Can a Natwest loan be on a repayment plan to avoid a default?

stedav2010

I've an ongoing issue with Natwest that started in 2021 regarding a loan I took out to cover a tax bill. I was laid off a job and needed the money for priority bills as I did not have enough savings. So I took out a loan to pay the tax bill.

However, getting back into work proved difficult. I work as a freelancer but did also apply for FT jobs. I picked up work and managed to stay on top of the loan payments but due to gaps in my income that followed, and other credit card bills, it became difficult to stay on top of paying. I had a couple of payment holidays and I think I reduced payment at one point.

Then I got a job in 2023 but six months later, like I'm cursed, I was laid off again and had to stop the payments. Again, they froze the interest. And a couple of weeks ago, refunded interest payments which was odd. So again I took a payment holiday and discussed potential repayment arrangements. Into April, and after these payment breaks and buying patience from the bank, I am at a point where I think I've got no more time and a repayment plan must be negotiated once they again go over my finances next week. I have talked to Payplan, Stepchange and another debt advice line. But I am trying to avoid a debt relief order, and really don't want to go the IVA route.

I won't be able to afford to pay the full loan payment monthly as hoped from April. And I was told that a repayment plan of less than the full amount expected monthly will result in a default. So that makes it unavoidable. I wondered if I could ask to just cover the interest monthly until my income improves but I'm getting the sense that Natwest won't stop the account defaulting. I am also stuck in my overdraft. I have a default now anyway from another creditor and likely another coming from another in the next couple of weeks as my income is not getting back to a level needed to cover everything. 

I was incorrectly told by one agent at Natwest Collections that if I arrange a repayment, it will include the overdraft and my account will be closed. However another lady at that dept said if I stay in my overdraft and don't go over it, that won't happen. In any case, I'm setting up a new Mondo account and transferring all my payments and most debits to that account as I feel I'm at a point where I can't trust the bank to not close my account without enough notice.

What are my best options in negotiating with Natwest for more time on a reduced payment monthly plan that does not default? 

fatbelly

Moving bank is a sensible precaution. The problem is their right of setoff. Not often used but prevention is better than cure.

Accept the default. It gives you an endpoint as the whole entry drops off after 6 years.

Arrangement to pay is a worse marker as it stays until 6 years after the account is settled.

You do need to address the overdraft. If you are near the max and can't pay it off quickly, ask for it to be closed and combined with the loan.

If it's small you may be able to sort it using these tactics

https://www.moneysavingexpert.com/banking/cut-overdraft-costs/

ManyWays

I agree with fatbelly that a default is probably a better option in the medium term as your credit record will be cleaned sooner.

But when you were given this loan, could Natwest have told from your current account that you did not have the income to cover it? If they should have seen this, you have a potential complaint for irresponsible lending. See  https://debtcamel.co.uk/tag/refunds/ for an article about refunds from loans. 

JadedAngel88

Trust the above. You don't want an AP (arrangement to pay) marker on your credit record. It will stay there for 6 years after you've paid back the loan. 

sourcrates

Might be time to stop juggling and address your debt situation as a whole.

Don`t know what your debt level is, but if you post on the DFW board, we should be able to make suggestions as to a way forward.

sparks_2023

10 defaults are no worse than 1 default. Once you've got a default you might as well go all in.

Seeing as you already have 2 recent defaults it is better to get another one rather than ongoing arrangement to pay flags on the account - as all your defaults will drop off your credit files at about the same time if you don't delay.

stedav2010

Thanks all for your comments. very helpful. Pretty much agree that since I can't financially defeat the defaults firing up, I have to roll with the punches until I can. My only worry, can Natwest freeze my current account and prevent my access to my money?

stedav2010

JadedAngel88 said:

Trust the above. You don't want an AP (arrangement to pay) marker on your credit record. It will stay there for 6 years after you've paid back the loan. 

Sadly, I have a few APs already. I did find out about this much later. I had no idea when I agreed to the APs.

stedav2010

sourcrates said:

Might be time to stop juggling and address your debt situation as a whole.

Don`t know what your debt level is, but if you post on the DFW board, we should be able to make suggestions as to a way forward.

What's the DFW board? As a whole, I want to avoid an IVA or DRO as there is at present a chance I'll be back on track for a couple of accounts. But more than that, insolvency affects far too many aspects of my life.

One aspect I would like to get some clarity on. If I settle the defaults, they will show as 'satisfied' on my record. Nothing I can do within that 6 year period, but once settled, how do credit checks take that into account? 

Nasqueron

stedav2010 said:

sourcrates said:

Might be time to stop juggling and address your debt situation as a whole.

Don`t know what your debt level is, but if you post on the DFW board, we should be able to make suggestions as to a way forward.

What's the DFW board? As a whole, I want to avoid an IVA or DRO as there is at present a chance I'll be back on track for a couple of accounts. But more than that, insolvency affects far too many aspects of my life.

One aspect I would like to get some clarity on. If I settle the defaults, they will show as 'satisfied' on my record. Nothing I can do within that 6 year period, but once settled, how do credit checks take that into account? 

Debt Free Wannabe
Linky here: https://forums.moneysavingexpert.com/categories/debt-free-wannabe

ManyWays

stedav2010 said:

One aspect I would like to get some clarity on. If I settle the defaults, they will show as 'satisfied' on my record. Nothing I can do within that 6 year period, but once settled, how do credit checks take that into account? 

Settling a defaulted debt doesn't affect your credit score but that is just a made-up number that lenders don't use. 

Credit checks depend on the lender. Many lenders will be happy the debt is now sorted. Mortgage lenders will want the debt to have been settled a couple of years ago.