Moneybarn Refusing to Default Debt

Angrycarbuyer

Good Afternoon, 

I voluntarily terminated an agreement with Moneybarn and there was £7k left to pay to reach half the agreement. 

I was 3 months in arrears when I took the Voluntary Termination option and no payment has been made to the account since December 2019. However they have not defaulted the debt. They have sent no default notice and are currently chasing through Moorcroft. 

After checking my credit record they have updated it as "no payment due/u" for the past 19 months. 

Now I don't have an issue with this per se. Although I do think its against the ICO guidelines for accurate reporting.

But I want to enter into a repayment arrangement with them. This is likely going to take about 5 years to pay off, they are obviously then going to start adding "AP" markers to my file, which is as bad as a default I understand, but this will drag on for much much longer than 6 years from the date of default. I have written to them and asked them to default the account. But they refused. Saying that they have their own internal processes for when an account is in default. 

So is it legal for a company to continue to report "no payment due/unclassified" to the CRA's for several years and then add a default whenever they feel like? Probably just before it becomes statute barred for maximum damage. 

How do I go about getting this resolved? I have told them I am not making any payments to the account until they add a correctly dated default to my credit file, and instead will put a token payment in a savings account each month. 

No response as of yet. Would be grateful for your advice. 

sourcrates

The question is not "is it legal", the question should be, "is it fair" ?

The consumer credit act, particularly section 87, which deals with defaults, sets out the stall nicely -

Consumer Credit Act 1974 (legislation.gov.uk)

If you read it, you will see there is no penalty, to the creditor, for not defaulting an account.

The FCA produce a financial handbook, which sets out the guidelines creditors should operate under, conc 7.3 covers how to deal with customers with accounts in default, or about to go into default -

CONC 7.3 Treatment of customers in default or arrears (including repossessions): lenders, owners and debt collectors - FCA Handbook

Again if you read it, the guidance is directed towards keeping people repaying their debts, at an amount they can afford, without defaulting them.

Now this may be well and good for some individuals, but say for example, your in debt management, and you want an end date to your credit file being trashed, then you want, and need to be defaulted.

And again, someone in your position, its exactly the same, however creditors have been told to use forbearance with those in arrears, so really its a catch 22 situation.

All you can do is keep with holding payment in the hope they will sell the debt on, and/or keep complaining to them.

Angrycarbuyer

It does seem that the regulations are, forgive the expression, an !!!!!! about tit way of dealing with matters such as this. It seems that it is far more preferable for anyone to wait until an account is defaulted and then make the payments towards clearing it, rather than to enter into a payment arrangement to clear an old debt that hasn't been defaulted at the earliest opportunity. Which makes no sense for either party. 

The thing with regards to this is that the agreement has in effect ended. There are no contractual payments, there is no interest accruing. There is just a sum that became due when I exercised my right to voluntary termination. 

The contract doesn't say anything about how or when this should be paid.  

So, if the account is not in default, then what do I need to do to bring it back into good standing? There are no "arrears" as such. No schedule of what payments are due when. There is just this lump of £7k that is owed to bring the agreement to a close. If I paid my contractual payment amount each month of the original finance agreement, would this then bring the account into good standing and payments reported to the CRA as "On Time". Despite an almost 2 year gap in payments.

I think the answer is probably that one full payment of the total amount due would be the contractual payment.

But then if that is the case, and it hasn't been made for 2 years, it should have defaulted after 6 months. Like every other creditor who isn't a bit shady does.

I am in a catch 22 situation here then. It could be another 2 years until they decide to default the debt. From reading other peoples stories it very rarely works getting a default date changed after the fact. 

It seems like, having been stupid enough to take out the agreement in the first place, then pay them £5K more than the car was worth in repayments, then give them the car back. They are not content with simply recovering the amount that I owe them contractually. They want to inflict as much damage to my credit record as is humanly possible, for as long as possible, along the way.  

AnnieB2018

I actually don’t think this makes that much a difference really. It’s been a while since you paid anything towards the loan, but naturally you have been putting that money aside every month for it. So when you two agree how to deal with the repayment, it won’t take as much time to repay it as you envisaged back in Dec 2019. Say you wanted to pay it over 5 years, and you are already 1.5years in, just holding onto the cash for them. The credit history may perhaps look neater with say 3.5years arrangement to pay, rather than 5 years.