Virgin Money Default & Sale of Debt

rich1112

Hi, first post and looking for some help.

I'll give some background first. I got myself into a pickle a few years ago with debt, where the interest was getting to the point I wasn't clearing my debts so I opted to go onto a Debt Management Plan to draw a line under it all and repay what I owed (that was December 2019)

Fast forward to now, all of my debts were defaulted by the original creditors (an annoyance but expected), I hadn't really paid any attention to them since I hadn't been expecting to need to take out any kind of credit for at least another 2 years. However life has happened and I am now looking at getting a mortgage with my wife (our current house is solely in her name), and between us we have increased our household income circa 40% in the last 10 months.

I noticed when I checked my credit report as part of the decision in principle process that I had lots of defaults - although this made sense when I matched them all up for where they had been sold off to debt collection agencies, however they were all defaulted over the course of 2020.

There were 2 that worried me as they dropped in April 2021 and July 2021 - the July 2021 was from PayPal despite prior to this it showing as in arrangement - I contacted PayPal who admitted a system error and are in the process of removing the default which is great news. 

The current one I need advise on is the April 2021 default, this is showing from Arrow Global - who took over my account from Virgin Money - up to this point my payments from the debt management company have been over the 1% minimum payment (given they closed my account so there is no interest to take into account), and they had my account as 'in good standing'. They sold the account to Arrow with a default despite me never being issued with the notice, or even advised I was in arrears. To make matters worse the Virgin Money records have vanished from my credit file (all 3 CRAs) so I can't even show the history (as I am able with all the others). Virgin Money are being decidedly difficult to get hold of - it took them a week to respond to my complaint and that was only to confirm my email and home address, Arrow have also requested the account information and it has not arrived either. 

My question is - where do I go now? I am confident this is not a defaulted account but feel I am struggling to prove this - I am keen to progress this as the housing market is crazy and the 2-4 month wait is not going to make this any easier. My gut feeling is that there is a breach of some law here but not being an expert I don't want to go in guns blazing without the facts - the best I have now is the financial detriment and stress this is causing me but I know that alone is unlikely to get me anywhere.

Thanks for any advice 

sparklep0ny

If the account was "closed" as you say, you were paying no interest, and it's ended up in the hands of a DCA it almost certainly defaulted at some point.

Whilst lenders may occasionally sell up to date debts on, that is almost always reserved for their entire loan book, most often when they're exiting that particular market, and rarely, if ever, does it end up in the hands of a DCA.

I also think you need to seriously temper your expectations when it comes to getting a mortgage.  A slew of pretty recent defaults is likely to kill any real prospect of getting a mortgage, particularly if they're not satisfied (you don't mention them being paid off.)

rich1112

@sparklep0ny I appreciate the swift reply, few points of clarity I guess... Yes it 'should' have defaulted however in 16 months it didn't (which is in breach of ICO guidelines on how long it can be dragged out for). Therefore if the account was closed 16 months ago why wasn't it defaulted around 13 months ago? I don't know or care to know why it was sold on - maybe for the balance sheet I suspect.

In terms of the mortgage it will be a joint mortgage my wife has an excellent credit rating and having spoken to some really good brokers we can get mortgages (aslong as defaults are over a year old and are within the DMP) - I'm aware rates are pretty poor being around 2% higher than the high street but it is a hit we are prepared to take.

This post is far more about the data integrity and anything surrounding how long companies have to trigger defaults rather than the inner workings of selling debts to a DCA - given PayPal also closed my account and stopped all interest, and they registered my account as 'under arrangement' on my credit file (same applies that with no interest I was over the minimum payment) the lack of consistency worries me.

sparklep0ny

The ICO guidelines are just that, guidelines.  Lenders are free to ignore them if they wish.

I'm not convinced it didn't default for the entirety of 16 months but the issue here doesn't appear to be whether it defaulted but when.  You're going to need evidence this should have been sooner. Unfortunately, you appear to have binned all their correspondence.  You could try SAR'ing Virgin Money to get the data in order to work out when it should have defaulted according to the ICO guidance, and cross your fingers that they're one of the lenders who choose to follow it and will respond to a request to backdate it (or more specifically Arrow Global backdate it.)

Borders2017

I would be advising you against getting a mortgage /joint home for some time yet.
You look high risk as an individual, i would be giving you a wide berth as an underwriter. 

You will end up with either a decline or a massively high rate, which obsoletes the effect of you trying to out run the increase in the housing market.

Have you accrued any other debts in the last 2 years?
Saying 'in a bit of a pickle' and having to go on a DMP are a little different.
What was the reason for the debt in the first place?

What is the reason you want to move now?
Have you saved anything towards the cost of a house move?

Sounds like you are trying to run before you can walk..........

rich1112

I plan to keep this thread updated for anyone else who ends up questioning default dates like I am.

Update:
Virgin Money are currently dealing with a complaint (25th October) but haven't formally acknowledged it or done anything at this point - other than escalate it whatever that entails. 

I also submitted a DSAR request which has been fulfilled, it turns out that until Dec 2020 they were content with the payments I was making and marked it as no further action (albeit in arrears on credit report - which is to be expected).

In November 2020 they issued me a default notice with a deadline of the 17th December - which clearly came and went, and they did nothing more other than send me 2 more Notice's of Arrears in January & February 2021

Then on the 3rd March 2021 they issued me with another Default notice with a deadline of 31st March - which on the 1st April they registered a default and sold the account.

I have now updated my complaint to ask that the original notice is used and my credit report updated.

Side note for anyone interested in the particulars of my case, moving the notice to 2020 opens up the market to specialist mortgage lenders whose criteria I do meet, the intention along with obviously moving house is that I clear all outstanding debts (DMP and 'active') as well (they are roughly half what I started with nearly 2 years ago and the settlement offers make this worth doing).