Defaults Help Please

NorthEastFarmer

I've been handed a default without any warning because of a student overdraft of £2,000. I'm waiting for the Financial Ombudsman Service to get back to me.

I was hoping to move on with my life and upgrade my car etc but this default has had a really negative effect on my credit report.

I'm able to satisfy the default straight away but I want to know:

1. How much of a benefit will settling it be to my credit report?

2. I'm trying to get the bank (Lloyds) to remove the default as it was placed without warning. Am I in a better position if I settle the account first?

Any help or direction appreciated.

happy_bunny_2

1. Settled will look slightly better, but not worth it in my opinion until you find out the FOS result.

2. Makes no difference if with FOS. Although, have you complained to Lloyds and did they reject the complaint?

When is the default date?

matttye

The ICO default guidance says that a lender can apply a default if a customer continues to use facilities that were withdrawn by the lender. So if lloyds withdrew your overdraft facility and you didn't pay it back immediately, they can file a default straight away. Overdrafts are repayable on demand.

In future make sure you can always pay back your overdraft otherwise you'll have the same problem again.

I find it very unlikely you'll get it removed.

NorthEastFarmer

Thanks guys,

I know there's little or no chance of getting it removed, I've raised a complaint with the bank, the debt recovery agency and FOS.

My issue is that somehow Lloyds never bothered to contact me but the debt collection firm managed straight away!

I will settle the account in full, just to get it out of the way. Any idea how long after that it looks a bit rosier? When I can start to do things?

matttye

NorthEastFarmer wrote: »

Thanks guys,

I know there's little or no chance of getting it removed, I've raised a complaint with the bank, the debt recovery agency and FOS.

My issue is that somehow Lloyds never bothered to contact me but the debt collection firm managed straight away!

I will settle the account in full, just to get it out of the way. Any idea how long after that it looks a bit rosier? When I can start to do things?

Do you mean that lloyds never told you they were removing your overdraft facility? If so that could be a good reason to have the default removed. Overdrafts are repayable on demand, but if they didn't demand you repay then you haven't done anything wrong.

Unless you went into an unarranged overdraft for 3+ months; that's another way they can default you.

Did you keep lloyds updated with your current address the whole time?

You'll find it hard to get mainstream credit at all while the default is on your file. The effect does lessen over time though. I have five year old defaults and am accepted for most things now.

NorthEastFarmer

Yeah, no demand for payment despite them having my correct address and phone number the whole time and yet when the debt collection agency got in touch I replied straight away to pay it off.

At the time I didn't realise the effect it would have on my credit report. I'm really just trying everything to get some kind of help because the mark it's left on my credit report has been a little excessive I think.

matttye

NorthEastFarmer wrote: »

Yeah, no demand for payment despite them having my correct address and phone number the whole time and yet when the debt collection agency got in touch I replied straight away to pay it off.

At the time I didn't realise the effect it would have on my credit report. I'm really just trying everything to get some kind of help because the mark it's left on my credit report has been a little excessive I think.

Were you within your arranged overdraft limit or did you go into an unarranged overdraft?

NorthEastFarmer

I went into an unarranged overdraft but still there was no notification of it.