Overdraft Default Questions

surfamakikomi

Hi All,

I have been on a dmp now (managed and now self managed) for 3 an a bit years. At the start of the dmp the debts were
7000 - tesco credit card
2000 - lloyds overdraft
750 - lloyds overdraft
1700 - argos card
1000 - lloyds loan

they are now
821 - tesco
294 - lloyds
86 - lloyds
486 - argos
0 - lloyds loan


Even before the dmp started I was making regular payments to all the accounts above the minimum. When the dmp started only the argos and tesco cards received payments below minimum. I received default warning letters from everyone but only argos and tesco added them to my credit file. In the last six months lloyds have added defaults on both overdrafts (one of them since had date changed to 3 years ago).

My question is that as I was making regular payments on the lloyds accounts is the default correct? as I have been making payments every month and adding the default seems to be unfair as it has only been applied after trying to reduce the balances. I think that they only generated the defaults after someone in lloyds moved my accounts to recoveries (after I started to get charged interest again).

The least I think they should do is change the default date back to the start but if I could argue against the entire default then that would be better.

My aim is to rebuild my credit file to hopefully get a join mortgage with the missus (good salary , good credit history) in a year or two so I want my file as clean as possible.

Many Thanks

Lee

MrsTinks

Technically the default should only be applied the moment that you defaulted on the agreement. So when you stopped paying in to the account as per the agreed contract or when the bank withdrew your overdraft facility and you failed to repay it. Overdrafts are a bit of a smeg as they can be called in with very little notice - the question I guess is WHEN did the bank tell you they were cancelling the OD? And prior to that when did you actually break the terms of the OD facility by not paying into the account like you should have?

It's a bit of a grey area but it is definitely worth trying to get them to back date the default to when you believe they should have first placed it. I don't think the default itself is unfair though.

surfamakikomi

Thanks MrsTinks for the reply.

I will have to lookup the correct date but to date I havent missed a payment for this account. I think that the best option is to get the date changed. I think I had a letter from them cancelling the overdraft/ requesting full payback but I cannot remember when this was (wasnt recent).

I do think its unfair that by trying to sort my credit out I started a process inside lloyds that made them call in my overdrafts and make my credit rating worse.

National_Debtline

Hi

When you say you haven’t missed a payment for the overdraft account, do you mean an instalment as part of your DMP and then self-negotiated instalments?

Normally for a current account you need to have a certain amount paid in each month to comply with the terms and conditions. It might be £750pm or £1,000pm etc. If you stopped that and used a different account for your income you are likely to have defaulted.

James
@natdebtline

MrsTinks

surfamakikomi wrote: »

Thanks MrsTinks for the reply.

I will have to lookup the correct date but to date I havent missed a payment for this account. I think that the best option is to get the date changed. I think I had a letter from them cancelling the overdraft/ requesting full payback but I cannot remember when this was (wasnt recent).

I do think its unfair that by trying to sort my credit out I started a process inside lloyds that made them call in my overdrafts and make my credit rating worse.

As James said, much better than I, then the moment your overdraft was either recalled or you failed to pay in the contractual amount (ie salary of x amount every month) then you would have breached the terms of your overdraft.

The process isn't unfair, its what you agreed to in their terms when you agreed to/requested an over draft - personally I find overdrafts one of the most terrifying of debts as they can be recalled at a months notice even if you are managing your finances just fine but your risk increases to them because you live in your OD every month. Being in the OD every month also counts against your credit history and is not usually a good sign of money management.

I know it FEELS unfair right now, but get the date backdated if you can, then work on having small amounts of credit and managing it as soon as your DMP is up and by the time they all drop off your history you will find that you have a really solid base of showing you can manage your finances. Ultimately it takes time...

surfamakikomi

Thanks both,

I didnt think about the moving of my salary.. DOH. It doesnt seem so unfair now I understand the reason. At the end of the day if I hadnt made the decision 3yrs ago to go onto a DMP then I wouldnt be in the financial position I am now(much improved). I used to live in my overdraft and spent easily more than I could afford, I am not living well inside my means and will be debt free by june.

I will write to lloyds and get them to change the date and then continue paying everything off and keeping small amount of debt (I have a credit card with a balance of 1k (rising to 2k in feb) which I am using and paying off every month.

Once again thanks for your help and comments they have been very reassuring.

MrsTinks

Remember in fairness then two defaults or three won't make a huge difference - they're still defaults and ultimately in a few years they won't be there at all

If you can start saving once your are Debt Free then you will be in an amazing position when they drop off your file and have spending habits that will stand you in great steading for years to come

Always look forwards