loan never defaulted

nattony14

after some advice regarding a loan of my husbands from about 4 years ago. He took it out as one of those guarantor loans (which was his dad). Anyway, the loan was for approx 3K, and he fell behind with payments as he lost his job. His dad picked up the payments but then went bankrupt. He presumed that the debt died when this happened, but when we requested a copy of his credit report this week, the loan was still active.

The loan was taken out in October 2010. Payments were made until June 2011 and then thats when his dad picked them up. By Jan 2012, the payments were in arrears as he had gone bankrupt a couple of months before. Now, when he looked his credit report, i presumed that the loan would of been subject to a default notice and passed to a debt collection agency. However, the loan has never defaulted, and is still classed as in arrears. My belief was that after 6 months of being in arrears, a default should made as it is unfair to leave the account in arrears. there have never been any letters to my husband ( his parents still live at the address where the debt is registered).

Am i right in thinking it should be under deafult? or are lenders allowed to leave an account in arrears for 30+ months.

All advice greatfully received

National_Debtline

Hello there,

My belief was that after 6 months of being in arrears, a default should made as it is unfair to leave the account in arrears.

That may not be the case, sadly. If you have a copy of the terms and conditions please try and dig them out. Some contracts *may* specify that a creditor can apply a default when they so wish. For Consumer Credit Act regulated agreements they would need to send a default notice which would then give 14 days to remedy the breach. If the breach isn't remedied the account could then default. In a nutshell, there can be instances where late payments could just run and run on the credit file - although, like you, I think this would be unfair.

Am i right in thinking it should be under deafult? or are lenders allowed to leave an account in arrears for 30+ months.

Most loan agreements I come across make clear that a default will occur if a certain number of payments are missed (anywhere between one and three usually). If the loan agreement falls into this category you would be absolutely within your rights to mount a formal challenge.

If you can have a look through the paperwork please do come back to us.

Best wishes,

David @ National Debtline.