The main (urgent) situation that I am in is that I am not entirely sure what to do about complying with two Default Notices that I have (one needs payment by Friday 26 October 2012). Two of my creditors want to default me & terminate my accounts. They accepted £1 payments for a short period but now wish to close the accounts and presumably either pass on to a DCA or manage in house via collections. I am trying to work out what the least damaging situation for my credit file is in terms of getting SECURED credit (i.e. remortgaging my property) in the future.

Previously I thought that I had to avoid default notices at all costs on my credit files otherwise I would end up with an inability to remortgage & obtain secured debt (believe me when I say that I will NEVER take out unsecured debt again!).

Therefore, my main tactic has been to try and avoid any default notices on my file. However having read various material it appears that I have been misguided in doing so.

My understanding from reading some of it is essentially that I now have two options:

DEFAULT NOW ON THE ACCOUNTS - the notice/marker will automatically drop off after a six year period - full stop - whether or not I agree a repayment plan with them (that may or may not last after the six years). As soon as 6 years is up the default notice drops off and my file would be "cleared " of all information regarding that account.

AVOID DEFAULTS ON THE ACCOUNTS - I carry on trying to agree or come up with a repayment plan with them but this could sit on my file for six years after the repayment plan that I undergo with them ends. In that case it could be, for sake of example 5 years to pay it off and then it sits there for six years after that = 11 years. Much worse.

Therefore it would be better to get in now and "default away" as it were, rather than come to an arrangement whereby it could potentially go beyond the 'defined' six year default notice expiry ad nauseum after each debt is repaid.

I understand that DCA's or those who might buy my debt from the initial creditor may try to stick further defaults onto my file.

Any thoughts or help would be gratefully received.

Many many thanks!

Hello there. If you breach the terms and conditions of the credit agreement - either by not paying or by paying a reduced instalment, the creditors could be at liberty to default your account. In short, any 'repayment plan' which falls short of the contractual instalments can have the effect of defaulting your accounts.

You can only have one default on an account although a DCA can place their name on the original default instead of the original creditor's name - they cannot and should not change the actual date of deafult, however.

Hi Welcome to CAG,

A default notice gives you the chance to remedy the default if you do so no default is placed (best result/decision).

Agreements to pay will have equal impact when showing on credit reference files to that of a default as they indicate that the individual has not been able to manage the debt in accordance with the original terms and conditions.

It seems you have come to a wrong conclusion on the use of defaults, a default is placed when the creditor deems there is an irritrievable break down between them and the debtor, the debtor having been afforded the chance to remedy the default by the issue of a default notice.

There can only be ONE default for ANY debt, and only ONE default date for any debt, this cannot be changed by the debt being sold or exchanged at any time.

As to ''secured'' lending the fact that defaults are removed will not drastically improve the chance of gaining credit as te defaults will have prevented the grant of credit facilities during their 6 year life there will be no payment/credit history for a prospective lender to judge upon.

Lenders are increasingly looking for 5-6 years good++ credit history rather than 3 years previously required.

Just to clarify for you: All defaulted debts are removed on the 6th anniverasry of the default, paid or not.

A debt becomes Statute Barred if no payment or unequivical written acknowledgment is made in six clear years from the date of the cause of action, which is the date when a payment was due and not made after which no further payment was ever made.