Defaults starting to hit credit file…guidance?

2021rdsunshine

allystar said:

Thanks!

I hope you don’t mind, I’ve read your original thread when you were starting out. Looks like it took around 6 months for your defaults to start.

at what point did you start making payments to creditors?

I’ve never missed a payment in my life, so this is completely alien to me!

Don’t mind at all! Yes I stopped paying November 2023. Defaults letters arrived between May / June 2024. I kept looking at my credit file until defaults were registered there. In the meantime received letters from creditors and once default was registered on credit file I started paying what I had decided to pay using details on their letters: debt reference number, account details for payment 
One creditor hasn’t sold the debt, just appointed debt collector and I’m paying them . One creditor has defaulted the debt but went completely silent on me , no letters or calls so I’m not paying them yet. The others have sold the debts and I’m paying them. 

I completely understand the feeling about this being alien to you, it felt the same for me to be honest. But once you start gaining control of the situation it gets much easier. That’s the beauty of self managed DMP: you decide what to do and when. 

Last month one of the creditors sent me a letter offering a chance of settling a debt for 40% of the total . I was pretty tempted but my car needs replacing before MOT next month so I ignored the offer. However it means that in a few months I’ll be able to make them an offer for settlement. 

Definitely things will get easier for you. As long as you understand how debt collection works things will look less complicated. This forum has been a lifesaver for me and the only regret is I haven’t started this process earlier! 

So, to actually answer your first question on your post, yes I would definitely allow the debts to default before starting a DMP with step change or starting a self managed DMP. It would give you a chance of creating a budget and stick to it while also saving a buffer that would be very useful for an emergency + some savings for full and final settlements further down the line.

allystar

One of my lenders has noted Debt Payment scheme in my credit file…I havent made any payments and have cancelled Stepchange.

is this like an Arrangement to Pay and might not default?

RAS

It will be overwritten by the default, but might take a few months longer than without the marker.

sourcrates

allystar said:

One of my lenders has noted Debt Payment scheme in my credit file…I havent made any payments and have cancelled Stepchange.

is this like an Arrangement to Pay and might not default?

Yes, its an arrangement to pay, of course that may change if you still fail to make payments, it should eventually default.

Lets just be clear on what a default actually is, basically you fail to make the agreed contractual payments, after between 3/6 missed payments the lender eventually gets fed up, sends you a default notice giving you 14 days to pay the arrears, you fail to do so, they then terminate the agreement, and register the default on your credit file.

This marks the end of the contractual relationship between you, and all interest and charges end with it.

You then have a clear 6 year window until your file is expunged of the default, regardless of what you do, pay it, ignore it, nothing will change that status, and once gone from your file, it will never come back, even if money is still owed.

Your debt will then be one of many defaulted accounts, some are sold, some remain with the original lender, but are assigned to debt collectors, some may be left to go delinquent, but in most cases you will be written too by whoever has been appointed  to collect the debt.

allystar

I have cancelled Stepchange while waiting for my debts to default.

1st payment was missed for all CCs and loans in December. 2nd missing payments will be this month.

Things have been quiet first month but I know letters etc will likely start soon.

Despite cancelling, Stepchange have emailed me today to say that Virgin have rejected the payment offered to them (I have 3 CCs with Virgin and have just (this morning) sent them an irresponsible lending complaint). I’m not with SC right now and will likely self manage but should I be concerned re the rejection?  It is only the most recent CC that they have rejected the payment for...taken out in November 2024.

Virgin have added late payment fees and now charging interest…the 3 cards I have with them are all at around £8k each

Any advice/reassurance…no defaults only debt arrangements about to be added to my credit file for most.

EssexHebridean

Don't worry about Virgin - once you get to the point of starting the DMP you will be informing them of the amount you will be paying them, not asking whether that's OK. They can take it or leave it, and on the basis that anything is better than nothing, they'll take it! 

It take a few months of missed payments for defaults to land - you will know when it happens as you'll get Notice of Default letters. A month or so after that the default should be visible on your credit files. 

allystar

Hi, just an update (I do plan to do a diary)

I have now missed 2 payments with all my creditors…

3 creditors have written to me with notice of arrears (just filing these).

Tesco CC have sent a notice of Notice of Default under section 87(1) of Consumer Credit Act. I know I don’t do anything…they say if I don’t pay the monthly arrears by 19th Feb, then further action MAY be taken. They’re not asking for the full debt amount (I guess this will be next letter?).

I’ll wait to see what comes next…they’re certainly on the ball!

HSBC & Virgin are the only ones still to write to me…

tigergambit

In my experience Tesco went for default straight away. They then keep everything in house and play hardball, ignoring letters when it suits them etc. Pay them a very small token amount once they default and settle in for the long haul.

allystar

I think I may have had my first phone call…

I didn’t recognise the number…when I tried calling back, it said you’ve dialled an incorrect number???

Any thoughts? Or it might just have been a “you’ve been in an accident” call.

Anyway, number blocked

Grumpelstiltskin

Yes what ever you do don't answer any calls from unknown numbers and block them.

Don't speak to these people at all.