payment plan met, but still defaulted?

Hermione_boo

Hi, I had an account which I had an agreed payment plan with step change with. I was paying the agreed payments but they transferred my account to Arrow Global Ltd who contacted me. We initally had a few problems moving it but I was told my payment plan would be retained and I continued to make payments.

I checked my credit report on the 3rd October and saw the account was showing as 4 payments late, so I called Arrow to find out the payments were not enough and they had written to me (i hadn't received anything from them). I asked them to stop my account being defaulted would they take a settlement figure for the £777 and they agreed to £400. I paid the £400 7 days later as agreed and all sorted.

I logged on again to my credit report to see that on the 18/10/13 they show my balance as £377 and they have defaulted me (the default is dated 18/08/13). I am so cross!

I have written them a letter saying I want my account details updating to show the account as settled (and included the letter of settlement they sent me on the 3/10 and a copy of the entry on my credit report) and I have asked that they remove the default from my report.

If they refuse to remove the default, do I have any grounds to take this further?

Thank you in advance

Emma x

fermi

Well, the simple fact of the debt being transferred to a collector is one of the key indicators of a default under ICO guidelines, as would paying less than the full contractual payment for several months. So on purely technical grounds you may struggle to argue against the default.

So it may fall to other considerations. Namely:

- Did you receive written warning that a default would be applied? While not necessary in all cases, the ICO does strongly recommend the one is sent, so not receiving one may give grounds for a complaint on fairness.

- Do you have proof of your conversation regarding the settlement and agreement to not record a default? If yes, then you would have a clear complaint to take forward. If no, then you could still complain, but could be somewhat dependant of their being internal records of what they said. Perhaps worth a go though.

I would certainly complain. It's just the precise grounds that you need to get clear.

yazgee

A debt is passed over when you go into default. Even if you keep making payments once the default is registered it is there for six years.

fermi

It is a little odd that a default was not applied when the debt was sold on, yes. But unless I or the OP are misreading the situation, then looks like for some reason there wasn't.

Even a partial settlement would normally result in a default, so I think any challenge probably hinges on whether there was a concrete agreement by whoever applied the default not to do so. If not, then the OP may just have to accept the fact of it.

Hermione_boo

The account was sold on in 2011 and again in 2012 and again 5 months ago. It was never defaulted. My little boy was born in 2009 and was very poorly, so I had to leave my job as we spent so much time in Great Ormond Street and our local hospitals, but it meant that my pay took a nose dive. I always paid the dept management plan every month and there hasn't been any missed payments, and I agree it is strange it wasn't defaulted in 2009 like all my other accounts? But to default it now seems odd, esp as I paid it and I am cross because I have worked so hard to get my credit account sorted, no missed or late payments and my last default was due to come off in 2 years time. I am really upset about it.

I got confirmation of the settlement figure in writing (see I listen to you here on the boards ) but it doesn't say anything about stopping the account going into default.

I never received anything from the company to say they intended to serve me a default notice or even that any payments were late, yet the company on the phone told me they had?

Hermione_boo

I think my only leg to stand on is that when they took on my account they would have (or should) have known how much I was paying a month. When I spoke to the company they said thy would honour the existing payment plan, however this hasn't happened which is why the payments I was sending them were not enough and they recorded my account as late, then defaulted. What happens with this? Are companies supposed to honour existing plans when they are transferred to them? Can they default you when you haven't missed a payment to the plan in place with them?

happy_bunny_2

As Fermi said, selling the account is an indicator of a default according to ICO guidelines.

If they sold your account in 2011, the default should be dated no later than then. You could argue it should have been applied within 6 months of DMP, if payments were no where near as much as the contracted minimum.

This should be the basis of a complaint.

fermi

If getting rid of the default completely is a no-go, then certainly, yes.

In fact there is a reasonable case to say that if all the other accounts are defaults dated earlier on file, then it would in fact be better for this to remain a default as long as it was backdated. The the adverse info would drop off with the rest of the defaulted accounts 6 years after the default, whereas a non defaulted account with adverse history will remain for 6 years from the settlement date. i.e. mess up your credit file for longer than a correctly dated defaulted account would.

Hermione_boo

I have put a complaint in with the Ombudsman about it asking for it to be updated to shown paid and the default removed, so I will have to wait and see now.

gb12345

Hermione_boo wrote: »

I have put a complaint in with the Ombudsman about it asking for it to be updated to shown paid and the default removed, so I will have to wait and see now.

As you don't appear to have given the company concerned a chance to respond to your complaint, it is likely that the ombudsman will tell you that they can't help until the company have failed to act.

fermi

If a formal submission of a complaint, then that is true.

However, the ombudsman will often help with your initial complaint though by writing on your behalf. Seen them do that for a fair few people now.

http://www.financial-ombudsman.org.uk/consumer/complaints.htm

It's important that you complain first to the business you're unhappy with – and give them a chance to look into your problem. They have eight weeks to do this. We can help by contacting the business for you, and telling them about your complaint.

If the FOS do agree to do that for you, then it can be a very handy way to get the ball rolling, as companies understandably take a lot more notice of that.