Lowell showing as a default?

keeponcomping

Helping a friend who keeps getting turned down for credit. They want a consolidation loan for their high interest credit card debts of about £11,000. I suggested they get a credit report as they keep getting turned down for credit despite earning a good wage and not missing a payment in the last 4 years.

They have a debt being collected by Lowell, monthly payment agreed and they have been paying this for 3 years. The debt came about in 2011 when they were in an abusive relationship, it was a doorstep loan company. They defaulted, but in 2016 they agreed payments have paid this faithfully each month.

The credit report shows that Lowell have had a payment each month, but it is being reported as in default each month. Is this right, is it still counted as in default even though they are making agreed payments?

They have done so well making a plan to get out of debt (it was about £26,000 to start with 3 years ago). They have a 5 year plan which will see all their debt cleared and till now there has been no urgency to make extra payments on Lowell as they have no interest being added where as the credit cards are the likes of Aqua with 30% rates, so they have been targeting that instead.

The problem is this Lowell debt is clearly hindering them getting a consolidation loan to reduce some of this interest down and also they want to start saving for a mortgage when the debt is cleared.

Can anyone advise whether it is correct that debt collections are classed as in default till they are cleared even if the agreed payments are being made, or whether they should question this and see if they can get it changed and improve their rating?

[Deleted User]

Yes, it's correct.

The contract was broken and the agreed contractual payments aren't being made. Only the lower payments are being made.

Once the debt is cleared, it will show as settled, or will drop off 6 years from default, whichever is sooner.

keeponcomping

Deleted_User wrote: »

Yes, it's correct.

The contract was broken and the agreed contractual payments aren't being made. Only the lower payments are being made.

Once the debt is cleared, it will show as settled, or will drop off 6 years from default, whichever is sooner.

Thank you, I guess they will have to focus on paying this now and accepting higher interest on the cards in the meantime then as this must be hindering credit report and I assume if it comes off after 6 years that is 6 years from the last entered default. Think they said around 2 years left of payments on this where it will show as default each month, so that would be 8 more years till it is gone from the report? Thus will probably affect mortgage chances?

Ben8282

Your friend has high interest credit card debt of £11,000 and a default for £26,000.
Would you lend to this friend?

[Deleted User]

keeponcomping wrote: »

I assume if it comes off after 6 years that is 6 years from the last entered default. Think they said around 2 years left of payments on this where it will show as default each month, so that would be 8 more years till it is gone from the report?

No. 6 years from when the account defaulted.

sourcrates

Hi,

You said it yourself in your post, they defaulted on the original agreement,

defaults stay on your credit file for 6 years regardless of what you pay to anyone.

An account defaults only once, the date the default was registered will be on the credit report.
The credit report just shows status updates every month, six years from date of default it will be gone.

Probably a blessing in disguise not to get the loan, as you don’t repay debt with more debt, you either earn more, reduce your outgoings, or enter some kind of debt management depending on your circumstances.

Get your friend to join the forum and post a statement of affairs and we will be able to help them.

keeponcomping

Ben8282 wrote: »

Your friend has high interest credit card debt of £11,000 and a default for £26,000.
Would you lend to this friend?

No, they had debts of £26,000 3 years ago and they have worked hard to get this down to £11,000 over the past 3 years. The default amount still owed is £340.

If I had the money yes I would lend to them, they are not at fault here, as I said in my first post this debt has come about due to an abusive relationship, they were forced/coerced into taking out these debts and didn't actually benefit from them themselves, so I have a lot of sympathy - although understand of course the lenders can't possibly know the situation, so what I would do is irrelevant really. I am just trying to help them work out how to get debt free in the quickest way saving interest where possible.

sourcrates

keeponcomping wrote: »

I am just trying to help them work out how to get debt free in the quickest way saving interest where possible.

Then forget comsolodation firstly.


It really is a very simple process, either, they increase their income, and reduce expenditure, see if that alone can improve the situation.


If not, then some kind of debt mangement may be required, we wont be able to advise further, unless they post a SOA.

keeponcomping

sourcrates wrote: »

Hi,

You said it yourself in your post, they defaulted on the original agreement,

defaults stay on your credit file for 6 years regardless of what you pay to anyone.

An account defaults only once, the date the default was registered will be on the credit report.
The credit report just shows status updates every month, six years from date of default it will be gone.

Probably a blessing in disguise not to get the loan, as you don’t repay debt with more debt, you either earn more, reduce your outgoings, or enter some kind of debt management depending on your circumstances.

Get your friend to join the forum and post a statement of affairs and we will be able to help them.

Ok that makes sense. I think she was keen on consolidation to try and get a lower interest (and then close the credit card accounts) because lower interest will mean paying it off quicker. I saw some statements and the interest they take is eye watering.

I will suggest she joins up. I've been trying to help her set a budget and get costs down and to be fair I think she has done well reducing the balance by £11,000 especially when so much is being taken in interest too. I am sure there will be people on here who can see extra ways to save. I know she has been too embarrassed to go to somewhere like CAP as she doesn't want to have to talk about how the debt came about, which is understandable. Hopefully she will feel safer posting here since she can be anon.

Willing2Learn

@OP - When exactly was the date of default for the Lowell debt? (It should be clearly dated on your friend's credit file(s).)

keeponcomping

Willing2Learn wrote: »

@OP - When exactly was the date of default for the Lowell debt? (It should be clearly dated on your friend's credit file(s).)

I am not sure of the exact date till I see here again, i remember it was January 2011 she took a loan and then some time in 2015 that she defaulted but without seeing the report again I am not sure exactly. I will ask.