paying £1 a month on a card that defaulted in 2010

spencer999

my friend maxed out a credit card and there's about £4000 owing on it.  She's been paying £1 a month on it since 2010.  We rang the debt collectors together and they volunteered the information that the account defaulted in 2010, twelve years ago.  It's never been to court.  Am I right in thinking that she can safely bin that £1 a month payment and tell them to stop calling and writing as it's over the 6 years?  Is there a form of wording to use when writing?  Please no lessons in financial morality    thanks folks

HillStreetBlues

spencer999 said:

my friend maxed out a credit card and there's about £4000 owing on it.  She's been paying £1 a month on it since 2010.  We rang the debt collectors together and they volunteered the information that the account defaulted in 2010, twelve years ago.  It's never been to court.  Am I right in thinking that she can safely bin that £1 a month payment and tell them to stop calling and writing as it's over the 6 years?  Is there a form of wording to use when writing?  Please no lessons in financial morality    thanks folks

No, as a payments have continued.
It would have to be 6 years since last payment as making the payment will be acknowledging the debt.
What it's marked as isn't relevant.

spencer999

ok thanks, I thought it would be from 2010, I was listening carefully for the magic word "default" and when it happened and that was indeed in 2010.  So IF they wanted to they could still go to court?  Makes you wonder why they haven't as at this rate the debt will be paid in something over 300 years

enthusiasticsaver

It is a shame your friend did not take advice earlier. It is only statute barred if there have been no payments or communication for 6 years. By paying £1 a month he or she has acknowledged the debt. Have they asked for a F and F payment? 

spencer999

they probably have made numerous offers.  They've had 12 - 13 years to go to court, why haven't they though?  £1 a month isn't going to butter any parsnips.

HillStreetBlues

enthusiasticsaver said:

It is a shame your friend did not take advice earlier. It is only statute barred if there have been no payments or communication for 6 years. By paying £1 a month he or she has acknowledged the debt. Have they asked for a F and F payment? 

That's not strictly true.
There can be no acknowledgement of the debt in that time-frame (which includes any payment). Any communication is fine if there is no acknowledgement.

Catsacor

spencer999 said:

my friend maxed out a credit card and there's about £4000 owing on it.  She's been paying £1 a month on it since 2010.  We rang the debt collectors together and they volunteered the information that the account defaulted in 2010, twelve years ago.  It's never been to court.  Am I right in thinking that she can safely bin that £1 a month payment and tell them to stop calling and writing as it's over the 6 years?  Is there a form of wording to use when writing?  Please no lessons in financial morality    thanks folks

However, financial lessons are what this subforum is about and everyone reading this thread gains valuable information that might well relate to their own situation 👍👍

HillStreetBlues

Catsacor said:

However, financial lessons are what this subforum is about and everyone reading this thread gains valuable information that might well relate to their own situation 👍👍

My reading of it isn't about lessons.  It's simply the morality of trying to avoid a debt that is owed.

nic_c

spencer999 said:

they probably have made numerous offers.  They've had 12 - 13 years to go to court, why haven't they though?  £1 a month isn't going to butter any parsnips.

They haven't gone to court and won't whilst your friend is paying. Yes it will take an age but as the debt company agreed to the £1pm rather than insisting more be paid to pay it off in a reasonable time, nothing much they can do.

If they tried to take it to court your friends defence is that there's an agreement between the parties and your friend has been maintaining the terms of the payment. The Court would throw it out.

They may try asking your friend to increase it, but they can't force it, there is an agreement your friend is complying with. Even though at £1pm the debt is unlikely to be paid off in the lifetime, it will no longer show on credit files and have no impact (technically if they applied for a mortgage and the bank statements showed the £1pm to a debt company the mortgage company might query as it's non-settled debt).

Does your friend feel they were given more credit than they could cope with (e.g. was having money problems and so maxed out the card paying for debts/living etc) there could be a case of irresponsible lending claim.

Alternatively if your friend can pay more than £1pm, how about contacting the debt company and ask if there's any settlement discounts. They may offer anywhere between 20%-90% off if your friend can pay it in one lump sum or over a few months (though get any confirmation of offer in writing before paying). They might not, but given the amount paying and the age of the debt, companies are often willing to do it.

nic_c

HillStreetBlues said:

Catsacor said:

However, financial lessons are what this subforum is about and everyone reading this thread gains valuable information that might well relate to their own situation 👍👍

My reading of it isn't about lessons.  It's simply the morality of trying to avoid a debt that is owed.

There is the morality of whether a debt is fair though. We often take it as if someone has borrowed the money, they should pay it back. However it's not always as simple nor black and white as that.

There are plenty of cases where the financial ombudsman has upheld irresponsible lending.

Given the age of the OP's friends default, there were several credit card companies that did not do due diligence on fully checking credit files, or only checked when they gave a very small limit but did not check when the limit was increased several times each time the customer reached the limit. When in reality the spending up to the limit whilst paying the minimum should have been a red flag for further investigation.

HillStreetBlues

nic_c said:

HillStreetBlues said:

Catsacor said:

However, financial lessons are what this subforum is about and everyone reading this thread gains valuable information that might well relate to their own situation 👍👍

My reading of it isn't about lessons.  It's simply the morality of trying to avoid a debt that is owed.

There is the morality of whether a debt is fair though. We often take it as if someone has borrowed the money, they should pay it back. However it's not always as simple nor black and white as that.

There are plenty of cases where the financial ombudsman has upheld irresponsible lending.

Given the age of the OP's friends default, there were several credit card companies that did not do due diligence on fully checking credit files, or only checked when they gave a very small limit but did not check when the limit was increased several times each time the customer reached the limit. When in reality the spending up to the limit whilst paying the minimum should have been a red flag for further investigation.

But that's a different question,  if the debt is unfair and ruled as such then there is no debt owed.