Defaults dropping off mean nothing really - correct?

[cadencealex]

I will have a few defaults drop off this this year... but it's not going to repair my credit is it, when the others are still there?

 

So I am presuming I will have to wait another 6 years to be completely 'clean'?

 

OR would my credit rating improve to 'fair' or something?!

 

Confused how it all works.

[paulc79]

Defaults seem to be a major factor in your credit score, but not the sole factor, number credit checks, any court judgements etc will also influence your score.

 

Basically every time you apply for a credit card company or a credit check it made by say a mobile phone operator it has an impact on your score.

 

Defaults can only be on record for six years so once the date is over you should see an increase in your credit score but this depends on the above and number of defaults I think.

 

P

[paulc79]

oh and experian say that a credit score in January may be unrepresentative of your credit score in may, so best to keep an eye your score every now and again

[cadencealex]

Thanks Paul. I have credit watch on Equifax and now Experian, just waiting for my Experian PIN number to come through the post

[cadencealex]

I have received a letter now demanding payment?

 

I am sure there was a default on my account which has dropped off now and I know this debt is from when I was 18 and like many of those, all due to drop off this year (most settled).

 

Why are they sending me this letter?

 

 

Trying their luck? Do I respond or will that initiate contact and result in a new default being added to my credit file?

[dx100uk]

fishing letter!

 

who's it from?

the OC or DCA?

 

dx

[cadencealex]

fishing letter!

 

who's it from?

the OC or DCA?

 

dx

 

 

It's from a DCA!

[cerberusalert]

Send the merkins this if they contact you again;

 

Dear Merkin

 

Account no:

 

You have contacted me/us regarding the account with the above reference number, which you claim is owed by myself/ourselves.

 

I/we would point out that I/we have no knowledge of any such debt being owed to (insert company name).

 

I am/we are familiar with the Office of Fair Trading Debt Collection Guidance which states that it unfair to send demands for payment to an individual when it is uncertain that they are the debtor in question.

 

I/we would also point out that the OFT say under the Guidance that it is unfair to pursue third parties for payment when they are not liable. In not ceasing collection activity whilst investigating a reasonably queried or disputed debt you are using deceptive/and or unfair methods.

 

Furthermore ignoring and/or disregarding claims that debts have been settled or are disputed and continuing to make unjustified demands for payment amounts to physical/psychological harassment.

 

I/we would ask that no further contact be made concerning the above account unless you can provide evidence as to my/our liability for the debt in question.

 

I/we await your written confirmation that this matter is now closed. Otherwise I will have no option but to make a complaint to the trading standards department and consider informing the OFT of your actions.

 

I/we look forward to your reply.

 

**Edit to suit**

 

Remember, don’t sign the letter.

[cadencealex]

The time is coming soon where I will have to submit my credit file through a company for employment purposes - this is weighing heavily on my mind.

 

I have an old default of more than 2k which I am now in the position to pay off completely.

 

Plus a more recent default (all charges) but I was a little too late to stop it.. anyways.

 

Both will be paid off this week.

 

 

 

 

Will this still look bad? What will the company see? Will they see I am still risky or will my credit file miraculously be great again? (I don't want debts, once bitten twice shy)

[maroondevo52]

Hi,

 

I honestly don't think it makes that much of a difference, bound to improve a bit but a defaults a default, satisfied or not.

 

Just my opinion.

 

Regards.

 

Scott.

[andydd]

Good question !..I have one too.

 

Unfortunately I believe the answer is 'yes' or 'almost' .

 

Andy

[cadencealex]

With an unenforceable credit agreement.. and them not chasing me for payment.. I really wouldn't bother if I didn't want to work in a bank!

[Jasper1965]

Contact the creditor and offer them payment of 40% in full and final settlement on condition that the account is not sold on and all adverse credit markers are permanently removed.

 

40% is possibly treble what they paid for it and a whole lot more than they will get simply by leaving the default in place.

 

Be sure to get written binding agreement that they will permanently remove all adverse markers from all CRA's before you pay them one penny though.

[cadencealex]

The 2k one is now back with the original company - who refuse to take anything other than full payment.

 

I could wait I suppose until it gets sold again, but I figured if I wrote offering maybe 1k a DCA would jump at the chance.

 

The original company said it is in the process of being 'passed on' again.

[fletchy83]

"Contact the creditor and offer them payment of 40% in full and final settlement on condition that the account is not sold on and all adverse credit markers are permanently removed."

 

As a warning to anybody who follows such advice, a partial repayment that is accepted by a creditor does not amount to satisfaction of the debt in contract law. Unless detrimental reliance (estoppel) can be shown by the debtor.

[bedlington83]

Can you expand on this Fletchy, in particular why you believe the phrase "full and final settlement" has no meaning?

[Joijo]

I thought a 'satisified' default was one that had been paid off. I say this as i have 3 on my file that were in default but i paid them off a few years ago. Now this has made me mad that they could be the same as the defaults.....

[fletchy83]

bedlington83:

 

In practice, if you take an offer from a creditor that will probably be the last you hear of it. However, in contract law the debt is not satisfied until it is fully paid off - or, more specifically, consideration must be shown for the remainder.

 

I don't remember all the case law developments from uni but the main cases you want to research are Pinnel's and Williams and Roffey. The overriding point is that a promise to accept part payment does not involve the requisite consideration (money) on the part of the debtor, so the remainder is not extinguished in contract law. There are some exceptions, though, as I mentioned: estoppel and equitable releases. These usually kick in where the debtor has relied on the creditor's promise to their detriment.

[bedlington83]

Surely though, if a creditor accepts a reduced sum in full and final settlement then that's it? They can't come back a few months later and say "we want the rest" can they?

 

I think perhaps the clarification is this (my emphasis) taken from Pinnel's Case at AllExperts;

There are several well defined exceptions to Pinnel's Case, most notably being settlement in litigation where the parties agree to compromise by a payment a lesser sum without admitting that the greater sum was due. Payment of a lesser sum will also be sufficient were the currency changes, where the time of payment is brought forward, or where the place or manner of payment is changed (applying the long established rule that the court will not look into the adequacy of the consideration; that is, if a creditor is foolish enough to take 50 pence in the pound to get his money a week earlier, he is entitled to do so).

 

In the context of the OPs default, the creditor may never get their money back or at least it may take a while so they may be receptive to a low offer, which, if they accepted, might be one of the exceptions to Pinnels described above

[fletchy83]

You highlighted a major exception to Pinnel's Case in respect to the earlier repayment date but that's only because consideration is deemed to be provided in the form of performance.

 

I only raised this issue because contract law will not extinguish the debt unless consideration for the remainder has been shown or some kind of equitable exception can be argued. In practical terms, I agree that most creditors will not chase the remainder where a reduced repayment offer has been accepted. That being said, they would still be legally entitled to do so.

 

The equitable exceptions (promissory estoppel, estoppel by convention, etc.) would be difficult to argue in the context of an outstanding debt - they are more often applied in land law cases (tenancy, rent, etc.). So, as to your question, yes, the creditor can come back a few months later and demand the remainder - but they probably won't.

[bedlington83]

You learn something every day

[flopper]

Ok, i think this might have some relation to my query, if you pay a reduced amount is it ok for the company to keep the remainder as default on your credit report? And never inform you that this is the case??

[fergal71]

satisfied defaults on cra are just as bed as non paid defaults... speaking from experience if it helps...

[will smith]

You highlighted a major exception to Pinnel's Case in respect to the earlier repayment date but that's only because consideration is deemed to be provided in the form of performance.

 

I only raised this issue because contract law will not extinguish the debt unless consideration for the remainder has been shown or some kind of equitable exception can be argued. In practical terms, I agree that most creditors will not chase the remainder where a reduced repayment offer has been accepted. That being said, they would still be legally entitled to do so.

 

The equitable exceptions (promissory estoppel, estoppel by convention, etc.) would be difficult to argue in the context of an outstanding debt - they are more often applied in land law cases (tenancy, rent, etc.). So, as to your question, yes, the creditor can come back a few months later and demand the remainder - but they probably won't.

 

This is correct, it's part of the 2006 syllabus for the CIMA Business Law module, which I studied last year.