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Default closed - Reopened as new loan

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Hi All

Bit of a strange one as I can’t seem to find any information of this.

I had a loan through a Credit Union which I defaulted on 5 years ago and it became a CCJ around the same time due to my past negligence with finances. I figured out a payment plan with their solicitors and have been paying it off since and haven’t missed a payment (on this and any other account) for the last 5 years. They kept the default on my file as well as the CCJ which I researched into and they were allowed to do so thought it was all part of financial rehabilitation process and moved on.

I checked my credit file today to see that they have closed the default account down and reopened it as an open loan for the same amount currently outstanding. This has obviously had a detrimental effect to my credit score and now makes my file look like I’ve been applying for a ton of credit (I opened a 0% balance transfer card to switch existing debt over recently).

There was no prior warning to them doing this beforehand either by themselves or their solicitors. It obviously means this account will be on my file for another 6 years and I was trying to save a deposit for a mortgage at some point. So my question is: Are they allowed to do this?

Comments

  • sourcrates
    sourcrates Posts: 31,496 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Short answer is no, but some credit unions are not required to conform to FCA guidance, nor are all credit union loans governed by the consumer credit act, its a bit of a minefield to be honest.

    They cannot close one account and re-open it as another under a different status, are you sure the debt hasn`t been sold to a new creditor ?

    Is the default date still showing, is it the same as the original?
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • BarmyYardy
    BarmyYardy Posts: 2 Newbie
    Fifth Anniversary First Post Combo Breaker
    Short answer is no, but some credit unions are not required to conform to FCA guidance, nor are all credit union loans governed by the consumer credit act, its a bit of a minefield to be honest.

    They cannot close one account and re-open it as another under a different status, are you sure the debt hasn`t been sold to a new creditor ?

    Is the default date still showing, is it the same as the original?
    No, the closed the Default account down1st June 2025 and new account was opened 30th June 2025 all under the same name. Default date on closed account is same as it always was. New account isn’t showing as a default, just a new loan that is up to date with payments.
  • sourcrates
    sourcrates Posts: 31,496 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    In that case, its not hurting your credit file then, I have no idea why they would do this, but you are no worse off for it.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
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