6-Year Rule

[friendly debt collector]

If a debter defaults and pays a DCA for over 6 years at what point does it fall off his/her's credit rating as a bad debt. Anybody know?

[shane5408]

do you mean the default on the debtors credit history? Then yes 6 years

[friendly debt collector]

Thanks Shane. So just to clarify: Jan 2002 a debter defaults. Pays DCA £20 a month for 6 years. Still owes £2k, but Experian comes clean. So after that point the debter can stop paying Yes/No?

This is getting very interesting

[tiglet]

No, the debt would still show, but the default wouldn't, if you see what I mean.

[ODC]

Thanks Shane. So just to clarify: Jan 2002 a debter defaults. Pays DCA £20 a month for 6 years. Still owes £2k, but Experian comes clean. So after that point the debter can stop paying Yes/No?

This is getting very interesting

Assuming the DCA had the executed CCA and deed of Assignment the the debtor would have to pay them unless he reached a settlement with them. The debt still exists and if the DCA have the paperwork its still enforceable. The Limitations Act would not apply in this case.

[friendly debt collector]

Assuming the DCA had the executed CCA and deed of Assignment the the debtor would have to pay them unless he reached a settlement with them. The debt still exists and if the DCA have the paperwork its still enforceable. The Limitations Act would not apply in this case.

 

So if the payments were maintained how would it show on experian?

FDC

[friendly debt collector]

No, the debt would still show, but the default wouldn't, if you see what I mean.

 

So how would it show on experian

FDC

[ODC]

Its still an outstanding debt.

[Allwood]

Sosumi - is this you doing research for your new DCA company that you have talked on about setting up.

[shane5408]

Hi FDC,

 

I think what you're getting at is after 6 years, having already filed a default can a DCA file one again.

 

Well, firstly there has to be a legally compliant agreement in place as ODC stated, secondly not only does the DCA have to have a Deed of Assignment but the notice of assignment transferring the debt to themslvles as well as all rights, responsibilities and duties etc has to be accurate, if certain terms such as the balance due or the date of execution of assignment are wrong this renders the notice legally invalid (Case law that backs this up is W.F.Harrison & Co Ltd v Burke [1956] 1 WLR 419).

 

Also, any default served has to be accurate as well both in form and content as laid down by the Regs and it must also give the correct statutory time frame to the debtor to remedy the breach.

 

Recent precedent set in Woodchester Lease Management Services Ltd v Swain and Co also requires the 'sum due' to be accurate, if it is overstimated (for eg there are penalty charges) the default can be voided.

 

However, IMO after 6 years if there is a valid breach and the creditor has adhered to all of the above then yes they are legally entitled to register a default again given that the previous one has been expunged

 

regards,

shane

[friendly debt collector]

Its still an outstanding debt.

 

So does the debt turn back into ordinary credit & lose its 8-rating?

FDC

[ODC]

That would of course depend on what the DCA tell their buddies at Experian

[friendly debt collector]

Sosumi - is this you doing research for your new DCA company that you have talked on about setting up.

 

Naah!!!

I just do a bit of part-time collecting 'cos I enjoy it & I reckon that customers should be treated as customers (which they are to us). I get to know most of them quite well, so if I can help them I do.

[sosumi]

Sosumi - is this you doing research for your new DCA company that you have talked on about setting up.

Noooooooo!!!

[sosumi]

Blimey! Noo!!

I like to see a Friendly Debt Collector around though.

[sosumi]

Thanks Shane. So just to clarify: Jan 2002 a debter defaults. Pays DCA £20 a month for 6 years. Still owes £2k, but Experian comes clean. So after that point the debter can stop paying Yes/No?

This is getting very interesting

Do you think a Debt Collection Agency would accept payments of £20 a month for six years, FDC?

If they have a legal right (as per the other posts) to collect the money, and you still owe £2000, then whether they registered a default or not, the money owed would still exist.

 

The problem with Credit Reference Agencies, is they've become so powerful that it's hard to see past them. Plus they're being used as incredibly prejudiced tools by DCAs.

[friendly debt collector]

Yes. It's now the CRAs that mean everything. So to clarify. Mr A. defaults on his credit card in October 2002 owing 6K. It then gets passed on to a DCA who manage to get £20 per month (Oh yes, quite normal) for 6 years. By October 2008 the default becomes 6 years old. Does it stay 8-rated or does it become a normal 1-rated credit arrangement, although he still owes over £4,500? Or has this never happened?

[sosumi]

Yes. It's now the CRAs that mean everything. So to clarify. Mr A. defaults on his credit card in October 2002 owing 6K. It then gets passed on to a DCA who manage to get £20 per month (Oh yes, quite normal) for 6 years. By October 2008 the default becomes 6 years old. Does it stay 8-rated or does it become a normal 1-rated credit arrangement, although he still owes over £4,500? Or has this never happened?

Could you clarify the first sentence, "Yes. It's now the CRAs that mean everything."?

[make them aktiv runners]

By October 2008 the default date would be removed. The 8 would disappear against the monthly entries because the CRA only show the last 6 years entries (though I think they do not show more than 3 years in the monthly summaries).

[Hippy-chick]

Naah!!!

I just do a bit of part-time collecting 'cos I enjoy it & I reckon that customers should be treated as customers (which they are to us). I get to know most of them quite well, so if I can help them I do.

 

I'm still laughing at this one. Not having a go, FDA - but the idea of doing it in my spare time coz I enjoy it is alien to me.

 

Good for you if you're doing it nicely though -all power to your elbow.

 

[MilkTrayMan]

...So just to clarify: Jan 2002 a debter defaults. Pays DCA £20 a month for 6 years. Still owes £2k, but Experian comes clean. So after that point the debter can stop paying Yes/No?

This is getting very interesting

 

...So to clarify. Mr A. defaults on his credit card in October 2002 owing 6K. It then gets passed on to a DCA who manage to get £20 per month (Oh yes, quite normal) for 6 years. By October 2008 the default becomes 6 years old. Does it stay 8-rated or does it become a normal 1-rated credit arrangement, although he still owes over £4,500? Or has this never happened?

Hi peeps!...anyone notice something??...

[sillygirl1]

The sums don't add up - even with basic/intermediate maths skills it looks like

 

12 x 20 = £240 per year

6 x £240 = £1,440

£6,000 - £1440 = £4,660 ie not even 1/3 of debt repaid in 6 year period

 

Seemingly interest has not been frozen during this period and charges have been added by the DCA - time for a statement request methinks.