Can I negotiate the removal of a default with a collections agency when settling the full balance?

SoCloseAlmostThere

Afternoon all,

 

I have had a contentious relationship with credit most of my life. In some parts this is due to fairly unusual life circumstances, but mostly a lack of self-control and organisational skills.

For the last ten years I have been fairly careful until I became a father and as of October 2019 I managed to acquire two small defaults.

I have my excuses but to my credit (sort of), I have had thousands of pounds of credit cards, a few 5-7k loans and have never missed a single payment on anything over the last decade.

In 2017 we had a daughter. We were very reliant on credit available and would pay off all each payday but we were at least still living out of the red. This meant that we were very reliant on our full pay each month.

My wife lost her job during maternity. Make no mistakes it was pure discrimination which lawyers agreed. We settled for a good-ish figure but not before almost two years of fighting it due to an overrun court system (I guess they won, by prolonging they knew we would be forced to settle as playing out in court was too risky, yes we would almost definitely win but if not there was no escape from our financial situation). That was the toughest two years of our lives. At the end of every month we had the choice to feed ourselves or our daughter… obviously we fed my daughter (this is an extreme example and not every month). I was still earning so there was no help.

During this time, after losing an income we were forced to use more of our available credit.

The 4-5k we were regularly dipping into out overdrafts (each) had their policies changed. Our overdrafts were on fairly good rates and between us would never cost more than 60-100 a month. Snap, they changed to a daily fee!
We were now not only out of an income but our bank then started charging up to £300 a month because, well, they decided the original agreement that the money was loaned upon can just change,... just like that; this makes me sick with anger. This meant that we were forced into a stupid amount more debt… £200 more each month on cards and the like.

Make no mistake, I am aware that we could have avoided things, and certainly should have prepared for this rainy day. I hold a large amount of the responsibility on my shoulders but this was a unique set of circumstances… this was a dark time and not what you want when you have just become a father. There were a few times driving home at night glared by oncoming headlights and just thinking I am a swerve away from a great life assurance payout to my family. This was one of those thoughts that fleeted, just a passing thought from circumstantial depression that would never have been acted upon.

We made it out alive and in three years have managed to pay back over £20,000. Don't ask how, it was tough. Saving £200 a month with no commute due to COVID helped amongst some other life changes we forced on ourselves.
Covid has really taught me about necessity. No more, despite living on the breadline, could I justify buying that £1.40 coffee at work because it was Friday. No more could I try and justify those little expenses you don’t think about.

I have been extremely, extremely lucky in that my career blossomed and now earning a very high monthly; fragile contract albeit.

But... through this success story there is another victim. I defaulted on two accounts. They are small at £2,000 combined and I am now in a position to settle in full. When I say 'now in a position' I mean that I prioritised live, interest charging cards and balances. They are all at zero but with the defaults I do not have that "free", "celebration" feeling.

Is it a 'thing' that when I reach out to the collection agencies I can attempt to negotiate the removal of the defaults in exchange for full payment?

I know that this is an ethical question as well but I do feel I am not hurting an industry who's business model is to hurt us little folk. I am happy to accept the defaults but if it is possible to get my credit file back then I will take it. Our circumstances were rare, unique and not one we could ever find ourselves in again as we have managed to build a pillow to fall on in the bank. When applying for a mortgage there is little space for me to give the sob story I have just bored you with!

I read that I could send a letter to ask for proof of the debt to try and potentially force the collector to wipe in case they don't have the admin to provide and find the agreements. Please don't advise this, I borrowed the money and would rather not get involved in all of that.  

So now we are saving a lot, we have new better jobs and look to have a 30k deposit in October 2021 for our first home but these October 2019 defaults I imagine are going to be costly in any mortgage process, if not completely blocking despite their (about to be) ‘paid in full’ status.

I do not suggest I deserve to have these removed but I want to try. We are in different stages of our lives now and we are a lot wiser.

 ...

I want to address my poor finances in my younger life I referenced at the beginning. Both my wife and I come from the poverty line. We have been on our own since we were 16 20 years ago (we are childhood sweethearts). I built up a few defaults when I turned 18 because I was a stupid teenager. I will never forget trying to get credit for a games console and television… just why…??? Anyway, once I grew up and managed to work off the defaults I just decided a cold turkey on credit until I was about 24. I then accepted a massive overdraft and a few credit cards and over the next 10+ years lived like a responsible human… borrow a bit, pay it all and repeat. My score was so good until the above. Two defaults and two years at over 90% of my borrowing capacity, well you don’t need the algorithms to take a guess at how low it is.

Somehow my wife, despite living a long time at full borrowing capacity has a cracking score now after having most paid off for 9 months (and no defaults). Sorry sweetie, we are financially linked. The worst thing of all of this was at the time, I was likely only a phone call to the creditors from stopping this from happening but I was stupid… and a bit of a mess… and stupid.

sammyjammy

I didn't read most of your post as most of its irrelevant, they are not interested in the whys and wherefores of how you came to be in debt.  You can try and get the defaults removed but its extremely unlikely they'll agree, chances are the default was listed by the company you originally owed the debt to so it would be them you'd need to liaise with.

SoCloseAlmostThere

With regards to irrelevant, yes I do that. I think I was telling the story to explain that I am not trying to worm out of things perhaps...
Thank you for the information. I will ask the question to the collection agency but expect to just pay off and deal with it. 

Suseka97

I don't think it's likely they'll remove any defaults, these are applied as part of a legal process when people fail to make their contractual payments after a period of time - so non negotiable once applied.  Is there a particular reason you want the defaults gone?  No-one other than you know they exist and your credit 'score' is irrelevant - what matters is your credit history, and this only matters if you are looking at accessing credit (which is clearly not your intent) or perhaps if looking to remortgage.

sourcrates

Firstly the reasons why you got into debt are irrelevant to us, most of us are not judgemental, as most have been there and got the T shirt.

There are certain circumstances where a default can be removed -

(1) If the default was applied incorrectly, for example the account didn`t default in the first place.
(2) If you had a complaint about unaffordable lending upheld, and default removal was included in the redress.
(3) A goodwill gesture on the part of the creditor, a very unpredictable option, as they would need good reason to do so.

You are free to make a complaint to the original creditor, if you can convince them the default was unfairly applied, then there is a chance, a very slim one, that you may get it removed, however, don`t start celebrating just yet, the default would normally have to be re-placed by something else (unless option 2 above applied to you) usually arrangement to pay markers, or they may decide to wipe the entry completely instead.

What I'm trying to say is your position may improve by complaining, or it may get worse, its the gamble you take.

SoCloseAlmostThere

sourcrates said:

There are certain circumstances where a default can be removed -

(1) If the default was applied incorrectly, for example the account didn`t default in the first place.
(2) If you had a complaint about unaffordable lending upheld, and default removal was included in the redress.
(3) A goodwill gesture on the part of the creditor, a very unpredictable option, as they would need good reason to do so.

You are free to make a complaint to the original creditor, if you can convince them the default was unfairly applied, then there is a chance, a very slim one, that you may get it removed, however, don`t start celebrating just yet, the default would normally have to be re-placed by something else (unless option 2 above applied to you) usually arrangement to pay markers, or they may decide to wipe the entry completely instead.

What I'm trying to say is your position may improve by complaining, or it may get worse, its the gamble you take.

Thank you. I phoned up this morning and tried. They came straight in with partial settlement offers which I think I will decline. I am giving up on this pipedream...
The money was loaned and was not unaffordable, I defaulted to no fault of theirs. I have paid one off in full this morning, the other one they said that they would settle the default as 'fully satisfied' (different collections agent) which makes no sense, I thought this would not be legal. Anyway I may take them up on this if it checks out. 

Thank you for your response. 

SoCloseAlmostThere

Suseka97 said:

I don't think it's likely they'll remove any defaults, these are applied as part of a legal process when people fail to make their contractual payments after a period of time - so non negotiable once applied.  Is there a particular reason you want the defaults gone?  No-one other than you know they exist and your credit 'score' is irrelevant - what matters is your credit history, and this only matters if you are looking at accessing credit (which is clearly not your intent) or perhaps if looking to remortgage.

Thank you for the response. Yes I am going to give up on this idea. I want the defaults gone so I can pretend they never happened when applying for a mortgage. Putting it this way sort of answers precisely why this wont happen! Anyway, I paid one off this morning and am waiting on a call back to the other so can call it a day and move on.

Again, thank you for the response.

sammyjammy

Time moves fast, best of luck with moving forward in your life.

Suseka97

When it comes to looking for a mortgage you just need to approach a broker who has experience of working with clients who have an adverse credit history.  Depending on where you then are with regards to the age of the default/s or whether they are settled or not, there will be options for you.  

SoCloseAlmostThere

Suseka97 said:

When it comes to looking for a mortgage you just need to approach a broker who has experience of working with clients who have an adverse credit history.  Depending on where you then are with regards to the age of the default/s or whether they are settled or not, there will be options for you.  

Thank you, we are going to have a tough time and we may need to wait until the defaults have been paid for over a year (I imagine). Then the process of calculating adverse credit interest rate in comparison to the post tax £13,200 a year we pay in rent. 
There is another factor that will make mortgaging all the more difficult; the reason we have landed on our feet as it were is the fact that I am now contracting in my industry which comes with significantly better financial benefits but also risks where the lender is concerned. We have singled out one or two specialist advisors so will see what comes.
I don't resent any of this, we are elated that we are finally in a position that we can have these conversations finally after a long time. I am waiting for a phone call from this collection agency to arrange full payment and we will have literally zero debts. I may take out a large loan to throw a debt free party... that was a not particularly funny joke. 

Suseka97

Enjoy your debt freedom and I wish you the very best of luck with your future plans... just goes to prove there is 'life after debt'