Effect of large unsecured loan v default
DrWatson1
Posts: 130 Forumite
Hi,
I'm currently negotiating for settlement of a large, unsecured debt (£26k). The debt was not defaulted this when i originally went into a DMP 9 years ago.
I'm now negotiating F&F settlement on the loan. I have asked for the default to be backdated to the original date I entered the DMP, but if they do not agree, how would a default on my account affect my credit rating when compared to a £26k debt?
I'm currently negotiating for settlement of a large, unsecured debt (£26k). The debt was not defaulted this when i originally went into a DMP 9 years ago.
I'm now negotiating F&F settlement on the loan. I have asked for the default to be backdated to the original date I entered the DMP, but if they do not agree, how would a default on my account affect my credit rating when compared to a £26k debt?
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Comments
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I'm not sure I understand the question.
A £26k loan shows significant indebtedness. Depending on your income, lenders may be concerned about your ability to handle further credit.
A defaults shows lenders that you couldn't meet your obligations.
The two things aren't really comparable.0 -
I thought a DMP was supposed to include all debt?
What is the current status of this loan?
Have you been keeping up payments for the last 9 years? if yes, then how long was the original term?
If no, then what is the current status of the loan on your credit files?0 -
The DMP included this debt, but the lender did not default the account so it's currently in arrears as I have been paying back a reduced amount.
I am negotiating to potentially settle this debt, but the lender has said if we agree a deal, they will default the account, and mark it partially settled.
I would like to go for a remortgage over the next few months, so my question is would a default be worse from a lenders point of view than £26k of unsecured debt that is in arrears?0 -
I would like to go for a remortgage over the next few months, so my question is would a default be worse from a lenders point of view than £26k of unsecured debt that is in arrears?
Yes, a default would be worse, but a £26k debt in arrears is not desirable either, so I don't think you'll find you have the best remortgaging options anyway.
You say they are marking the debt in arrears - do you mean an arrangement? It seems odd that you can stay in arrears for 9 years without them writing off or collecting the debt or marking it down as an arrangement.0 -
Yes, I have an arrangement to pay through a DMP and they have frozen the interest, although at the moment it's only a token amount.
I believe they should have marked the debt as default when I entered the DMP as my other creditors did, but for reasons known only to them, they didn't.
Incidentally, If i did settle the debt, would they *have* to mark the account as defaulted? I appreciate they will mark it as partially settled, but if they are going to apply a default now, one could argue they should have applied it several years ago...0 -
They wouldn't have to mark it as defaulted, just because you settle. In fact, it makes it more unlikely.
I would be looking to get the default applied for the right date, which will then cause it to fall off your file completely.0 -
Okay, thanks for the information - Would you be looking to get the default applied to the right date, even though they have yet to default the account?0
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Yes - to within 6 months of when you defaulted.0
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