Unfair default ruined me for 6 years!

defaultvictim17

Hi ML/Team/Community,

Can you advise me on my situation please,

Back in 2016/2017 (I was 25 at the time) I took a personal loan out with HSBC for a period of  4-5years. The first 3/4 of the first year I was always on time when paying the monthly agreed payments. But life hit me and I lost my job. So bear in mind I was still up to date with the payments. I began to look for work but was unsuccessful for a period of time.
The next payment was then due as I was unable to meet the payment. I received a letter stating I missed a payment and that my account is now in arrears. 
So I went to citizens advice to see if they could help me as I knew I couldn't afford the payments they needed but I didn't want the default to affect my credit file as I wanted to buy a house in the future. 
Citizens advice to me was very helpful ad they drafted the letter I sent to HSBC. The letter was the condition I pay the agreed amount until I find work then my account wouldn't be affected by a default and would just be froze. (The letter has been misplaced for a number years but HSBC received a copy.)

We agreed that I need time to find work and as soon as I get work I would start paying back the loan and that was it.
Two months later from the agreement I received a letter from a collection agency Moorcroft Group which shows my loan has been passed to them as my account went into default. 
I was never made aware that this was going to happen. It came as a surprise to me. I contacted HSBC and they told me that it is correct because I couldn't make payment. And as per there T&C's after a period of missed payments the account automatically goes into default.
But I never knew this. They said the agreed amount didn't come out my account. But it has been going out till this day as I only noticed it early this year. 
At the time I was going through a meltdown and could not concentrate, I went to the doctors and they prescribed me with medication and so I didn't challenge what happened and just started paying the collection agency instead when I found work 2 weeks later.

The default has affected my credit for 6 years and has now been removed in 2023 but it has taken blood sweat and tears! I just feel like I was treated unfairly and had to take out extreme interest loan rates as my credit was bad. Especially when I was paying the agreed amount after sending the letter which Citizens advice gave me. 
 😞

Is there anything I can do now?

PixelPound

Unfortunately even though you were paying something as you paid less than the contractual amount you were not adhering to the T&C. 

Two questions though : 
Did HSBC agree to your offer, because they should have put an arrangement to pay marker on not a default.
Where has the money been going if not into the account. 

However now that the default has fallen off your file, maybe that was the better option. An AtP stays on until you catch back up with payment, so if you have never been in that position your account would still be on your credit file in arrears. Would you prefer it still on undefalted but in arrears or as it is now? 

As to having to take loans out at extreme interest rates, no you didn't have to take loans out, you chose to. The AtP marker will still have effected your file, missing minimum payments and breaking the contract would always leave a footprint and other lenders taken that into account with the rates they then gave, whether or not you had a nice letter from the CAB. 

fatbelly

So you got a default in 2017. It dropped off in 2023.

Move on. There is nothing you can do.

400ixl

You took a loan, you didn't take cover for future changes to your circumstances. You failed to make payments in full so they invoked their rights under the T&C's to mark missed payments and after 3 of such to mark your record with a default which stays on your record for 6 years to warn other financial institutions of your history.

There has to be repercussions of failing to pay your debts.

What can you do now, learn the lessons and move on. Avoid debt and if you can't make sure you have the protection in place for a change of circumstances or accept the risk of a repeat (or worse) experience.

Sorry if that sounds harsh.

sourcrates

defaultvictim17 said:

The default has affected my credit for 6 years and has now been removed in 2023 but it has taken blood sweat and tears! I just feel like I was treated unfairly and had to take out extreme interest loan rates as my credit was bad. Especially when I was paying the agreed amount after sending the letter which Citizens advice gave me. 
 😞

Is there anything I can do now?

No, basically, unless you maintain contractual payments, you are at risk of default or AP markers.

The default has already gone from your file, if they had marked it as "AP" that would still be showing now, and affecting your ability to get credit, you had the better deal.

You chose to take high interest credit, when you maybe should have opted for debt management instead.

LinLui

Sorry, but 25 isn't all that young. You didn't read the terms of the loan, you had no cover for if you couldn't pay, you stopped paying, you expected them to just accept that, and then having defaulted on one debt you took out further loans. I'm certainly no fan of banks, but you entered into a voluntary relationship with the bank, and want to blame them for your mistakes. Where is your personal responsibility? There are lessons for you to learn here.