Defaulting on a default

martinmcfly

I pay back £1 a month to a credit services agency for a personal loan I defaulted on over 6 years ago. I have recently been led to believe, by a reliable financial source, that it would be in my best interests to stop paying this debt. That, similar to double indemnity, I can't 'default' on a default. Outside of any questionable morals this might raise, what is the legal position on this?

fermi

In terms of a regulated agreement under the Consumer Credit Act if a default notice (a letter) is issued and NOT remedied within the 14 days then that is a one time thing. Can not be done again.

A default recorded on your credit is a slightly different thing in a legal sense, but again that can only legitimately be recorded on your credit file at one date, and if it has now dropped off then they cannot or should not put another one on, as once broken the original agreement stays broken (defaulted).

That does not mean that you can necessarily stop paying without consequences. If the collector decided to start legal action as a result, then got a CCJ, which you were then unable to pay in full withing one month, then that would stay on your credit file as a new entry in the CCJ/public record section for 6 more years.

martinmcfly

That's interesting, thanks fermi.
My understanding is that because of this monthly payment the debt has not been Statute Barred even though it is older than 6 years?
Forgive my naivete but I believe I can ask the credit services agency to prove the original debt? And if they can't, then I can dispute it and cease payment? Though I suspect this may be me reaching in the dark for a way to avoid the risk of a CCJ?

Gaz83

martinmcfly wrote: »

That's interesting, thanks fermi.
My understanding is that because of this monthly payment the debt has not been Statute Barred even though it is older than 6 years?
Forgive my naivete but I believe I can ask the credit services agency to prove the original debt? And if they can't, then I can dispute it and cease payment? Though I suspect this may be me reaching in the dark for a way to avoid the risk of a CCJ?

A debt becomes statute barred six years from when it's acknowledged. That acknowledgement can come in the form of admitting in writing you owe the debt, or paying it. As you've been paying it it won't be statute barred.

You'd be hard pressed to go down the route of asking them to prove the debt - you've been paying it as presumably you acknowledge that you do owe it.

martinmcfly

Gaz83 wrote: »

A debt becomes statute barred six years from when it's acknowledged. That acknowledgement can come in the form of admitting in writing you owe the debt, or paying it. As you've been paying it it won't be statute barred.

You'd be hard pressed to go down the route of asking them to prove the debt - you've been paying it as presumably you acknowledge that you do owe it.

Right, that makes sense. So if I do decide to stop paying then I put myself in the position of crossing my fingers and hoping they don't bring a CCJ down on me in the next 6 years?

tomtontom

Why are you only paying £1 a month when you've got £15,000 savings?

fermi

martinmcfly wrote: »

Forgive my naivete but I believe I can ask the credit services agency to prove the original debt? And if they can't, then I can dispute it and cease payment? Though I suspect this may be me reaching in the dark for a way to avoid the risk of a CCJ?

You can ask them for copies of the Consumer Credit Agreement and a statement of account.

(CCA request)

See here ---> https://www.nationaldebtline.org/EW/factsheets/Pages/39%20EW%20Credit%20agreements%20-%20getting%20information/Page-02.aspx#quicklink1

If they are unable to provide those then it may be unenforceable against you.

martinmcfly

tomtontom wrote: »

Why are you only paying £1 a month when you've got £15,000 savings?

This repayment was started before I had any savings. It hasn't been accruing any interest, and so has not been a high priority compared to other financial concerns.