Debt Camel

Answers to questions about debts and credit ratings - in plain English!

What should the default date for a debt be?

A default badly damages your credit score, so how long will it be there?  In Britain, the credit record rules say:

the debt, including the default, is deleted from your credit record six years later after the first default.

An example: a debt with a default date in May 2014 will drop off your record in May 2020.

There are no exceptions to this rule. A debt which is marked as defaulted will disappear after six years in all the following situations:

  1. you have repaid the debt in full;
  2. you have made a partial settlement;
  3. you are still making monthly payments to it; or
  4. you haven’t made any payment to it for years.

The default date is very important!

The longer ago the default date the better because it will disappear sooner.

The default date should be the same on all three credit reference agencies but it’s good to make sure, see How to check your credit records which explains how you can check all three credit reference agency record for free.

This article looks at what the default date should be. If you can get a creditor to change a default date from June 2015 to April 2013, the debt will disappear more than two years earlier.

What should the defaultn date be for a debt? The older the better!

When should a default be added to a credit record?

The Information Commissioner’s Office (ICO) says :

“As a general guide, [a default may be recorded] when you are 3 months in arrears, and normally by the time you are 6 months in arrears.

There are exceptions to this which may result in a default being recorded at a later stage, such as secured or long term loans e.g. mortgages, or if the product operates in a more flexible way e.g. current accounts, student loans, home credit.

So those are the main guidelines, but let’s look at specific situations.

Debt management plans and arrangements to pay

For situations where you miss a few payments, or make reduced payments, or enter a Debt Management Plan, the “3-6 months” guidance above applies.

If your arrears have already reached three months, then the lender can register a default, even if an arrangement to pay is then agreed or you pay the debt in full.

Arrears will usually continue to mount up when you have an arrangement to pay or a DMP, so later a default can be added even if you are making all the payments.

At the start of a DMP or an arrangement to pay you may not want a default – they do harm your credit score! But if you aren’t going to repay the debt in a few years, having a default is usually better because your credit score will clear up sooner. With no default date added, the record will stay until 6 years from the date the debt is finally settled which could be a long while.

So it can often be better to have a default early in a debt management plan rather than not have one – see this article on DMPs and Credit Ratings for some examples.

Overdrafts are more complicated

For most loans and credit cards the ICO 3-6 month provisions apply – the common exception is current accounts.

There is no regular or minimum monthly payment to an overdraft, so the concept of “3-6 months in arrears” doesn’t really exist. You may have abandoned an account with an overdraft and switched to using a different account, but unless you told the bank this and asked for an arrangement to repay it (for example in a debt management plan) the bank may not have been able to tell.

So default dates for overdrafts can often be later than you would think.

Debt sold to a debt collector

If a debt is sold to a debt collector, then the new creditor should use the same default date as the original creditor did. If the original creditor didn’t add a default, you can ask the original creditor to add one, then the debt collector will have to use that.

If the original creditor didn’t report to a credit reference agency at all (this is unusual) then the debt collector should apply the same ICO rule that the original creditor would have used.

CCJs

If you have had a CCJ registered for that debt, the default date must be earlier than the date of the CCJ. The CCJ stays for 6 years, so the debt disappears before the CCJ does.

Insolvency

If you have gone bankrupt, had an IVA or Debt Relief Order(DRO) then the default dates of the debts in your insolvency must not be later than the date the insolvency started. This is covered in detail in these articles:

Mortgages

Mortgages and other secured loans are an exception to the general “3-6 months in arrears” guidelines. In 2007 the ICO issued technical guidance on Filing Defaults With Credit Reference Agencies, see paragraph 14 for this specific area.

A mortgage lender has much more discretion on when to record a default, but it should generally not be later than six months after any repossession.

Only the first default date for a debt matters

When people talk about the default date for a debt, it is the first default date that matters.

Your credit file will normally show a default marker each month afterwards until the debt is settled. That looks bad, but in the credit scoring it is only counted as one default.

The whole debt will disappear six years after the first default.

What can you do if a default date looks wrong?

For some examples of how these principles have been applied in practice, see these case studies that the Financial Ombudsman has reported. They should give you a better feel for whether you can get your credit record changed.

To correct a problem with a default on your credit file you should write/email the lender (or the debt collection agency if your debt has been sold by the original lender), putting COMPLAINT as the subject, explaining why you think it is wrong.

Don’t just copy out the guidance above, add the facts and dates which relate to your specific case. Some common examples would be:

  • “I first missed payments to this debt in early 2013 and set up an arrangement to pay in June 2013”,
  • “I never received the December 2014 bill as I had moved house”,
  • “I only made token payments from 2012” etc.

Then say what you think should happen to your credit record, do you want it deleted, added, or changed to be earlier? For example:

  • “Please delete the default date because I was never three months in arrears according to the ICO rules.”
  • “You never contacted me to say the account was in arrears so it is unreasonable to have added a default. I had later accounts with you so you knew my contact details. I paid the debt as soon as I found out about it.”
  • “I would like you to add a default date in November 2012 in accordance with the ICO rules.”
  • “According to the ICO rules the default date of September 2015 is too late and I would like you to change it to May 2012.”
  • “[name of original lender] added a default in 2010, this has since dropped off my credit record. You should be using that same date, so please correct it.”

The credit reference agencies only report what they are told by the creditors, so complain to the creditor not Experian etc.

If you haven’t had your complaint to the lender sorted within 8 weeks, put in a complaint to the Financial Ombudsman.

Stop and think – will doing this “reset the clock”?

If you haven’t made any payments to a debt for years and you are hoping it will get to the 6 years point so the debt is statute barred, it is probably best not to contact the lender at all.  If you ask them to change the date then this will acknowledge the debt and “reset the clock”. See Questions about Statute-barred debt for more information as the conditions for some debts becoming statute-barred have changed in January 2019.

But also read No calls all letters about a debt for years? Is very common for you to be contacted about an old debt just a few months before it reaches the 6-year statute barred point. So unless this is very close, it’s probably not worth hoping this will happen and it’s better to get the default date sorted.

If the debt is already statute barred (are you absolutely sure? read the above article) then you can safely ask for the default date to be changed as once a debt is statute barred it will always remain barred.

And sometimes a default is good news!

Defaults sound bad, right? So getting one removed must be good? This is probably the most confusing thing of all, but No!

It can often be better to have a default on your credit record.  If there is a default against a debt, then the whole debt will “drop off” your file after six years, even if you haven’t repaid the debt. With no default, the record will not go away until six years after it is marked as settled/satisfied in some way.

So don’t rush into trying to get a default removed… and never try to get a default date changed to a later one because it will wreck your credit record for longer!

Remember: your credit record isn’t the only thing that matters

You may wonder why you should pay a debt at all if it will go from your credit record after 6 years if you don’t pay it. There are two good reasons:

  • it stops the creditor going to court for a CCJ, which would harm your credit record for another 6 years
  • seeing that problem debt is settled makes other lenders more likely to give you credit.

Even though it’s good for your credit score when defaults disappear, the debts still legally exist. See Do I have to pay a debt that isn’t on my credit record? for more details.

Don’t get confused with “Default Notices”

This article has looked at when a creditor marks your debt as “in default” with one of the credit reference agencies. The word “default” is also used in the term “Default Notice”. A lender has to send you a Default Notice before taking you to court over an unpaid debt. This has nothing to do with informing a credit reference agency that your debt is in default – your credit file may be marked as in default even if the creditor has no intention of taking court action.

If you have read things like the lender has to send you a Default Notice 14 days before starting court action and if you pay the debt in full within this time the lender can’t go to court these aren’t referring to credit records at all.  Anywhere you read the phrase Default Notice you are probably looking at information about CCJs, not credit records.

More Debt Camel articles:

How much will my credit score change if…

FAQs on statute barred debt

When can you get a default deleted?

Comments

  1. It was a bit more complicated.
    We had a faulty meter from March 2011 – May 2012 and the bill came out of my ex partners account, I was giving her the money but she was not paying the bill and I never saw any letters as she opened them all.

    It was the energy ombudsman that I took this complaint to.
    Is this debt not statue barred?
    Can they get a CCJ against me?
    I don’t mind paying the bill I just want the default back dating as I can’t get a mortgage.

    Reply

  2. I have a question, took out a loan from Likely Loans in Sept 2017 to repay PayDay Loans (yes, I know!) and in Nov 2017 I decided enough was enough and realised I’d got myself into enough trouble. I contacted Likely Loans and StepChange, in turn with effect from Dec 2017 I have been paying it back via a DMP at only £6 per month, in comparison to the £118 loan repayment it should have been.

    I’ve kept up with the DMP payments since, not missing any, but queried recently why they didn’t add a default because my credit report shows it was at least 3 months late (now shows 6 months late) but Likely Loans are saying they won’t add a default as a DMP agreement stops that action; is that correct?

    Reply

    • Have you complained to LL about unaffordable lending? How large are the total of debts in your DMP?

      Reply

      • Hi Sara, sorry yes, I’ve already been down that route. Might I add, further to the help of your site alone : )

        £15k of debt overall, all now being paid via individual DMPs set up direct with the lenders / creditors. No issues in that respect, but wondered whether a default should have been added to this account, as this will take a good few years to pay off and then take another 6 years to drop off my report after that I’d assume.

        Reply

        • So your options are to put in a complaint as the article above suggests and take it to FOS if they do not add a default. Or to simply stop paying them for a few months until they add a default. If you were a long way into a DMP the latter is not a good idea, but as you are so close to the start it is a possible option if they won’t add the default.

          Reply

          • thanks Sara, I’ve raised a concern about it with them now.

            Its bizarre that due to me being open and honest from the off, not missing payments (as such) and committing to a DMP despite the massively lower repayments, I’m actually going to be worse off at least from a credit report point of view rather than if they’d just applied a Default had I ignored them and not made payments.

            In my particular case, continued to pay via a DMP and not missed any payments – 4 years before account paid off and 10 years before account removed from credit score – 2029.
            If I’d have ignored them from Dec 2017, the account would be defaulted and would be removed from my credit report from Dec 2023!

  3. Hi

    I complained to creation and have had the following response.

    ‘An arrangement was set in place for April 2014 and your account was later passed to Lowell in 2016 to manage . However I can confirm that accounts that are in financial difficulties arrangements would not be defaulted, rather being allowed to continue on the arrangement.

    I am unable to uphold your compliant’

    Any advise please.

    Reply

    • You could go back and say that you feel that this is not treating a customer fairly as this was not explained to you at the time. Ask them to reconsider or you will send the complaint to the Financial Ombudsman.

      Reply

    • It seems rather random I am afraid. Well worth a go though – it’s just a few emails from you.

      Reply

  5. Hi, I applied to my creditor to get a loan defaulted as I was in arrears and paying very little on a DMP which was reviewed every year. The have refused so I went to the ombudsman office and this was their response (below). Is there anything further that could be done? My DMP is now 8 years old.

    Reporting an account as in default is only done as a last resort when the relationship between the lender and consumer has broken down and attempts to come to an arrangement have failed, or if the agreed revised terms are broken, or the account is closed with an outstanding debt. A default shouldn’t be filed if an agreement is reached and the consumer keeps to the terms of that arrangement. Being in arrears doesn’t automatically mean an account is in default, neither is there as fixed level of arrears which means an account is in default.

    Reply

  6. Hi Sara

    Hope you can help me , I have a payday loan with payday express from 2015 , I lost my job and was unable to pay it back . I recently looked on my credit report and it has not default and just show six late payments from 2015. I contacted payday express but they said they couldn’t add a default on the loan as they had not issued a default. Is this right or is there anything I can do to have a default applied to the account.

    Thanks

    Tom

    Reply

    • Have you repaid the loan? was this the first loan you had from them? Did you have other payday loans? (these questions aren’t as irrelevant as they may sound!)

      Reply

      • Hi Sara

        Sorry for the delay in getting back to you I have been at work no I have not repaid the loan , but in a position to do so now . It was only my first loan with them but I had defaulted on five other payday loans

        Thanks

        Tom

        Reply

        • Hi Sara
          Sorry for the delay in getting back to you I have been at work no I have not repaid the loan , but in a position to do so now . It was only my first loan with them but I had defaulted on five other payday loans

          Thanks

          Tom

          Reply

    • for the same debt? how different are they? And is this with the same creditor, or is one with the original creditors and another with a debt collector?

      Reply

      • The difference is almost five years. Experian started default Nov 2013 and Call started in March 2019. I’m in DMP from Sep 2013 never missed payments under the DMP. It’s the same creditor and the same account just compared entires from three different credit agencies.

        Reply

          • In previous post I made a mistake.
            – One is LLoyds but it’s overdraft First default Nov 2018 by Experian and first default by Equifax in Apr 2019
            Another is AA finance default March 2014 by Experian and first defaulted by Equifax in April 2019

            Still owe money for both creditors.

  8. Hi Sara
    I wrote to Arvato for the CCA and they have replied that the account is now closed and returned to their client Barclays bank. What should I do now? Should I ask for a CCA from Barclays bank? They were the original bank that I had the Credit card with. thanks, Shezza

    Reply

    • Well you know I think you should be getting on with buying a flat and then deal with making settlements… If Barclays contact you, ask then for the CCA.

      Reply

      • thanks Sara
        Yes, I will do that…currently searching the property market :-)
        thanks for your advice so far

        Shezza

        Reply

  9. I need some advice, I didn’t know there was a water meter in my rented property when I moved in back in 2003. After months of arguing the huge bills and engineers coming out it was found that a previous tennant hadn’t disclosed the meter being fitted and that’s what caused it, it was on the public path outside the house.

    I agreed to pay £40 per month and have done ever since, for the last 16 years. Severn Trent continue to send my bills to Moorcroft and despite the default dropping off I still have AR on my file and Severn Trent keep adding to the debt.

    Any advice welcome as I didn’t know until I checked equifax I even had an AR marker which makes getting a mortgage impossible just as we’re about to apply for one

    Reply

    • I think you should go to your local Citizens Advice and ask for their help as this all sounds very odd.

      Reply

  10. Hi

    I am trying to get a mortgage to get a new house but my credit report keeps throwing up that I on a DMP.. In 2014 I was in financial difficulties and went to the CAB for help, they advised me not to make further payments but would write to all the creditors to get my payments reduced after going thru a financial statement.

    I just recently just registered to Noddle and all of my creditors have marked a default from about that time in 2014, however there is one that has marked it as a DM, debt management plan.
    I have called them up and they say the marker is correct even if I am not paying a dmp company, they said I used a third party, the CAB, to put offers in and they have then put DM markers on.
    my mortgage lender have asked me to provide dmp company name etc for this but I pay this as a self managed plan I guess.

    What can I do to change the markers or even change it to a default and back date it to 2014

    How do I tell the mortgage lender about this and explain..

    Also I have another two creditors that don’t take payments direct but use a third party to take money then pass the money onto them, would the mortgage lender see this as a DMP?

    Many thanka

    Ray

    Reply

  11. Hi

    Yes I am still making all the payments however I must admit they are all very small token payments.

    I make most of my payments direct to creditors thru DD or standing order, apart from two creditors that use third party to collect money and pass on to the original creditors. This I think the mortgage lender is seeing as a DMP in place, although I didn’t organise this it was passed onto the third party to collect

    All my payments are made each month however like I said most are just token payments

    Reply

    • Your credit record here is largely a red herring – most mortgage lenders will not be happy that you have debts you are only making token payments to, even if they do not show on your credit record. And the mortgage lender is likely to see payments arrangements as just the same as a DMP.

      You can try to get a default added for the one currently showing as in a DMP, see the article above. But you also need to get all these debts settled!

      Reply

  12. Hi

    Yes thanks

    We had to goto the mortgage broker and explained the situation, there are a couple of mortgage lenders that are willing to give us a mortgage however we have to put a large deposit down, they are aware of our circumstances and just want proof of12 months continued payments without missing any, they wanted also the names of the third party companies

    We have told them that we will pay off most of the creditors on completion, which we will, however can we make partial settlents or would we need to pay full on completion?

    Thanks

    Ray

    Reply

    • Only your mortgage broker can answer this – you need to know what the two specific mortgage lenders will want.

      Reply

  13. I have a credit card and a loan with HSBC which were defaulted in Apr 2015.

    In March 2014 my loan was already 6 payments behind according to my equifax credit file – i cannot see my credit card history as it was sold in Apr 2015.

    In Apr 2014 I had an arrangement to Pay and had just entered a debt management program which of course was accepted. My current account was defaulted in the November of this year – is it wrong that HSBC did not default my credit card nor loan until Apr 2015?

    The card went to a debt collector and the loan stayed with HSBC recoveries.

    Reply

    • When you were actually 6 months in arrears depends on how large the DMP payments were. If they were, say, half the normal amount, then you would not be “6 months behind” until you had been making reduced payments for 12 months.

      Reply

  14. Hi Sara,

    Hoping you can kindly advise on this. I understand there is a limitation of 6 years after an account has been declared default for a creditor to register a CCJ but is there a limit as to when the creditor must report the account as defaulted in the first place? Can the creditor declare an account as defaulted many years in the future and then register a CCJ within another 6 years, or is there a cut-off point?

    Many thanks

    Reply

    • I would rather talk about specific situations than very broad generalities. Can you say what you are worried about, who the original creditor was, what sort of debt it was, whether it is now owned by a debt collector and whether you have been making any payments to it?

      Reply

      • Hi Sara,

        Thanks for the quick reply.

        I have been chased in the past for mobile phone payments. I no longer have any of the written correspondence after a couple of address moves but believe it started early 2012, after I had switched to another provider a few months earlier. I tried to resolve the situation in a call with the mobile phone company before I moved (arguing that my commitment period had ended and the phone was no longer in use) but they did not accept this and then sold the account to a debt collector group, to whom I have never sent any written correspondence or made payments to. It was this company I last heard from in early 2014 before moving address and, regrettably, overlooking the situation due to some bad advice. I have no idea if the account has since been sold on to anyone else. I do not have any defaults or CCJs listed on Experian, Equifax or Noddle. Can the debt collector still declare my account as defaulted at any time or would there have been a cut-off point? I have started browsing for houses to with my partner and I am very worried that a default/CCJ could appear after all this time and put a stop to mortgage applications. I’m also worried at how much the debt could have increased with any extra fees attached.

        Many thanks

        Reply

        • This is a difficult decision for you.

          The debt should be statute barred as you haven’t acknowledged in in over 6 years. (It is not a consumer credit act debt so the recent court case about default notices affecting statute barring is irrelevant.) so if there was a court case you should be able to defend it and win.

          But it is possible that as the debt collector doesn’t know your address, the debt collector could go to court and get a CCJ without you even knowing. Which would be at best a complete pain and at worst could mean you loose a mortgage if it happens at exactly the wrong time.

          So your options are to:
          1) contact the debt collector and pay the debt
          2) contact the debt collector and say the debt is now statute barred, say what your new address, and ask them to confirm they wil not take any legal action
          3) to contact the debt collector and say the debt is statute barred but offer them £50 say in full and final settlement
          4) to cross your fingers and hope you never hear from them before your house purchase , or that if you do the letters come to your current address so you can then pay them.

          How large was the debt?

          Reply

          • Thanks very much, Sara.

            As you say it should be statute barred now, does that mean the account must be considered as having defaulted from the time of the first missed payment to the mobile company? Or can the debt collector still declare it as defaulted many years later if they have not already done so, thereby triggering the CCJ limitation period? I cannot recall receiving a letter re my account having defaulted so I am unclear when the clock would have begun or if there’s a chance it hasn’t yet.

            I am very reluctant to contact the debt collector (who I gather could have sold on the account by this point). If I was to approach option 3 however, I would want to make sure the defaulted account date must be considered by law as being a long time ago i.e. when the mobile company still owned my account, hence why I query the above.

            The debt was less than £200. Could this have now incurred interest fees and debt collector fees?

            [reply 1 of 2]

          • What is the possibility of having a CCJ without knowing i.e. how likely is it to not appear on my credit files? Is it correct that I would be incurring £50 pm charges without knowing if the case? What would be the ultimate outcome of me not responding to a CCJ that I’m unaware of?

            With the above in mind, I’ve been considering running a check via Trust Online but would anyone else be able to see that a search had been done on me? Are all CCJs 100% guaranteed to be listed here?

            Sorry this is a long response. As you can tell, I’ve been agonising over this recently and have many questions! Advice from family is to leave well alone but I want to make sure I’m protected from bailiffs knocking or seizing my car and possessions etc. Your responses are very much appreciated.

            [reply 2 of 2]

  15. Hi Sara
    My interest only mortgage is up for redemption at the end of this month. The value of my house is approx £225,000 and I still owe £18,000 which I don’t have. I have been paying approx £200 a month off what I owe. What would happen if I just continued to pay that amount after the redemption date. Could they still take me to court or repossess my house even if I’m making regular payments

    Reply

    • Yes they could – but a lender will normally be slow to do so. Have you looked at getting a small mortgage or secured loan to cover the balance? Who is the lender?

      Also have you looked at things like reclaiming any PPI – any lump sums you get can come straight off the mortgage!

      This page https://debtcamel.co.uk/interest-only-mortgage/ would be a better place for your question and I will move it there in a day or so.

      Reply

  16. Hi Sara

    I have a query if you don’t mind, and it does relate to default dates. I have been looking into raising an unaffordable credit complaint with Very.co.uk. My balance was £3000 when I entered into a DMP in March 2015. It is now June and I still owe £859.00 despite paying between £60-100 per month for the last 5 years, I calculate I have paid atleast £3600 to them through the DMP. I have ended the DMP and intend to pay the remaining payments directly to Very. I was looked into raising an unaffordable credit complaint with them through Resolver. As it stands with a balance of over 859 remaining, my minimum payment is over 700 (90% of my balance), with arrears of 700+ and a take three payment due of over 700. Very have been adding continuous interest to my account for the last 5 years at a staggering 47.9% APR, which I understand is their right but has left me in such dire straights financially.

    They have never defaulted me, so I am worried they will suddenly issue me with a default out of spite with a recent date once I put a complaint in. Would you advise me to wait until the debt is cleared before complaining? Can they default me once the account is settled?

    As a side not do you think I have any chance with an unaffordable credit complaint? I did recently have success with a payday loan, but I hadn’t considered going through with one for a catalogue company.

    Many Thanks
    A

    Reply

    • I suggest you send very a complaint that they haven’t frozen interest in your DMP, see https://debtcamel.co.uk/creditor-wont-freeze-interest/.

      Ask for a refund of the interest they have added. Take the complaint to the Financial Ombudsman if they refuse.

      They are no more likely to add a default now than when the debt is settled. To be honest a default back in March 2015 is probably better for you as it will disappear completely in 2021. At the moment the payment arrangement markers will be on your credit record for 6 years after the DMP ends.

      Affordability complaint – when did you open the account? how often did they raise your credit limit?

      Reply

  17. Hi Sarah

    Thanks for responding, I have been a long time reader of your blog but never plucked up the courage to post. Just before I started my DMP my credit limit was £3750 with Very. I had a very account in place since 2012 so in two years my credit limit was bumped for £250-3750! My debts started to snowball between 2013-2015.

    With Very I had the option to buy now pay later on everything I purchased. Before I knew it I had a minimum payment of over £300 due, plus impending pay later purchases of £200 and £150 for ‘take three’ (subdivided purchase into 3 installments) Very are the main reason I am actually in the DMP. Whilst being on my DMP the interest they have charged me per month has varied from £60-100 per month. I have £857 left to pay so which i believe is this low is because my 3 credit cards dropped off my DMP a couple of years ago and the lions share of my DMP payment has been going to Very.

    Do you think it would be better to try and recoup interest off them and not bother with the affordability? It was so easy to fall into debt with them. I have a good job but I never managed to cleared the bill off in full, I cant remember if I ever even got close.

    I hope Very default me now! Arrangement to pay has already been there for 5 years. Another 6-7 years and that would be 11-12 years of my credit report destroyed by them. That is assuming I can clear this £857 some time soon. :(

    Reply

    • Well there is nothing to stop you making an affordabilty complaint as well as asking for a refund of the interest. Make sure your complaint clearly says you have to separate issues: you were given an unaffordable amount of credit before your DMP and in your DMOP Very refused to freze intere4st, unlike your other creditors,, prolonging the time you were in debt even though your DMP firm sent them details showing you coulkd not afford to pay more.

      In practice if they offer you a refund of the interest in the DMP then you may think that’s a good enough offer to accept. But if they reject everything, then the Ombudsman can look at both complaints/

      Reply

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