A reader asked hopefully the other day if his debt had been written off:
I’ve just seen that the balance on a credit card I haven’t been able to pay for more than a year is now zero. If it’s been written off that would be great, but how can I find out if this has happened?
The bad news is that this is very unlikely.
The debt has probably been sold to a debt purchaser
Lenders like to get their money back! If you haven’t paid anything to a loan or a credit card for a year, then the lender knows it’s unlikely they are going to get all the money, plus interest, back anytime soon. But it’s not impossible that you can pay something. And if the lender just wants this debt sorted, they will have sold it to a debt purchaser.
If a debt has been sold, this is what should happen to your credit record:
- the original creditor will have marked the debt as satisfied, with a balance of zero;
- a marker will have been added to the debt to say that it has been assigned or assigned to a CAIS member (those are Experian terms – the wording on other credit reports may be different);
- the debt purchaser will then add a new record for this debt with the correct balance owing.
This new debt record may not be added immediately, but when it is it should have the same details, including the default date, as the original debt had.
So my guess is that the reader’s credit card debt has been sold. The new creditor hasn’t yet added the debt to the credit reference agency records. If the reader wants to be sure, he can contact the credit card company and they will tell him who the debt has been sold to.
People often worry this means they will then have two defaults on their credit report which is unfair. But that is why there is a special marker ion the original debt – it means that this is ignored from credit score calculations when the new debt record is added, so only one default counts.
Do lenders ever write off debt?
Yes, but it’s not common. There are two main situations in which a loan or a credit card debt may be written off:
- if you have asked for this to happen and provided some good reasons for the creditor to think this should happen. When can you ask for a write off? looks at these situations.
- if the creditor has realised there is something technically very wrong with the debt, possibly the documentation. This is very rare. If there is a problem which means they can’t take you to court for not paying the debt, they don’t usually write it off. If it happens, the creditor will have written to you and told you about it.
In either of these cases you would have been told about the write off. It doesn’t just happen and you find out later from looking at your credit record.