Advice on defaulting

intheblack_sheep

sourcrates said:

Moorcroft will run through their standard letters, and if no response, return the debt to the lender.

First Direct may then rinse and repeat with another collector, or sell the debt to a 3rd party.

Banks, rarely, if ever take independent recovery action, this is why we have a debt collection/debt purchasing industry.

Might it be beneficial for us to leave off paying Moorcroft for now then? In the hopes that FD sell it on? 🤔

sourcrates

intheblack_sheep said:

sourcrates said:

Moorcroft will run through their standard letters, and if no response, return the debt to the lender.

First Direct may then rinse and repeat with another collector, or sell the debt to a 3rd party.

Banks, rarely, if ever take independent recovery action, this is why we have a debt collection/debt purchasing industry.

Might it be beneficial for us to leave off paying Moorcroft for now then? In the hopes that FD sell it on? 🤔

Companies acting as collectors can`t do diddly squat, if that fits in with your plan, then yes,  fine.

First Direct will sell the debt at some point, its only when it gets a new owner that you should take it more seriously.

AgentBigBoss

There was also question what happens with overdrafts? Will they also default?

RAS

You have set up new accounts unrelated to any banking group to whom you owe money? And moved your income to them, them you essential DDs, manually not via Switch?

In which case the ODs just become another debt that you wait to default.

sourcrates

AgentBigBoss said:

There was also question what happens with overdrafts? Will they also default?

They take longer to default, as there are no regular payments made to an overdraft.

Asking your bank to default the debt is something you can do.

AgentBigBoss

And also is there any sense to default small loans / credit cards? Like for example someone has big loan 20.000£ waiting to default and also cc 500£ and other 1.000£ with interest frozen (agreed with creditor reduced payments and no arrears). So in my opinion by common sense is better to repay those small ones in like one year lets say. That dealing with phone calls from thousands of agents for small debts like 300£ or 500£. What I mean, isn’t it better to just pay back the smallest ones? And waiting to default other wich are lets say above 2.000£?

sourcrates

The basic thinking about allowing a debt to default is centred around two things.

First all interest and charges stop, and second, you have a clear six year window till your credit file is cleared of all negative information.

Small debts are reported to the CRA just the same as larger ones are, I do get your thinking, little victories etc, but your credit file may take longer to recover, and you may be charged more in interest, but if that`s not an issue, then by all means do that.

AgentBigBoss

The thing is some are so small for example cc with limit 500£ that they don’t report anything as account is up to date. Even if minimum payment is 20£ per month. So I’m just curious of your opinion here is there sense to default that just to show other creditors that I defaulted 100% of any debt? And also if and what creditors are able to see?

RAS

You'll probably already be getting AP markers on the Barclays debt. Those stick around for 6 years after the debt is paid off. 

Defaults are removed from your credit record after 6 years, even if you still owe money. 

It's not been unusual for people to do a DMP over 5-10 years and find out some debts only defaulted half way through or later. So it's going to take 10 years plus for their credit record to recover.

sourcrates

Those who enter debt management, especially self management, tend to look to play "the long game".

So any interest added before default, is offset by saving up an emergency/settlement fund to take advantage of offers to settle the debts for much less than is owed, at a later stage in the process.

Not many in debt management repay the full amount, you should look to possibly settle for as little as possible as and when funds permit, this is once all accounts have been sold on, a few years from now.