Is it worth paying back a defaulted account?

typhoo_2

Hi,

Let's say I have a 20k debt on a loan account which defaulted on 1st jan 2013. Is it worth paying the maximum I can afford towards this debt, or shall I just pay the absolute minimum I want to give to them?

I guess my question is, if the default drops off after 6 years regardless anyway, should I try and clear the balance or just leave it. Assume I don't want to gain any credit facilities in these 6 years.

matttye

The creditor could leave it 5 years and then get a CCJ against you, which would remain on your file for 6 years from the CCJ date. That would make it 11 years with no credit for you. Not to mention there could be bailiffs banging at your door if you don't pay a CCJ.

They could also petition for your bankruptcy.

Pay whatever you can afford and get it cleared ASAP. It's the right thing to do and also the best option for you at this point.

typhoo_2

Thanks matttye, what if I didn't give accurate information about income and expenditure and said I can only afford repayments of £200 as opposed to £500 - and they agree to that as part of a repayment plan. That way I could save £300 a month and they will be happy they're getting something. And it will all drop off after 6 years anyway.

I'm just talking hypothetically, and also a little bit out of frustration due to the way a certain bank has treated me.

matttye

You don't have to provide any income and expenditure information unless it goes to court, but if the creditor isn't happy with your payments they can take you to court, so it's up to you whether to run that risk or not.

You'd be better off not supplying information rather than lying.

Thrugelmir

Every month the debt will marked as being under an Arrangement To Pay. So there's no benefit when the default drops off. As the markers will be visible and impact your attempts to obtain credit.

happy_bunny_2

Has it defaulted?

That is important.

If so, paying back a reasonable amount is likely to keep it out of court and as said, default will go after 6 years, fully paid or not.

What's the monthly contracted payment, what can you afford?

Cycrow

the moral thing to do would be to pay back the money you own, rather than trying to worm your way out of it

Thrugelmir

happy_bunny wrote: »

If so, paying back a reasonable amount is likely to keep it out of court and as said, default will go after 6 years, fully paid or not.

Default goes. However the impact of having an ARP doesn't.

toppersport

I've just found out I have a defaulted account and when I rang up to settle it I was told I couldn't as it had written off!! I sought legal advice who told me that it would make no difference to my credit rating whether it was settled or not settled in my circumstances. So, I guess as yours is quite recent you're not in that situation? Have they contacted you to pay it off?

matttye

toppersport wrote: »

I've just found out I have a defaulted account and when I rang up to settle it I was told I couldn't as it had written off!! I sought legal advice who told me that it would make no difference to my credit rating whether it was settled or not settled in my circumstances. So, I guess as yours is quite recent you're not in that situation? Have they contacted you to pay it off?

That legal advice should have told you that individual lenders assess your creditworthiness based on their own criteria and it's up to the individual lender whether or not a settled account comes across better than an unsettled one.

happy_bunny_2

Thrugelmir wrote: »

Default goes. However the impact of having an ARP doesn't.

I wasn't suggesting an arrangement, I hate those, they screw you for too long.

It's possible to pay back a defaulted account that stays as default with no arrangement in sight. I'm doing just that.