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What next after a default?


carrs09
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Can somebody clarify the following issues regarding the default notice scenario below:

"A creditor issues you with a default notice and you make arrangements for reduced payments through a debt management company"

What is the legal status of the account during this period?

Will the original credit agreement still be valid (assuming its all in order) or it is considered as ended?

Is the creditor obliged to give you a default notice if you miss several payments or they can choose not to?

What options does a creditor have once the default 'falls off' the debtors credit file after the '6 year sentence'?

Thanks in advance

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Hi Carrs,

 

Welcome to CAG I am sorry but I do not know the answer and my reason for replying is: 1 to let you know that we are trying and 2 to bump the thread back to the top.

 

If you have not received a reply in say 24 hours then I recommend that you click the red triangle over there

 

Regards

 

GameKeeper

 

If you receive useful advice it is customary to tickle their scales to show your appreciation over there

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Hi,

 

What is the legal status of the account during this period?

 

In Default, if you have received/they claim to have sent a DN. Delinquent otherwise.

Will the original credit agreement still be valid (assuming its all in order) or it is considered as ended?

 

Still valid, until you receive a demand for the full oustanding balance payable (past arrears and future payments). A termination notice, Final demand or Court claim should be considered as termination.

It is my opinion that termination notices have been replaced with arrears notices. Therefore, the agreements will endure for as long as there are arrears.

 

Is the creditor obliged to give you a default notice if you miss several payments or they can choose not to?

 

The original default usually results in the issuance of a default notice.

Should the debtor make an arrangement to pay at a reduced level, the creditor can issue a second default notice when the amount due at the reduced level, is equal to 3 months missed payments at the original level.

The creditor should report the default(s).

 

What options does a creditor have once the default 'falls off' the debtors credit file after the '6 year sentence'?

 

If the account is still running (being paid) - anything they like.

If the account was terminated - nothing after 6 years, so long as there has been no acknowledgement (letter or payment for 6 years) of the debt.

 

Bill

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Thanks Bill Shidding.

Does this mean then that for as long as the account is running, the creditor has the permission to process your data with CRA's. I mean you would presumably have allowed them to do so on account opening?

 

Also can they re-default after the default 'falls off' the credit files

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Hi carrs,

 

Does this mean then that for as long as the account is running, the creditor has the permission to process your data

 

Yes, and a further 6 years after the account is closed.

 

Also can they re-default after the default 'falls off' the credit files

 

(It takes 6 years to "fall off"!!)

 

Yes, if there is still an amount outstanding, and the debtor is still repaying it but misses further payments (as described above).

 

Bill

Edited by Bill Shidding
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Thanks Bill Shidding.

Does this mean then that for as long as the account is running, the creditor has the permission to process your data with CRA's. I mean you would presumably have allowed them to do so on account opening?

 

Also can they re-default after the default 'falls off' the credit files

 

 

Carrs

 

I would say that this is questionable.

 

If they have no agreement how can you have given permission for them to use your data?

 

If they have not terminated the account I understand that they can issue new DN as it is possible that you rectified the breach and then fell behind again.

 

GK

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Hi

 

A creditor issues you with a default notice and you make arrangements for reduced payments through a debt management company

 

I understand that is Payplan/cccs or similar.

 

 

What is the legal status of the account during this period

 

So long as the agreement is enforceable, title remains with the OC.

 

Bill

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Hi GK

 

If they have no agreement how can you have given permission for them to use your data?

 

I understand that this is the real question that the Judge posed in the thread about staying agreement cases.

 

Bill

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Hi GK

 

 

 

I understand that this is the real question that the Judge posed in the thread about staying agreement cases.

 

Bill

 

Do I get you right here - have agreement cases been stayed?

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Hi

Agreement cases have been the subject of much debate on the legal issues forum (where I usually go). A Judge recommended that these cases should be subject to "carefully selected test cases" in a higher court. DCAs have jumped on this as a reason to pursue disputed debts. However, it appears that the Judge was actually referring to the subject of data processing where the agreement was disputed.

You can read the thread in the legal forum if you wish.

 

Regards

 

Bill

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Hi All,

 

I have recently been advised that the relevant judge has changed his mind about the stays and even so No true copy cases are unaffected.

 

There are some 'test' cases underway in Manchester Court. I am unable to provide further info yet due to confidentiality.

 

GK

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i am awaiting confirmation but ime sure that once a default drops off your credit file, thats it, a dca cant put another default on your credit file

 

an account can only be defaulted once, even if you are still paying a dca who now own the account

 

ime just getting to the bottom of a question

 

if you are still paying a dca after the six years because of the statute of limitations has restarted as you agreed a repayment plan,

 

the default has droped off being its six years gone by,

 

what info can a dca pass on to a cra if any

 

my argument is none even if you are still paying a dca

 

default and account history gone /deleated, its been six years since termination of original account

 

i feel this is an important question that need exact and correct answers

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Hi postggj

 

an account can only be defaulted once, even if you are still paying a dca who now own the account

 

Ok, if you default on the original agreement, fail to make any repayment/arrangement or the debt is farmed out. You are correct.

There is further guidance on when the debt is sold on.

 

Op has entered into an arrangement through a debt management company, and has therefore rescheduled the agreement.

This is done either formally or informally.

 

Data Protection Technical Guidance.

Filing defaults with credit reference agencies.

Version 3 02/08/2007

 

Chapter 18 Formal rescheduling of the agreement.

 

This involves a formal and permanent rescheduling of the payments due on the account. It might include capitalisation of part of the debt; it may extend the length of the loan; it may change the level of payments. This adjustment may take the form of a new agreement or a change to the original agreement.

If a new account is set up for the customer then the original account should be shown on the credit reference file as settled, with the correct payment history shown up to the time of rescheduling.

If the repayment history shows missed payments (a default) then there is still a defaulted account showing on the file, but it is settled. It does not wipe the original default.

 

If the rescheduling results in changing the original agreement, the correct payment history up to the time of rescheduling should again be shown, but in this case the credit reference file will not show the account as settled. ****Information filed after the rescheduling should reflect payments and the terms of the modified agreement.****

In this instance, the original default stays. If you again miss payments, you get a second default.

 

Chapter 19 Informal rescheduling of the agreement.

 

This is where the lender agrees to reschedule the terms of the agreement for the medium to long term but anticipates that the customer will return to the original level of payment on the account.

 

The credit reference file should record the correct payment history up to the time of rescheduling.

If in default, the default will remain.

The account should be marked to show a new arrangement has been made, and reflect the modified repayment terms.

Any record of monthly payments after the reschedule should reflect payments made against the modified agreement.

If rescheduled agreement is defaulted, two defaults on one modified account.

Where a rescheduling of this type breaks down, a default may be filed when the total value of the arrears is equivalent to three monthly payments under the original terms. However, this should not result in the customer being placed in a worse position than someone who has made no effort to pay whatsoever.

Quite how they differentiate between cant pays or wont pays, is not elaborated on!.

 

I hope this explains my reasoning. However, this guidance can be complicated in the extreme.

I expect any reader of this post now knows more about default guidance than most DCAs:).

 

Bill

Edited by Bill Shidding
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Hi postggj

 

i am awaiting confirmation but ime sure that once a default drops off your credit file, thats it, a dca cant put another default on your credit file

 

If a DCA has bought the debt, then the original account should be marked as settled and closed (any default will remain for 6 years).

The *NEW* DCA account can be defaulted, should 2 consecutive repayments be missed. Although some firms like to use 1 missed payment to serve a default notice:rolleyes:.

You cant be defaulted twice for missing the same payment ie July 2008.

 

Bill

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Hi Bill

 

But You Must Agree A New Repayment Plan With A Dca First

SORRY TO KEEP GOING OVER THIS

THE ORIGINAL ACCOUNT WAS SOLD TO A DCA, THE DCA REGIOSTER THE DEFAULT IN THERE NAME.

NO CONTACT WITH THE DCA, DEFAULT DROPS OFF AFTER SIX YEARS BUT DEBT ACKNOWLEDGED 2 YEARS EARLIER IN WRITING.

 

DCA COMES BACK WANTING THERE MONEY SAYING ACCOUNT ACKNOWLEDGED IN WRITING 2 YEARS EARLIER

 

WHAT CAN A DCA DO BEING NO ACCOUNT EXSISTS ON CREDIT FILE

 

WOULD THAT BE BY SIGNING A NEW AGREEMENT

 

Is That Correct

 

SORRY TO KEEP GOING ON

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Hi postggj

 

If the debt is "sold on" you are correct. You must AGREE to a repayment plan.

Whether you have to sign a new agreement depends on if they have the original (enforceable) one. If they dont have one, who would sign it?

 

(Are we talking about the OPs position, postggj ?)

 

Bill

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Thanks Bill

 

This Does Not Affect Me, Its Just For My Own Reserch

 

I Take It The Dca Would Need To Send Correspondents To Confirm The Repayment Plan

 

If It Did Not Have A Copy Of The Letter Sent From The Dca To You Outlining The Repayment Plan

 

They Would Be Stuffed Even If The Debt Had Been Acknowledged In Writing

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Hi

 

Before a DCA would contemplate a repayment programme instead of "going for the b*lls". Surely the DCA would insist on seeing a completed Income and Expenditure schedule, mainly to ensure they receive maximum instalments (profit).

This would be before they agree to allow any repayment programme?

However, any DCA that allows an account to remain unpaid that long (acknowledged or not) IMHO CANNOT have a CCA for it. If they did, they would have filed a claim a long time ago for the whole balance.

 

Bill

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