Bank recommended defaulting

St_Kildaa_Girl

Hi,
For the past few years I have been working hard to clear debt following my divorce. Last year I contacted my bank (The Bank of Scotland) to discuss how I could reduce the regular interest charges on my 2 overdrafts. (£1900 and £2500) They immediately recommended that I default on both accounts - which had been up to date until that point. At the time I needed to reduce my outgoings as much as possible so I agreed, but I am now concerned that I was offered bad advice and that they could have perhaps offered to make an arrangement with me that meant I could repay the overdrafts, without the interest (or with reduced interest) and prevented me having defaults on my credit file.
Has anyone else been given this advice or have thoughts on it?


Thanks.

[Deleted User]

A default is far preferable to a long running arrangement.

They seem to have advised you well.

Nebulous2

If you entered into an arrangement with the bank to pay off your debt and reduce interest there were really only two options for reporting it. Either default or arrangement to pay.

A default comes off your file completely 6 years after the default date. An arrangement to pay will stay on until payment had finished or you resume contractual payments and will show for 6 years after that. We regularly have posts on here from people who feel they have been disadvantaged by having an AP marker, as it is still showing where a default would have now disappeared.

So they may have done you a favour.


edit: cross-posted with zx81

Ben8282

OP said they asked bank for advice on reducing interest on their overdraft. They did not say that there was any problem at that point or that the bank were requesting repayment of the overdrafts.
The common sense advice would have been to pay salary into the accounts so that the overdraft reduces each month even if used again or to see about obtaining a 0% card of some sort or similar. There was no suggestion of an arrangement to pay based on what OP has written. Not quite sure how OP went about defaulting the overdrafts except by ceasing to pay any money into the accounts and then refusing to make repayment on demand.

St_Kildaa_Girl

Thank you for replying.
The bank automatically closed the accounts once I had agreed to default. I didn't actually default. My accounts were up to date and they just placed them in default status so that I no longer had the accounts and therefore didn't have to pay the interest.