Bank marked a default despite IVA and nothing seems to resolve it

jojebauk

Hello forum friends,

Struggling with a credit issue. In April 2020 after Covid hit I was out of work, heavy in debt, so a debt advice line recommended I take out an IVA, in which all debt – including my Halifax credit card – was taken on by a third party agency. Halifax, while agreeing to the IVA, did not seem to register this in their system and kept sending me late payment notices. I contacted them multiple times over the next year about it, and the agency did too, but in early 2021 I paid off the IVA in full and I heard no more. I hoped things would improve.
My credit score went up a little after the IVA was paid off. But in January this year I applied for a credit card and the result came back as being denied as I was in default. I ordered a credit report and discovered Halifax had me down as defaulting on the credit card in September 2020, months after the IVA was taken out. I spoke to Halifax who couldn't explain why this was, but told me since the IVA was paid off, I could send them my IVA Certificate of Completion so they could clarify the debt was cleared, and they would remove the dispute. I sent it to them in February.
By April nothing had changed on my credit report so I called them back – a lot of being passed down the call-centre line and nobody could confirm whether or not they'd ever received the certificate. I immediately resent it that day, and have proof of receipt via signature. It's now more than six weeks on and the default is still there. I know credit issues remain on file for six years, and my closed IVA will be there, but the Halifax debt is showing as an active default, and it should not have been there to begin with. The debt was bought from them. This has caused a lot of stress over the past couple of years and I'm not sure what else I can do. If you have any advice I'd really appreciate it.

Kindly,
Jo

sourcrates

Are you certain this was an IVA (Individual Voluntary Arrangement) re-paying after one year is unusual to say the least, why bother with an IVA if you could settle the debts after a year, you cost yourself a great deal of money in fee`s most likely.

An IVA, is a form of insolvency, it shows on your credit file for 6 years regardless of whether its paid off early or not.
All your debts should have shown a default date no later than the start of your IVA, but again, defaults will show for 6 years regardless of been paid off or not, all this you seem to understand.

However, its quite likely that Halifax retained ownership of your debt, after such a short period of time since you stopped making payments, the "third party agency" that you describe, was likely just a debt collector acting on behalf of the Halifax, basically following the standard debt collection process.

Unless you were informed in writing that Halifax had sold the debt to a 3rd party, were you ?

The two scenarios go like this -

(1) If the debt was not sold, just assigned to a collector, then what Halifax did was correct, however the date of default should have been moved to no later than the start of your IVA, but a few months won`t make a lot of difference to be fair.

(2) If the debt was sold, the same applies, you do not have to default an account for it to be sold, however it is required for insolvency purposes, so again, the above would apply.

jojebauk

Hi,

The insolvency agency I took out the IVA with is the party that took over the debt from Halifax. That's essentially the point of the IVA – for all debt to be sold to a single agent, who the customer (me) then pays off over time.

Yes, in hindsight I didn't need to take out the IVA, although at the time, at the start of the pandemic, I had no work or income lined up and I fell into deep panic... the debt line I called for advice should have suggested other options. I also had no way to know I would eventually get enough work within the year that I could clear it all. That is all really by the by. 

The issue at hand is that Halifax agreed to the IVA – there is a creditor's meeting they go through and then they hand over the debt to the insolvency agency. The IVA would be the mark on my credit rating, but not an additional default from Halifax as the debt was 'bought' off them in agreement. (The other credit card I had covered by the IVA was not listed as a default.) The fact the default also shows up as later in the year, and they were still sending overdue payment notices after the IVA was agreed to, shows that somewhere along the line the IVA agreement was not fully communicated to the department chasing credit card payments. I am also finding that when I apply for credit now, the alert that is showing up is not the IVA (which will remain for six years but shown as paid off) but the default on my credit card, which comes up as an active debt.

Hope this makes sense about the situation. Really appreciate you taking time to reply, and hope someone can offer advice on how I can proceed to get rid of this default. 

Thanks!

sourcrates

You have confused me even more, an IVA does not work in the way you suggest, the IP does not buy the debts and debt agencies do not provide IVA`s ??? no one hands over anything.

What you are describing is a debt management plan with a debt collector, that`s how it sounds to me.

Anyway, regardless of that, assuming it was an IVA you had, debts can be defaulted at any time after between 3/6 missed contractual payments, all debts in an IVA can still be defaulted by creditors and, indeed, it is better that they do default, as this means they will disappear in 6 years from the date of default.

As long as this date is on, before, or around the date the IVA started all is good.

The alternative would have been AP markers, which stay on file for 6 years after the debt is settled, so potentially much longer, your account has to be marked in some way, and once you stop making contractual payments, its either AP markers or defaults, that is standard practice across the board.

You cannot "get rid" of the default as it was placed correctly, and inline with guidance.

jojebauk

Thanks for responding. I am only repeating my understanding of the IVA in regards to how it was sold to me, and explained throughout. I regret the whole thing regardless and wish I had been given other recourse for debt in my moment of difficulty.

fatbelly

My guess is that you were indeed in an IVA, after you contacted a dodgy IVA pusher for their 'advice'


I don't have anything to add to sourcrates' posts - your credit history will look better as the insolvency gets older but hopefully you can live without credit until the 6 years is up