Debt Awareness Week - StepChange Q&A

Hey everyone :wave:t3:

You may already know, we work closely with the debt charity @StepChange. And because this week is Debt Awareness Week, they’ve kindly volunteered to answer questions you have about debt.

This year’s Debt Awareness Week is all about destigmatising debt – helping people feel comfortable asking for the help they need, and starting those difficult and often daunting conversations.

They’ll be on hand until 5pm this Friday – so do post any questions you have here.

Please remember to only share information you’re comfortable with, and contact StepChange directly if you’d like to discuss your particular situation in more detail.

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is it possible to get a default removed from your credit file?

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It gets removed after 6 years

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If it was an actual default, not before 6 years. If it was added in error there may be ways to address it.

Monzo could help people get out of debt by simply allowing money in pots to count against an overdraft. This simple change would help people manage their money and use the pots as “out of sight” money, without having to leave it all in the main account.

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Do you mean 6 years after my account went into default or 6 years after the debt has been paid off? Basically, I’m self-employed and when covid first hit I wasn’t able to get any work for about 8 - 9 months so I was unable to pay my Barclaycard off and it went into default. I wanted to see if I could remove the default.

It’s 6 years from the date the default was placed on your file. Regardless of the amount remaining to be paid back.

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A Default is commonly removed from your credit file 6 years after it was registered - in some cases if you start to re-pay and ‘re-activate’ the debt it can stay on your file until you finish repaying.

Sorry to hear about a tough time during covid, it was difficult for so many people.

The default stays for six years but it’s worth noting it’s affect on you getting credit also decreases over time. A two year old or more default won’t prevent a lot of credit applications, it’s the biggest issue in the first year especially.

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I’d say a default information bit might be useful. One thing I noticed is how some defaults are reported as “two” once sold to a debt company eg:

Defaults
CREDIT CARD: £0.00
DEBT COMPANY: £1,234

Whereas some are only reported “once” but with the company name eg:

Defaults
COMPANY NAME: £1,234

And confusingly I’ve seen a mixture of the above eg:

Defaults
CREDIT CARD: £1,234
DEBT COMPANY: £1,234

That being said it wasn’t my defaults but when helping a friend a few years back it was shocking how unclear credit reference agencies talk about how a default should appear.

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They are using algorithms that assess the credit file, these are regulated by risk teams so there’s no room for manual intervention usually.

A default four years ago is unlikely to be a reason to reject a mortgage application though.

Your broker can probably give good advice on this.

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Hi there! Technically yes, but only normally if it’s been applied incorrectly by the creditor in which case they should remove it through a formal complaint, if it was applied correctly then unfortunately not but it will drop off normally after 6 years from the date it was applied. - Callum at StepChange

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Some incorrect information about statute barred here from the looks of it stated higher up in the thread.

A debt can be statute barred 6 years after a few factors - one of which is the last payment - so it can be on there for longer than 6 years after you borrowed or defaulted. A common misconception. Indeed, I have seen defaults on a credit file far older than 6 years (from the date of issuance or default) and legitimately present.

Also worth noting that if a CCJ is registered - statute barred can never apply.

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It’s the same for a CCJ from the County Court Business Centre - the debt can be there twice perfectly legitimately but quite unfairly…

Hi there Brandon, decisions are often made without human intervention but you can add a Notice of Correction to your credit file which gives you the opportunity to explain the circumstances surrounding a default. Most people find value in independent mortgage advice when the time comes.

Hope this helps! - Callum at StepChange

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But would anyone actually pay attention to it?

We’ve shared some information on our Instagram account about how you can reach out to us through the app if you have money concerns. You can find it here.

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Don’t have an instagram account so can’t see. Have you shared this stuff anywhere else too? Something on the blog or FAQs (if it doesn’t already exist) would be good!

You can click the link and still view it (but not much more without an account)