Old debt - how will it affect me?

poordolly

Hi

I have a very poor credit rating mainly owing to some old debt (2009-2012) which was built up over time while I was in and out of work.

I recently discovered there are about 10 defaults ranging from different accounts with default values from £94 - £1598. The lenders are from LloydsTSB to some payday lenders (Not good, I know!!)

I know I was silly to get into this state but it's done now so I'm not looking for anyone to give me a lecture. I am already seriously learning from my mistakes!

I've made few payments to the accounts since they were made default, mainly from burying my head in the sand. As some of the defaults are coming to their 6 year term (I read somewhere that they only stay on file for 6 years) is it worth me repaying?

Any help would be appreciated!!

Thanks

Tixy

You are correct that accounts with a default registered only stay on your credit file for 6years from the default date.

Your creditors (or debt collectors) have 6years from the date of the last payment to each account to commence court action against you. IF they did successfully take court action and if you couldn't pay in full within a month then a CCJ would be on your credit file for 6years from the date of the judgement.

The lowish value of the debts reduces the chance of creditors being bothered to take court action, but it can happen.

Are you being actively chased for these debts currently?

poordolly

I'm being chased for 3 of the debts, Lloyds £1598; Vodafone £609 and RBS £501.

I am happy to pay them off but don't want to put the little extra money I have each month to a wasted cause when it might not make any difference on the older debts when I could be putting it towards a more recent account that will be on my credit file longer. Does that make sense?

poordolly

Also, would entering into a DMP to get the debt clear affect my file even more negatively?

Apologies but I have been VERY naive with all this!

stator

You're right that having a DMP can look bad on your file, but I'm not sure if it's worse than your current situation.

Have you tried one of the debt charities for advice? eg StepChange?

Thrugelmir

poordolly wrote: »

I'm being chased for 3 of the debts, Lloyds £1598; Vodafone £609 and RBS £501.

I am happy to pay them off but don't want to put the little extra money I have each month to a wasted cause when it might not make any difference on the older debts when I could be putting it towards a more recent account that will be on my credit file longer. Does that make sense?

If receive a CCJ the current age of the debt is irrelevant.

poordolly

thanks for the replies - I've spoken to one of the charities and they suggested bankruptcy - I felt that was a little harsh given I can make monthly payments. I'd rather not go down the bankruptcy route!

I'm going to contact my creditors (most of the DCA's) and see what the will let me do. I'm guessing a little money is better than no money!

Are there any tips when dealing with DCA's? Is it worth offering some a settlement rather than month by month?

Thanks!

Tixy

Bankruptcy?

How much is your debt in total? and how much have you calculated you can afford to put towards the debts each month?

Which charity did you speak to?

In terms of the DCAs - I would not contact them to "see what they will allow you to do". I would work out a detailed budget for yourself and how much you can afford to pay, and then I would write to them and offer them that amount as a monthly payment.

Tips for dealing with them - keep everything in writing by post, don't speak to them on the phone. Keep copies of all letters they send to you.
Get proof that a particular debt collector has a right to collect the debt they are chasing and can provide evidence of the debt.

iSaving

I can understand where you're coming from, so just wanted to confirm some facts to help you.

Yes, defaults on your credit record will drop off the report after 6 years. The same with CCJs or other records on the credit report. They only cover 6 years. If there are old debts which are not being actively chased by the company and are likely to drop off in the next 12 months, you should be okay to avoid paying these for now. But if you receive any correspondence in relation to them which may indicate a court summons may be issued, then don't ignore them.

Satisfied debts are much better reflected on your credit report than outstanding debts, even if they are old. So try and manage your way through the most recent ones satisfying them first if you can, as these are the ones which will stay on your credit record longest.

It's a harsh lesson to learn and a horrible place to be in, but hopefully you can manage your way through it and look forward to a good credit rating in future years. Good luck.

poordolly

Thanks Isaving - really helps, I'll work on the most recent ones and respond to all chasing letters to prevent getting into a worse situation.

Tixy, it was StepChange. I ahve about 12.5k owing in total and about £300pm to repay it with.

Some of the defaults are for a small amount (less than £200) is it worth offer 50% as a settlement?

stator

You might want to start a thread in the debt free wannabe board too, lots of helpful people in there.
http://forums.moneysavingexpert.com/forumdisplay.php?f=76