To pay, or not to pay a default

welliesrgreat

Good Morning All,

I have a defaulted account for £306 currently with Activ Capital but I think Emphingham? have now bought it and are contacting me. I am able to pay it off but will this start the 6 year process once again?

The default will fall off in Jan 2015. I am currently in the process of looking to buy my first house and have two mortgage offers from Barclays and Halifax - soft credit search completed by Halifax did not discover this debt , at least I don't think it did as it is registered to a previous address over 3 years ago.

I have a perfect credit file otherwise and am unsure whether to contact the DCA and offer to pay for fear of prolonging the debt on my file.

Should I pay them or wait until it 'drops' off in 13 months time?

Thank you

rizla_king

The default and account will drop off in 2015 whether you pay it or not.

Morrow1984

Please note that the default dropping off your file does not stop the collection company from chasing the money. It only falls off your credit report. It is still owed.

If you pay the default will stay where it as and still drop off, however it will then show as 'Settled on date xxx'. Which will improve how it is seen by a lender. However the whole entry on you file will drop off after the 6 year mark.

happy_bunny_2

Don't mortgage applications ask about unsettled debts, whether on your file or not?

chanz4

Halifax will catch on when a full application is done

National_Debtline

welliesrgreat wrote: »

Good Morning All,

I have a defaulted account for £306 currently with Activ Capital but I think Emphingham? have now bought it and are contacting me. I am able to pay it off but will this start the 6 year process once again?

The default will fall off in Jan 2015. I am currently in the process of looking to buy my first house and have two mortgage offers from Barclays and Halifax - soft credit search completed by Halifax did not discover this debt , at least I don't think it did as it is registered to a previous address over 3 years ago.

I have a perfect credit file otherwise and am unsure whether to contact the DCA and offer to pay for fear of prolonging the debt on my file.

Should I pay them or wait until it 'drops' off in 13 months time?

Thank you

Hi wellies

Welcome to the forum.

From what you have said, I think it can only benefit you to settle this debt now - as others have pointed out above, any record of it will drop off your file in 2015 regardless. Paying it now eliminates any risk of the creditor suing or giving you further hassle - I would hate to see something hinder your mortgage application at this advanced stage.

Good luck

Dennis @ NDL

welliesrgreat

Thank you Dennis. I phoned them as they text to say there was a discount if paid now. They offered 10% discount which I declined and offered them £200 which they accepted. They were sending me a letter to say this was full payment if the debt and that it was fully settled.

I hope this is the case!

Buzby

Perhaps it will, perhaps it won't - but some things to ponder:

The debt comes off your file in 2 years whether you pay or not.

You are paying money to a third party to speculatively purchased your debt, you have no moral obligation to pay them. Since the original creditor doesn't now want your money - I'd find better things to do with it.

For the amount owed, court action is so unlikely as to be laughable. Have you checked your original agreement to see if you agreed to have any debt assigned?

Your 'punishment' for not paying was ruining your credit file. If you pay, you still have this blight. Say you will pay, but only if the default is removed entirely (assuming it is worth it to you). If they say no - then say sorry, no deal.

Then sit it out.

adindas

As far as I am aware, the vast majority (if not all) of lenders will ask the standard question:

"Have you ever been defaulted ?"

I remember I have been asked these questions many times if I apply any bank product which has any link to credit.

So even the default fell off on the credit file after six years, they could still find it out from this answer.

The exception of course if the person is lying which is not recommendable as you will never know it might bite you back in the future.

Thrugelmir

welliesrgreat wrote: »

Thank you Dennis. I phoned them as they text to say there was a discount if paid now. They offered 10% discount which I declined and offered them £200 which they accepted. They were sending me a letter to say this was full payment if the debt and that it was fully settled.

I hope this is the case!

The letter merely evidences the fact that the debt is no longer owed.

Your credit file could still be marked with the fact that it was partially paid. Something which lenders will detect if this is the case.

Buzby

As to the question 'have you ever been defaulted' - how would the applicant be certain they had or had not? Is a CCJ a default? Since a mobile phone default is not regulated under the CCA, is this toy town default to be disclosed, or only true defaults as those defined by tge FSA and successors?

This is one of those 'when did you stop beating your partner' questions. The best course of action is to say you are unsure, they'll check regardless and you don't want to give them reasons under non disclosure.