remain on my Credit Report for 1 additional year after the difficulties were encountered.

Option 2 is default. I default on the payment and then begin repaying this back to the bank through a debt collection agency or other way. The amount paid is still £10 a month, and so after 1 year this is repaid. Again, avoiding the interest/charges which are added to make this simple.

The debit is paid after 1 year, the default date was at the start of the process, therefore only 6 years apply after the first point when it was reported, as a default.

So Option 1 would add an extra year of ‘risk’ which many credit companies would avoid with the plague, whereas my friend in Option 2 is able in theory to access credit again as their account clears 1 year before me.

I can’t see the logic. Am I missing something?

Oooh that's news for me. Are you saying that APs disappear a year after being settled?

HHx