Default on CF after settling loan two days late!

headswim

Hey i just wondered if anyone can give me some advice.
I applied for a loan of £500 with a PDL but soon after I lost my job. I setup an arrangement for a reduced monthly payment over a longer period of time. I ended up paying the final payment in February two days late, but at this point the account was settled and I thought nothing more of it. It's worth noting that I never received anything through the post threatening a Default on CF or an official Default Notice - I actually received no postal communication at all from this company, unlike most my other creditors who sent me loads!

I am just about to get a mortgage as I have a baby on the way so hoping to be moved into a new house before it comes... but have look at CF and notice that a Default has been applied from the PDL for the full amount of the original loan. It says the account Default two days before it was settled! This has come as a total shock as I assumed I had cleared this and stuck to my arrangement. I was in monthly communication with the company and never went 'AWOL.

I have contacted them and they've refused to remove the Default. It's going to be on my credit file for 6 years which completely ruins the chances of creating a home for me and my child.

Does anyone have any advice?

[Deleted User]

Not much you can do. They were correct to default the account.

It should have been within 6 months of you breaking the original agreement, so if later, you could ask them to back date it.

See a specialist broker re the mortgage. However, even without the default, taking PDLs will have limited your options hugely.

headswim

The arrangement was with the original creditor, it was the last payment within the arrangement paid less than 48 hours after the agreement date (around £50!) - do they not need to formally notify you of an intention to add a Default to your credit file? Or an offcial Default Notice?

I've pasted an area of the ICO banking code below that covers this area, are they not in breach of this?

33 Notices to comply with Sections 13.7 of the Banking Code5 and 7.5 of the Lending Code6 should provide adequate warning. A notice of intention to file a default can be sent with a formal default notice serunder Section 87 of the Consumer Credit Act 1974. Where lenders are not required to issue these notices, they can send an intention to file default through a final demand, letter or relevant account statement, which should make clear not only the intention to file but also the date of the intended default. The date should allow the customer enough time to respond properly. Lenders who have to provide a notice of intention to file a default under a relevant code of practice should be aware that not complying with the code may be taken into account in any assessment of the fairness of their processing.

Then the Consumer Credit around Default Notices:

(2) A date specified under subsection (1) must not be less than [F214] days after the date of service of the default notice, and the creditor or owner shall not take action such as is mentioned in section 87(1) before the date so specified or (if no requirement is made under subsection (1)) before those [F214] days have elapsed.

I paid the final payment of the arrangement two days late, they did not have to chase me to pay, and they did not reference to DCA, I proactively called them and settled the outstanding balance.

StopIt

headswim wrote: »

The arrangement was with the original creditor, it was the last payment within the arrangement paid less than 48 hours after the agreement date (around £50!) - do they not need to formally notify you of an intention to add a Default to your credit file? Or an offcial Default Notice?

I've pasted an area of the ICO banking code below that covers this area, are they not in breach of this?

33 Notices to comply with Sections 13.7 of the Banking Code5 and 7.5 of the Lending Code6 should provide adequate warning. A notice of intention to file a default can be sent with a formal default notice serunder Section 87 of the Consumer Credit Act 1974. Where lenders are not required to issue these notices, they can send an intention to file default through a final demand, letter or relevant account statement, which should make clear not only the intention to file but also the date of the intended default. The date should allow the customer enough time to respond properly. Lenders who have to provide a notice of intention to file a default under a relevant code of practice should be aware that not complying with the code may be taken into account in any assessment of the fairness of their processing.

Then the Consumer Credit around Default Notices:

(2) A date specified under subsection (1) must not be less than [F214] days after the date of service of the default notice, and the creditor or owner shall not take action such as is mentioned in section 87(1) before the date so specified or (if no requirement is made under subsection (1)) before those [F214] days have elapsed.

I paid the final payment of the arrangement two days late, they did not have to chase me to pay, and they did not reference to DCA, I proactively called them and settled the outstanding balance.

In breach of what?


Have you read the passage you're quoting, specifically this:


Where lenders are not required to issue these notices ..etc


It isn't a requirement to send a default notice as it'll be in the T&Cs of the credit facility.


You keep saying you only settled 2 days late, but that isn't when you defaulted on the loan. You defaulted on the loan when you entered a payment plan.


The alternative to a default here is an AR (Arrangement to Pay) marker. To a mortgage broker, the impact is the same, especially for a Short Term Loan.


Any action taken now is down to the goodwill of the lender.


They can do one of the following:


1: Issue a default notice in retrospect, fully compliant with regulation as that is the mitigation for a missing default notice.


2: Change the Default marker to an AR marker, as that is what it would be instead of a Default


3: Remove all traces of the loan from your credit files, including the default.


3 Is the best outcome, but there is no regulation, or regulator which will make this happen if they won't do so out of goodwill.


Also, a debt does not have to be sold to a DCA in order to be marked as Default on your credit file.

Destabilising

While I agree that they didn't handle this in the best way, seeing as you were up front and had been making payments to them, and kept in communication, it sounds to me like your best option from here would be to add a NoC to your credit report, explaining general circumstance. Just remember that it must be under 200 words, not mention or blame third parties and must be factual and true. If you need help with wording, any of the three CRAs would help with it, and you would also need to apply to all three to get it put on your credit report.

StopIt

Destabilising wrote: »

While I agree that they didn't handle this in the best way, seeing as you were up front and had been making payments to them, and kept in communication, it sounds to me like your best option from here would be to add a NoC to your credit report, explaining general circumstance. Just remember that it must be under 200 words, not mention or blame third parties and must be factual and true. If you need help with wording, any of the three CRAs would help with it, and you would also need to apply to all three to get it put on your credit report.

To be frank, for a mortgage application, a NoC of this nature will result in the same result as a recent default, refusal.


A recent Arrangement to Pay, especially from a Short Term Lending facility is a massive red flag.


Think of it from a mortgage lenders risk assessment perspective.


You're asking for a long term relationship for a very high sum, and recently you couldn't meet your obligations for a small, short term loan. It makes the perceived risk of failure very high indeed. Filing a NoC to say that you're unhappy with a default because they didn't tell you they had filed it despite meeting the criteria for defaulting the account wont change what happened.


I know it sounds really harsh, and once the OP has saved a deposit, I would advise speaking to an adverse credit broker to see what can be done, but the likelihood of Prime mortgage lending went with the Short Term Lending to begin with, let alone the default on top.

headswim

Yes they might have not been obliged to send through a Default Notice but some communication instead of that with an intention to serve a Default on my CF, surely? The banking code clearly states that this is taken into account when assessing fairness.

Where lenders are not required to issue these notices, they can send an intention to file default through a final demand, letter or relevant account statement, which should make clear not only the intention to file but also the date of the intended default. The date should allow the customer enough time to respond properly. Lenders who have to provide a notice of intention to file a default under a relevant code of practice should be aware that not complying with the code may be taken into account in any assessment of the fairness of their processing.


This was the final payment within my Arrangement to Pay (entered into the plan in October, paid off in Feb), so for me to settle the account completely (albeit two days late) then receive a Default just feels unfair. Considering there was no communication this was happening, no chasing of the debt, no final demand and no discussion over the fact they were applying this when I phoned them to make my last payment. They also lent to me again one month later without question (I was unaware of the Default).

@StopIt - if they issued a Default Notice in retrospect, would they not have to give me 14 days to respond to this as per the Consumer Credit act? I've already settled the account.

StopIt

headswim wrote: »

Yes they might have not been obliged to send through a Default Notice but some communication instead of that with an intention to serve a Default on my CF, surely? The banking code clearly states that this is taken into account when assessing fairness.

Where lenders are not required to issue these notices, they can send an intention to file default through a final demand, letter or relevant account statement, which should make clear not only the intention to file but also the date of the intended default. The date should allow the customer enough time to respond properly. Lenders who have to provide a notice of intention to file a default under a relevant code of practice should be aware that not complying with the code may be taken into account in any assessment of the fairness of their processing.


This was the final payment within my Arrangement to Pay (entered into the plan in October, paid off in Feb), so for me to settle the account completely (albeit two days late) then receive a Default just feels unfair. Considering there was no communication this was happening, no chasing of the debt, no final demand and no discussion over the fact they were applying this when I phoned them to make my last payment. They also lent to me again one month later without question (I was unaware of the Default).

@StopIt - if they issued a Default Notice in retrospect, would they not have to give me 14 days to respond to this as per the Consumer Credit act? I've already settled the account.

No, because your default would have been triggered by your arrangement to pay, not the 2 days late payment at the end of the arrangement.


Again, the 3 outcomes to a complaint are what can happen here. You should complain to the lender in any case as you can't get a resolution without doing so, but the mitigation for a missing default notice is to issue one in retrospect.


A default means not meeting the contacted obligations of an account as set in the T&Cs of the credit facility. Setting up an arrangement to pay is a form of default because you are not meeting the payments in the agreement. The AR marker was set up as a halfway house between default and late payments, even though in many cases the arrangement actually meant the account was in default, but in many ways is just as damaging.

Candyapple

headswim wrote: »

Hey i just wondered if anyone can give me some advice.
I applied for a loan of £500 with Wage Day Advance but soon after I lost my job. I setup an arrangement for a reduced monthly payment over a longer period of time. I ended up paying the final payment in February two days late, but at this point the account was settled and I thought nothing more of it. It's worth noting that I never received anything through the post threatening a Default on CF or an official Default Notice - I actually received no postal communication at all from this company, unlike most my other creditors who sent me loads!

I am just about to get a mortgage as I have a baby on the way so hoping to be moved into a new house before it comes... but have look at CF and notice that a Default has been applied from WDA for the full amount of the original loan. It says the account Default two days before it was settled! This has come as a total shock as I assumed I had cleared this and stuck to my arrangement. I was in monthly communication with the company and never went 'AWOL.

I have contacted them and they've refused to remove the Default. It's going to be on my credit file for 6 years which completely ruins the chances of creating a home for me and my child.

Does anyone have any advice?

How do you go from about to apply for a mortgage (so assuming you have at least a couple of grand for the deposit, minimum) to applying for a payday loan and then losing your job?

Why didn't you use £500 from your deposit money instead of using a payday lender?

headswim

I was working freelance but have been in permanent, full time job since March.

Re deposit - parental contribution combined with partner has a strong income / credit rating.

Candyapple

I think your best solution at the moment with regards to the mortgage is to speak to a broker as they will be able to tell you which lenders to place your application with who might accept you given that you have a recent default.