Unenforceable debt and a mortgage application

summerb64

fatbelly said:

summerb64 said:

Hello, 

Hoping someone will be able to give me the answer, I am back in the process of applying for a mortgage, the house I was trying to purchase a few months back was taken off the market. 

I had a debt from a credit card with something around £4000 remaining, it was sold to Pra debt purchasers, I done the cca request a year ago and they said the debt is unenforceable. I haven’t made any payment to this debt for 18 months. Last time I applied for a mortgage I just made sure to avoid the original lender (Barclaycard). 

I still occasionally get letters asking for payment but they cannot enforce it so I just ignore them. Should I have to declare this to a broker? Last time I didn’t tell the broker but just told him to avoid Barclays. But I am using another broker and it just crossed my mind whether there is a point telling him/her about this or whether it just confuses things for no reason?

Provided it's over six years since the default it won't be on any credit record. As PRA have agreed it's unenforceable, that one is gone.

The only people who might still have a record of it are pra and the original lender- who probably has it marked as settled

Hi Fatbelly, thanks for your input, that’s what I thought, I don’t get the question ‘have you ever defaulted’ because surely if it’s not on credit report and it’s paid off or unenforceable, and you aren’t applying to the lender you defaulted with… how would the lender ever know?

MWT

summerb64 said:

Hi Fatbelly, thanks for your input, that’s what I thought, I don’t get the question ‘have you ever defaulted’ because surely if it’s not on credit report and it’s paid off or unenforceable, and you aren’t applying to the lender you defaulted with… how would the lender ever know?

The question may be asked precisely because older events drop off the report and they may consider it important to know if you have ever defaulted...

How you answer the question should be based on the truth, not 'how would they ever know' ...

summerb64

MWT said:

summerb64 said:

Hi Fatbelly, thanks for your input, that’s what I thought, I don’t get the question ‘have you ever defaulted’ because surely if it’s not on credit report and it’s paid off or unenforceable, and you aren’t applying to the lender you defaulted with… how would the lender ever know?

The question may be asked precisely because older events drop off the report and they may consider it important to know if you have ever defaulted...

How you answer the question should be based on the truth, not 'how would they ever know' ...

I totally get that and this is why I will be telling the broker about the default anyway, more or just wondering. Do they ask for further context on you ever defaulting if it’s no longer on a credit report, like if it is ten years old would they require proof it has been cleared off or unenforceable etc?

MWT

summerb64 said:

Do they ask for further context on you ever defaulting if it’s no longer on a credit report, like if it is ten years old would they require proof it has been cleared off or unenforceable etc?

That is a good one to ask your broker, and yes, the difference between cleared or not paid because it is unenforceable could be important to a lender as it indicates attitude towards debt.

The important part is telling your broker everything so they can help you through the process with the best chance of success, and as you are going to do that, you are off to a good start.

ACG

We ask customers to tell us everything.
Our factfind asks if you have ever had a default/CCJ etc and then asks for details if you answer yes. 

We have a contract that basically says if you do not tell us something that results in a declined application, we reserve the right to charge an admin fee. 

If you do not tell us about the default and it gets declined because of it - you are on the hook for our fee. 
If you tell us about it and it is declined because of the default - you are not on the hook for anything. 

If you did not tell us about the default and it gets picked up and then subsequently declined because of the valuation, then you would not be on the hook - but I would be unhappy you had not told us everything and in the back of my mind I would be wondering what else had been missed off. 

"the truth shall set you free" or whatever the line in the bible says. Just tell the broker, it wont be an issue but at least you cant be accused of hiding something. Let the broker worry about it.  

summerb64

ACG said:

We ask customers to tell us everything.
Our factfind asks if you have ever had a default/CCJ etc and then asks for details if you answer yes. 

We have a contract that basically says if you do not tell us something that results in a declined application, we reserve the right to charge an admin fee. 

If you do not tell us about the default and it gets declined because of it - you are on the hook for our fee. 
If you tell us about it and it is declined because of the default - you are not on the hook for anything. 

If you did not tell us about the default and it gets picked up and then subsequently declined because of the valuation, then you would not be on the hook - but I would be unhappy you had not told us everything and in the back of my mind I would be wondering what else had been missed off. 

"the truth shall set you free" or whatever the line in the bible says. Just tell the broker, it wont be an issue but at least you cant be accused of hiding something. Let the broker worry about it.  

I think that is fair enough and it would only make the brokers job more difficult if they didn’t know the full picture. So I will mention this to the broker next week. I think what caused me so much confusion on this one was that the default was on a staff loan which was only ever reported on equifax and this stopped showing in 2020 anyway. 

As a broker, would you require proof that the default is paid/unenforceable/wrote off if it wasn’t on the credit report anymore. Or would you just want to know so you could avoid certain lenders where you know the fact I have defaulted in the past would have an impact?

ACG

I would just want to know who it is with and approximate date and yes, just so we can potentially avoid the lender. 

The rest of it, being unenforceable etc - its not relevant. Some lenders hold a grudge indefinitely if they had to write off a penny, others do not. 

summerb64

ACG said:

I would just want to know who it is with and approximate date and yes, just so we can potentially avoid the lender. 

The rest of it, being unenforceable etc - its not relevant. Some lenders hold a grudge indefinitely if they had to write off a penny, others do not. 

Thanks so much for your help. I’ve moved my appointment forward to this Wednesday so will provide the broker with the default date and all those details so she can go from there😀

summerb64

Update - thanks for all the info and advice on this, I spoke with the mortgage broker today and made her aware that there was a default with Barclays some time ago and doesn’t show on any of the credit reports and she said this is fine provided it doesn’t show on 3-6 months worth of bank statements. Surprisingly she said that normally wouldn’t rule out Barclays but is getting back to me later once gone through my reports and statements etc and will give me the options then. 

I personally will ask to avoid Barclays irregardless of whether it’s the best deal because feel as though since I did default with them in the past it wouldn’t feel right to attempt to have a product with them again 😊. 

Thanks and will provide an update when I get one in case it helps anyone who has been in a similar situation as it does feel a better to be honest and not have to worry about something causing a problem that needn’t to 

JMA74

Last thing you want is to apply to Barclays and get it declined based on historic data as then that declined application has to be declared on future applications.  What became easy to 'hide' is now something that has to be declared upfront.   I would absolutely avoid barclays in this case