I can't recommend strongly enough your need to get in touch with the Financial Ombudsman about this. They were hugely helpful in my situation which resulted in having my default removed and my credit file restored. They cannot mark your account as in default on the basis of extra charges they decide to throw on as they like.

Hi, I’ve been lurking on the forums without posting as of yet, a lot of info here has helped me take the right steps to VT my agreement with MotoNovo. thanks firstly. Sat the end of Feb 2014 I decided to Voluntary Terminate my Hire Purchase agreement with MotoNovo. It was 5 years HP, and I’d only had the car around 12 months but for one reason or another I needed out and accept I have a present liability to settle up to the 50% mark on the agreement . I wrote to MotoNovo around 20th February informing them I wish to VT. I received a reply around 7 working days later, to explain Manheim would collect the car which they did on the 12th March. I knew they would sting me with their additional charges for “excess miles, condition” etc which I know is a load of tosh as per the CCA (as the car was second hand, in good condition and fair wear and tear etc). I received a letter dated 18th March from MotoNovo, stating they accept the VT but that on top of the £4.9k liability (which is wrong as a further payment was sent to them on 5th March) they also want to add on almost £2k for their charges following the inspection report. It says payment should be made within 30 days, a further paragraph goes on to state “…failure to make payment within 30 days of the date on this letter, will result in your agreement being noted as terminated with default liability…”. I replied to this letter on the 4th April 2014 (via RD, they received it) explaining I am happy to pay the remaining liability to settle the agreement minus the additional charges from the inspection report. Today I’ve received an alert from Equifax that my credit report has changed, and low and behold my agreement is now marked Defaulted as of 10th April. My issue and the reason I am now posting is regarding the default notice. The 30 days given in order to settle the agreement isn’t up yet as per their own letter. My question is do they have the right to mark the agreement (at this stage) as defaulted? And does the extract above from their letter cover them in terms of issuing a formal notice of default letter? Any help/advice on this would be massively appreciated. I feel like I’ve got a fight on my hands with this one… since I arrived home. I've received a letter dated 4th April 2014 advising that after the sale of the vehicle the settlement amount is now £4.1k, and will be reduced by 20% if paid within 7 days (passed that before the letter even arrived!). If payment is not made the account will be sold to debt collection agency. No mention of any of the points raised in my last letter, although it does appear the £2k charges from the inspection have been wiped (unless the car sold 2k over at auction?) I made a quick call (in addition to the letter I will send to back it up) with one of their agents who was very surprised at what had happened re: default, as he was in agreement to 30 days being outstanding, after a quick consultation with his manager he quickly fell back into party line and informed me "marking the agreement as defaulted is what we normally do when someone VTs the agreement until the amount is settled, but once you've paid the amount the the defaulted mark will be removed". Maybe I'm cynical but I'm dubious over this, my instinct is don't pay a penny until they've removed the defaulted marker.