If its been four or five years since you stopped making payments to a debt and you haven’t had any phone calls or letters for a long while, you may be hoping your debt has got lost or the debt collector has forgotten about it.
This article looks at what is likely to happen as in 2018 debt collectors are taking more people to court for CCJs than they used to.
If you have been making payments, even very small ones, to an old debt this article isn’t relevant for you – instead read Should I keep paying an old debt?
Here is a typical situation. Mr H wrote:
I stopped paying a loan in 2013 when I lost my job. I have a Default on my credit file for June 2013. The bank sold it to a debt collector after a couple of years. But I was never contacted by the debt collector. I know in 2019 it will fall off my credit history altogether.
Do you think there is a chance after 5 years of a Debt Collector contacting me this year or next year? What is the best thing for me to do?
Becoming “statute barred”
When a debt is statute barred, the creditor won’t be able to get a County Court Judgment (CCJ) for the debt. In general a debt becomes statute barred six years after you missed a payment if the creditor had the right to start court action at that point. But if you made any payments during that six year period, the 6 years would start again. I’ve written another post that looks in details at questions people ask about statute barred debt because it can be complicated for different types of debt.
Mt H hasn’t been making any payments. But if a debt collector gets in contact with him before this six-year period is up, they could take hime to court for the debt and he would get a CCJ.
It’s natural for Mr H to think that after five years he has probably been forgotten. But it’s common for people to be contacted by a debt collector with only a few months left before that statute barred point.
If you are contacted, can you ignore the letters?
Another reader wrote
I have just received a letter threatening court action. My debt will be statute barred in December, only 6 weeks away, surely I can tough it out until then? It must take a few weeks to get a CCJ?
It does take a few weeks to get a CCJ – it will be months if you defend the case – but all the debt collector has to do is start court action before the statute barred point, not complete the case before then.
Also you have to be absolutely sure your debt will be statute barred – this is especially important in 2019 as a recent court case has made it more difficult for some loans and credit cards to become statute barred.
If you ignore the letters there is a chance the debt collector won’t go to court. This probably depends on how certain the debt collector is that you are the debtor. But in many cases they will.
In the first quarter of 2018, there were more than 100,000 CCJs per month – a lot more than there were a few years ago. Debt collectors are taking more people to court about unpaid debts than they used to.
So ignoring letters isn’t a good idea because you could end up with a CCJ.
In particular, if you get one headed Letter Before Action (or sometimes Letter Before Claim or Letter Before Court), then this is your last chance to make a monthly agreement to pay the debt and not get a CCJ.
It is also the point at which you can ask for more information about the debt as sometimes the debt collector doesn’t have the right documentation to get a CCJ. Read How to reply to a letter before action which suggests how to complete the Reply Form that you have been sent.
What happens to your credit file
When a default date has been added to a debt on your credit file, the whole debt will disappear after six years. This is going to happen whatever you – or a debt collector – does.
If the debt collector suddenly springs into life you are likely to see them add the debt to your credit record under their name with the same default date as the original record does. If the debt collector “makes a mistake” with this and uses a later date, you should get the default date corrected.
But if you get a CCJ, this is then added to your credit record and will remain for another six years. A CCJ is worse for your credit score than a default is.
So what is the best thing to do?
That depends on your financial situation. Here are a few cases:
Much improved, hoping to get a mortgage
This old debt needs to be sorted, the last thing you want if you are making a mortgage application is the possibility of getting a CCJ. If you want to get a mortgage soon, whilst the old default is still on your file, I suggest you contact the debt collector yourself and pay the debt in full. If you won’t be applying until afterwards, then have a go at getting a Full and Final Settlement offer.
OK, could start clearing this debt
I suggest you work out how much you could pay each month and start saving this amount up in a separate account, where you won’t be tempted to dip into it. If the debt collector contacts you, you then have an amount you could offer in a full and final settlement. If time goes on, the debt drops off your credit file and you are sure it is well over six years since you made a payment, then read up about statute barring. At some point you will feel comfortable to use the little nest egg you have saved for something else.
Not good, could only afford a token monthly payment
In this case there isn’t anything sensible you can do now except wait. If the debt collector does contact you, don’t ignore the letter but offer a token payment and give details of your income and expenditure, showing why you can’t afford any more.
Dreadful, lots of other problem debts as well
You need to look at your whole situation, not just firefight individual debts. Although this particular old debt could potentially disappear, you should probably assume that it won’t. Have a look at this overview of possible debt options then consider talking to StepChange about your options.
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Sam says
Hi Sara,
In late 2014 I lived in a shared house with tenants who dodged paying the last £50 bill before moving out. We had a joint contract. A few debt agencies + 5 years later I have not made any contact with anyone regarding this debt. I doubt any of the previous tenants have as well.
Fast forward to 12/2019, my British Gas account was transferred to Lowell. British Gas wrote saying ‘this letter is formal notice of assignment of your debt to Lowell … we’ve closed your British Gas account … Lowell is now the Data controller’.
Shortly after this, Lowell wrote ‘Your British Gas account was sold to Lowell in 12/2019 … Please call us to talk about paying your account … Where appropriate, as part of the transfer, Lowell will take over the REPORTING of information against your credit file’.
British Gas never registered a default on any of the three CRAs (which is odd).
Given that I – and the other joint tenants – have not made any contact/payment to British Gas or Lowell, can they still register a default on my credit file even after 5 years? More importantly, can they threaten with a CCJ if there is no default for the account beforehand?
Thanks in advance!
Sara (Debt Camel) says
You may know this but in case you don’t: If you were sharing a house, then you are probably jointly and severally liable to pay this bill. The fact the other tenants dodged it doesn’t mean you are not liable.
British Gas’s credit reporting isn’t reliable.
If a default is added it should be back a few years.
Defaults on a credit record have NOTHING to do with taking you to court for a CCJ. Anyone you owe money to can take you to court for a CCJ. A friend you owe money to can.
For £50 you agree is owed, is this worth the hassle?
Sam says
Really appreciate the quick reply Sara.
Yes, we are jointly and severally responsible. I’m a bit confused how a default isn’t connected with taking me to court. When I read Citizensadvice’s topic it suggests there are three steps that must always be followed (https://www.citizensadvice.org.uk/debt-and-money/action-your-creditor-can-take/if-youre-being-taken-to-court-for-debt/ )
“If your agreement is covered by the Consumer Credit Act, your creditor must follow all 3 steps of the process before taking you to court for debt. Your creditor must send you a:
1. default notice
2. letter of claim
3. claim pack
Am I in the wrong here (I probably am xD)?
And what do you mean that British Gas’ credit reporting isn’t reliable? Surely if they were meant to register a default and did not (or delayed it), then they and/or Lowell couldn’t just backdate it to a random date? If they wanted to do this it would have to be backdated within 6 months of last paymebt, right?
Thanks again in advance.
Sara (Debt Camel) says
a) this debt is a utility bill, it is not a debt that is covered by a CCA agreement
b) if it was a CCA agreement (which it isn’t) then the creditor has to send a Default Notice. This is a letter in a set format. But it, confusingly, has nothing to do with a default being added to your credit record.
The date of the default will relate to the date of the bill, not your last payment which settled the previous bill.
debs666 says
hi sara , looking for a bit advice , ive had a letter from hmrc to say they have contacted my employer to have money taken off my wages for a £2213 debt , i had no clue what this debt was so phoned them and they said it was an over payment of working tax credits in 2011 ,ive not claimed wtc in a long time and dont understand how or when i could of had an overpayment without knowing about this , the person i spoke to couldnt really say much more than that as it was soo long ago , can this be upheld or can i refuse to pay it as ive never had any communication before now , ive wrote to them and ask if all details of payments and claims can be sent out to me , thanks
Sara (Debt Camel) says
Can you go to your Citizens Advice for help with this? They will have seen this before :(
debs666 says
thanks for replying, i will make an appointment
Nat says
Hi Sara,
A bit of advice, an apologies as I know this is probably something you’ve got before and something I’ve let myself get out of control. Many years ago I racked up a bad debt with Capital One after getting very ill and losing a job, and defaulted on the payment. I’m now trying to get back on my feet again, and recently bit the bullet and checked my credit report. I defaulted back in August 2014, and I haven’t heard from them since, my address is up to date with everyone so I assume they would be able to find me. After reading your post I’m a bit petrified that they’ll just serve me a CCJ now as it comes up to the Stature Barred cut off, which I definitely couldn’t pay off and that would ruin me for the future. Should I reach out to them and try and find a way to pay it off in instalments, and would that wipe the debt off my credit score after the default date in August 2020 or reset it for another six years? Hope that’s clear, I’m trying really hard to mend my credit and I think this is the thing that’s ruining it.
Sara (Debt Camel) says
Well… first are you sure Capital One hasn’t sold your debt? because they normally would with old defaults? Have you looked at your credit record with all three credit reference agencies (see https://debtcamel.co.uk/best-way-to-check-credit-score/), is the Cap One debt marked as having an open balance? Or satisfied? And are they any debts with debt collectors you didn’t know about for what looks like roughly the same amount?
Lenders such as capital One almost never go to court for a CCJ. Very few lenders, mostly guarantor lenders like Amigo, actually take a customer to court for a consumer debts, not a large business loan.
Nat says
Hi Sara, thank you for your swift reply. On my credit report it just says that I have an open account with Capital One, with the amount, and the default date as August 2014 and then a series of defaults since that date. There isn’t any other company with the amount or an amount similar on my file either, just them. I’ve checked this against two other credit reports too (ClearScore, Credit Karma, TotallyMoney).
Sara (Debt Camel) says
So TotallyMoney reports on TransUnion data, just the same as Credit Karma. I would expect them to show the same. It’s not worth your time looking at both of them.
You haven’t yet checked Experian data – use MSE Credit Club to do this. It may well be the same, but why cross your fingers when you can check and make sure?
Nat says
Hi Sara, just checked MSE Credit Club (thanks for this, I had no idea!). It says ‘Default/Ended’ and Account Settled, and a ‘Gone Away’ status. There’s no other information and no other place where it has been transferred or another company with the balance. Is this anything to worry about?
Sara (Debt Camel) says
ok! I suggest you contact Capital One and ask who they sold the ALLEDGED debt to.
Gina says
Hi looking for some advice please.
I got a CCJ issued against me in October 2014. I tried to contact the debt collection agencies that obtained the order to set up a payment method to be told they had sold the debt after the order and the new debt collector would be in contact with me to arrange payment. Ive not recieved anything since so as was unsure what to do just waited on them contacting me.
Today I’ve recieved a letter from Arrow global saying the are sending the debt to resolvecall and await contact from them. I don’t understand why after so long when the CCJ was due to come off in 9 months they have decided to contact me. If I now set up a payment plan with Resolvecall (if and when they make contact) will it restart the time this will stay on my credit file?
Sara (Debt Camel) says
No this will drop off after 6 years from the date of the CCJ.
Elaine says
Hi, just looking for some advice please. I got refused a job due to my credit report in February 2020 and I noticed on my credit report a default from Npower back in February 2017. I called Npower and they said it was debt from 2009-2012 amounting to £1300. I remember in 2012 I got a prepayment meter installed to help pay for money outstanding but I don’t agree with the amount they say that i owed. As I only just recently found this out I requested a copy of my Sars report but was advised that they can only go back to when the meter was installed, I said but the debt in query is relating to 2009-2012 which you’ve added as collection in to my meter and I’m disputing this amount. I was advised they don’t have any information relating to this time as they only keep records for 6 years. She said they could take it to deadlock and before she done this what would I like to happen, I said I wanted the default of my cf and she said she was surprised it had happened as they had only sent out a final bill with no further correspondence. She advised she would pass it on to the relevant department and get back to me with regards on the default, I also said that I still need the information relating to the original debt but said we would discuss this next week. Really don’t know what to do now, any help would be appreciated thanks.
Sara (Debt Camel) says
when was the final bill for this debt? are you still living in that property?
Elaine says
I’m not living there but my daughter still lives there.
They said I’d left the property with £600 still in debt. That was 4years ago in March.
Sara (Debt Camel) says
OK, so when you say “in 2012 I got a prepayment meter installed to help pay for money outstanding but I don’t agree with the amount they say that I owed.” do you mean that in 20112 you didn’t agree with the amount owed?
Or that you agreed at that point but it was less than the £1300 they are now saying it was?
Elaine says
At the time I didn’t agree in 2012 and was told it would be rectified and I assumed that it was done automatically that’s why I thought my debt would have cleared from the prepayment meter but was left with £600 in debt, that’s why I was wanting a sar to confirm that I wasn’t due that amount.
Sara (Debt Camel) says
Do you have any record (letter? email?) of having said the amount in 2012 was wrong?
It is a shame you did not follow this up at the time.
Elaine says
Hi, Unfortunately I don’t. So it’s pretty much there word against mines now, just don’t understand why they wouldn’t keep any records of the debt. Thanks sara
Victoria says
Hi, I hope someone can offer me advice.
I have been in the process of paying off debt which was ran up when I was on the bread line but in a better position now.
Currently dealing with Lowell. They confirmed the amounts and what the original balance was for which I had to ask for as I have had no contact from them at all for years. I only knew because I went with my credit report. I paid one off with a full and final settlement and have another 2 on a payment plan.
However I received 2 letters last night saying they “forgot” to send out the Formal Letter of Assignment when they purchased the debt. Does this change my position at all? Or will I still need to pay? I do not dispute I owe the £ but now thinking they havn’t followed process.
Thank you in advance.
Sara (Debt Camel) says
How old are these debts? How long has it been since you made a payment? what sort of debts were they?
victoria says
Hi Sara.
The debt for the full and final was a credit card. I made a payment on this on the 25th Feb 2020. It was opened in Aug 2015 and defaulted Oct 2016 – I hadn’t paid anything on it until last week between these dates.
The 2 I have set a payment plan for is for British Gas. My first payment for these isn’t coming out until 25th March 2020. This was opened in Sept 2013 and defaulted in Aug 2015. Havn’t paid anything on this at all until the end of this month.
Sara (Debt Camel) says
OK, so those debts are not “statute barred” – you have to have not paid them for at least 6 years for that to be possible. That was why I was asking.
Setting up a payment plan is a good idea for these BG debts (unless you can offer a F&F settlement to them?) It doesn’t really matter they forgot to send you the letter of assignment.
victoria says
Great Thank you Sara.
I will just continue to go with the plan I have.
I can afford a Full and Final next month….I might contact them to see if they will accept this over the payment plan.
Thank you for your help! :)
P says
So… I have a debt that in August 2020 will be 6 years since the date of the default (Aug 2013)).
It’s just dropped off my credit file in the last couple of days so I’m expecting a letter (having read this post).
Am I correct in thinking that whether I settle the debt in full or make an agreement to pay off the debt in instalments, even if it is a token monthly payment, it’s not going to matter either way in terms of my credit rating because the debt will drop off in 6 months. The only problem would be if they decided to go for a CCJ, which would be added to my credit file.
In essence, unless there is a possibility of a CCJ, there’s no point paying it off in full in the hope of improving my credit rating?
Sara (Debt Camel) says
“the date of the default (Aug 2013)).”
was this the date on a Default Notice that you were sent?
E says
Hi I hope you can offer me some much needed advice. I had a debt with welcome finance in 2007. A CCJ was issued that expired and came off my credit file in 2015. However the debt was passed to various debt agencies over the years, all of which I ignored. Now Robinson way have sent a company called resolveCall to my door who left a note to contact them. Is this debt statute barred? I don’t know what to do or where I stand.
Sara (Debt Camel) says
CCJs never become statute barred.
But the good news is that if a creditor wants to enforce them (eg with bailiffs) after 6 years of you not paying anything, they have to apply to court for permission (see this fact sheet https://www.nationaldebtline.org/EW/factsheets/Pages/time-limits-for-recovering-debts/statute-barred-debt.aspx). And the courts will not often do that…
So if you are told that the debt is still legal, not statute barred and you need to make an arrangement o pay, I suggest you push back with “National Debtline says that because you have not tried to enforce the CCJ within 6 years, you have to go back to court to get permission to do this.”
Kasam ali says
Hi my friend was in violent relationship – the guy opened a few payday Loans on her name after 4 years we found out what can we do to get them removed or what is the best action ?
Sara (Debt Camel) says
Were these opened 4 years ago and she has only just found out? Or have they now been opened after they split up 4 years ago?
Kasam ali says
She only just found out but they split up 2/3 year ago ? One is with wonga and payday express this caused defaults on credit scores also he took two mobiles out on EE on her name which have not been paid all so have a default
Sara (Debt Camel) says
did he have access to her bank account?
Kasam says
Yeah he did – she no choice he controlled everything but what will best way to go by it ?
Sara (Debt Camel) says
Did she ever report him to the police at the time or soon after she left? If not, it is may be very hard to convince the creditors that she didn’t know about these debts.