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Should I keep paying an old debt?

Do you have to keep making payments to old debts?

It can be easy to get stuck in a long-term Debt Management Plan (DMP) or payment arrangements. If you are paying little each month, your debts will take a very long while to be gone.

This article looks at the questions people often ask about old debts where they have been making monthly payments to the debts.

If you haven’t been making payments, read No calls or letters about a debt for years as that is a very different situation.

Man walking down a long road into the fog, can't see where the road goes - are you paying old debts with no end in sight? with the end

Must I pay a debt that has dropped off my credit file?

 

A debt drops off your credit file six years after the default date. Most debts in a low payment DMP will have been defaulted (if one of yours hasn’t, read What should the default date for a debt be? because you may be able to get this changed) so after six years these literally disappear and your credit score improves.

But these debts still exist.

Even though they are old, they will never become “statute barred” (that is the legal term for a debt that is too old for a creditor to enforce) because you are making payments to them.. See When is a debt statute barred? for more details about this.

So if you don’t want hassle from the debt collector that owns the debt and possibly CCJs, bailiffs etc, then the answer is Yes, you do need to keep paying the debt – or settle it in some way.

If the debt is old, the paperwork may be missing

There is another possibility for some old debts that is worth exploring.

If the debt is a consumer credit debt – that is all types of loans, credit cards and catalogues but not including overdrafts – then the debt collector may not be able to produce correct Consumer Credit Act documentation. If they can’t, then they can’t take you to court for a CCJ and you can simply stop paying…

This is a very good chance this will happen for debts that were started before 2007. And it’s worth trying for more recent debts that have been in a payment arrangement or debt management for many years and have been sold to a debt collector.

This National Debtline factsheet explains how to ask the debt collector to send you the CCA agreement. And National Debtline are good people to talk to if you are sent something and you aren’t sure if it is correct or complete.

Am I really likely to get a CCJ for an old debt?

If you stop paying the debt, then it is much more likely the debt collector will go for a CCJ. Think of your creditor as snoozing quietly whilst your small monthly payments roll in – as soon as they stop, he is likely to wake up and rethink what to do!

Recently the number of CCJs has increased a lot – up to 320,000 in January-March 2019. Half of these CCJs were for less than £650, so don’t think your debt is too small for a debt collector to go to court!

If you carry on making the monthly payments, it is possible that you could get a CCJ. This may feel unfair – you have had a long-term arrangement with your creditor and you have kept your side of the agreement by making monthly payments – but legally the creditor can still get a CCJ.

But your debt is costing very little to administer, so the debt collector will often prefer to carry on getting small amounts of money from you each month to the hassle and expense of taking court action.

When a debt is sold to another debt collector, they may decide to look again at your situation – your credit file, your income and expenditure. In a DMP, your DMP firm will send them a new I&E every year, but in a payment arrangement, you may be asked to send one.

It’s best not to ignore a request from a debt collector for a new I&E. Although you don’t have to give them these details the new debt collector may decide you could be paying more and go for a CCJ if you won’t co-operate.

You are a bit more likely to get a CCJ if you have a house – a creditor can see from your credit file if you have a mortgage and may assume that equity has built up. The odds are that you won’t, but having a long term DMP with a house with a lot of equity can be a problem.

If I get a CCJ will the debt reappear on my credit file?

After a debt has dropped off it will never come back. But this isn’t good news because the CCJ itself will show on your credit file for six years, even if you settle it in full. (There is one an exception here – if you pay a CCJ in full within 30 days it will disappear.)

Is it a good idea to negotiate Full & Finals on these debts?

Definitely! Even if paying £5 a month to a debt doesn’t feel like much of a problem, it is always possible the debt collector will threaten court action and ask for more.

If a final settlement is agreed, the debt will not reappear on your credit file. A Guide to Full and Final Settlements has more information, including how to make an offer. If your debts have changed hands several times, the current creditor may have paid very little for the debt, possibly only pennies in the pound.

It’s not easy to say what you should offer – that will depend on:

  • what you are paying – if the debt will be repaid in a couple more years the creditor may not be interested in a low offer;
  • what you could afford to pay – it will help to get an offer accepted if you provide an Income& Expenditure sheet that shows you can’t afford to increase your monthly payments;
  • if have a house with equity – this doesn’t mean a F&F will be refused, but it makes it less likely that a very low one will be agreed.

Where could you get the money for a F&F? If you already have PPI complaints underway, they could also help. But it’s now too late to start a new one. One idea that may work if you have had a lot of debts, especially high-cost debts, is making an affordability complaint.

Don’t borrow money to make a settlement offer. At the moment all the old debts will have interest frozen, don’t swap that for a new creditor charging interest.

More Debt Camel articles:
Cn you get a mortgage if you are in a DMP?

Can you get a mortgage if you are in a DMP?

Worried about a charging order?

Information about charging orders

Ask for the CCA agreement for old debts

December 5, 2019 Author: Sara Williams Tagged With: Credit ratings, DMP, old debts

Comments

  1. Steve says

    August 31, 2019 at 12:50 am

    I have a very old debt dating back to at least 2007 which was the last communication with the creditor. They haven;t been in contact with me since then and I’ve managed to build my credit score back up again and have a couple of credit cards and a loan which I have full control over and fully up to date with the repayments. After doing an eligibility check the creditor from 2007 is now saying I have a 95% chance of getting one of their cards for a balance transfer. If I go for this am I risking them bringing up the old debt and ‘resetting’ my statute barred debt with them?

    Reply
    • Sara (Debt Camel) says

      August 31, 2019 at 7:49 am

      Once a debt is statute barred it is not possible for that to change and for it to become “unbarred”. Whether a debt is statute barred become more complicated earlier this year after a new court decision, see https://debtcamel.co.uk/statute-barred-debt/, but I would be VERY surprised if a creditor tried to argue this about such an old debt as yours.

      Reply
  2. Robert says

    October 17, 2019 at 4:07 am

    HI, I have an overdraft debt going back to 1997, I’ve been paying around £50 per month since then and never missed a payment for over 20 years now, I’ve not heard from them at all for probably at least ten years, I’ve moved five times (two of them abroad) in that period so they’ve probably lost track of me, the debt was around £60k and I’ll clearly never pay it of in my natural life, since then I’ve rebuilt my life and my credit but what do I do about this, I’m reluctant to make contact since after all this time and I would really struggle to settle it if I they wanted me too. I’m not sure what to do and it’s really worrying me now, any advice welcome, thanks

    Reply
    • Sara (Debt Camel) says

      October 17, 2019 at 7:42 am

      You had an overdraft of £60,000 ?

      Reply
  3. Diane says

    December 5, 2019 at 3:01 am

    I am on a DMP with stepchange and I have never missed a payment in over 6yrs, I’m paying the minimum amount back to then, can you tell me do I still have to keep paying until all my debt until it’s cleared off , Estimated another 7yrs, or does it automatically clear after the 6yrs? Will my credit score be going up now as I’ve never ever missed a payment?

    Reply
    • Sara (Debt Camel) says

      December 5, 2019 at 10:23 am

      The debts still legally exist and you can be taken to court for a CCJ even after they have disappeared from your credit record. If you stop paying, this is likely to happen so yes, you do need to keep on paying.

      Your credit score is likely to get a LOT better if all your debts in the DMP were defaulted as they will be dropping off your credit record.

      BUT read the section in the article above on If the debt is old, the paperwork may be missing as this may work for some of your debts, so your DMP will end sooner.

      Reply
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