Debt collector adding default to credit file

Jetart1407

Hi All, I have been in a debt management plan for many years now and its finally coming close to ending so I decided to look at my credit report and figure out how to get back on track.

It seems one of my creditors closed my accounts and passed it to a debt collection agency which is usual in itself but the debt collection agency immediately registered it as defaulted. I had been in a payment agreement with the creditor for 7 years up until this point with my payments far exceeding what they would be as a minimum payment for the amount I still owe had the account still been active so I was a little surprised to see this.

My main question is, can debt collection agencies put an account into default when you never had the original agreement with them and payments have been maintained?

[Deleted User]

They can, if the rights were assigned and payments were not being made in accordance with the agreement.

But it would be worth speaking to the original creditor to see if an earlier default could be applied. 7 years of arrangements is one heck of a long time.

Jetart1407

Indeed, I'm now into my 9th year, I owed a lot but I'm paying every penny back which is why it's a little frustrating to have been slapped with a default for no apparent reason so close to the end. Seems a little malicious in all honesty but the debt collection agency don't want to know

Is it a known thing for original creditors to any an earlier default?

Chappaz

In my view, the default should apply to when the default actually happened, which would have been when/if you stopped paying your required payments and then moved to the debt management plan.

You haven't kept up with the payments of the original agreement, so you technically defaulted, but this default happened when failure to keep up with the original payments occurred. Defaults should be registered within 3-6 months of the issue occurring. Lenders just can't pick and choose how far into the future they slap one on you.

And debt collection agencies also aren't allowed to "double default", i.e. give you two defaults for one debt. The debt can only have one default. It does look like this happens, but when the original default drops off after 6 years, so should the one issued by the collection agency.

They are essentially buying the debt and acquiring the rights. The debt doesn't change, only the owner does, so you can't have two entirely separate defaults for it. A defaulted debt is a defaulted debt, regardless of how many bad marks are on it.

So the debt collection agency can give you another default, but in my opinion, it should be attributed to the time you first defaulted on the debt, and should drop off the file within 6 years from that date (which would have passed by now).

The only issue I could see is that the account has been kept active with repayments, but if I recall correctly, this doesn't make any difference, otherwise borrowers would be penalised for trying to repay debt instead of just letting it close early so it drops off quicker.