Can this debt be removed from my credit file?

XEO25 · 23 April 2020 at 11:15AM

Hello, hoping someone can advise on this as I haven't been able to find an answer online.

I took out a payday loan in 2016 due to financial hardship, and wasn't able to pay it back. The debt (£375) was passed to a debt collector (BW Legal), and has been with them since (last 4 years). The debt has been sitting on my credit file marked as '5 months in arrears' for the last 4 years, although I only spotted it recently as it's only listed with Equifax (I use Experian). I phoned up BW Legal yesterday to pay the debt in full (as I'm hoping to apply for a mortgage in 6 months) and they said the account had been closed this month (two weeks earlier), and I didn't owe anything. They couldn't tell me why the account had been closed, which I thought was odd.

I did some research in to the original lender (ICL / Moneyshop) and it appears they went in to liquidation on 30th March 2020 (2 weeks before my account with BW Legal was closed). So I have two questions:

1. Is it likely that ICL going in to liquidation has resulted in my account with BW Legal being closed and the debt no longer owed?

2. How can I best address this with my credit file? The debt is showing as owed by Prac Financial (part of BW Legal), and in arrears for 5 months, for the last 4 years. Is it possible to have this removed completely, as the debt is no longer owed, or is my only hope having it updated as settled?

Really appreciate anyone who can advise. I'm getting no information out of Prac / BW Legal.

Thanks

[Deleted User] · 23 April 2020 at 11:19AM

1. Possibly. Possibly not.
2. The account will drop off 6 years from default. Use the time to build a better credit history. There's no reason for it to be removed any earlier.

XEO25 · 23 April 2020 at 11:21AM

Deleted_User said:

1. Possibly. Possibly not.
2. The account will drop off 6 years from default. Use the time to build a better credit history. There's no reason for it to be removed any earlier.

Thanks.
The account was never marked as a default, only 5 months in arrears, each month, for the last 4 years. As such, I'm unsure how this will be / can be dealt with.

MinuteNoodles · 23 April 2020 at 11:22AM

1) No. The debt is still owed, it is however now owned by the receivers or whoever they sell the balance book of ICL to.

2) You can't. An entry in your credit record IS A TRUE STATEMENT OF FACTS AT THE TIME OF THE ENTRY BEING MADE. The fact the lender no longer exists is irrelevant, the fact you pay it off in full after the event is irrelevent - even if you paid off in full it stays on. The only way to have something removed is when there was an error. As you took out the loan and didn't pay it it is a true representation of the facts so will not be removed regardless of whether you paid it or the lender went bust. You can't get it set as settled either because it hasn't been.

You may be able to get it marked as a default by writing to the CRAs but it won't get removed.

XEO25 · 23 April 2020 at 11:30AM

MinuteNoodles said:

1) No. The debt is still owed, it is however now owned by the receivers or whoever they sell the balance book of ICL to.
2) You can't. An entry in your credit record IS A TRUE STATEMENT OF FACTS AT THE TIME OF THE ENTRY BEING MADE. The fact the lender no longer exists is irrelevant, the fact you pay it off in full after the event is irrelevent - even if you paid off in full it stays on. The only way to have something removed is when there was an error. As you took out the loan and didn't pay it it is a true representation of the facts so will not be removed regardless of whether you paid it or the lender went bust. You can't get it set as settled either because it hasn't been.

You may be able to get it marked as a default by writing to the CRAs but it won't get removed.

Thanks for the detailed response.

If the debt is still owed to whoever buys the balance book of ICL, I will look in to that, as I don't want another entry on the credit file from a new owner. In terms of the existing entry with Prac Financial, how do you think this should be resolved? I can't leave it as '5 months in arrears' and I'm unable to settle the debt with them as the account is closed, so I'm unsure what to do?

[Deleted User] · 23 April 2020 at 11:32AM

Ask them to backdate a default to the appropriate time.

XEO25 · 23 April 2020 at 11:36AM

Deleted_User said:

Ask them to backdate a default to the appropriate time.

Thanks. Won't they ask for proof that a default was issued?

XEO25 · 27 April 2020 at 2:47PM

I've asked Equifax to update the account as a default and backdate to the appropriate time. They said I have to contact Prac Financial and ask them to do it.

So I contacted Prac and asked them, but they said because the account is closed, they can no longer amend it. I went back to Equifax with this and they said they still couldn't amend the account on the credit file.

What on earth am I supposed to do?