loan default, opinions please

frag420

Myself and my mates were discussing this at the weekend and I wanted an opionion from you guys about it.

Say someone owed 10k to a bank and could not make payments and has not made payments for a number of months due to unemployment. Then the bank after continuous contact(but still no agreement on repayment schedule) sends out a solicitor letter saying that the person will be pursued through the courts for full settlement of the loan and all costs involved.

No if I remenber correctly and I am open to correction but ones credit rating is wiped clean after 6 yrs and returns to neutral? Well thats what I have been informed.

So two possible outcomes. The person can agree reduced managable payments over a longer period of time(10-15yrs maybe) and once the loan has been paid in full that persons bad credit history will remain for another six yrs

or

One can default on the loan now and pay nothing and in six yrs their credit rating will be back to neutral.

Am i correct here?? Im thinking that there would be no point in repaying a loan for ten yrs only to find you still have another six yrs of bad credit rating when one could default on it now and have a clear rating in six yrs.


regards

frAg

am i bovvered

i am no expert but would think that once a judgement is obtained against you the 10k (which would now be alot more) would not disappear after 6 years, you would still be expected to repay.

gogo

What your saying is true, but before the six years the bank you are defaulting on will close your accounts, take any savings you have to offset the loan. So you go to anothe bank to open account, they check ICB, its a no go because of your bad credit history.
So what do you do without an account, 90% of employers mandate wages now, even social welfare give cheques, where you going to lodge those, they can only go into an account in your name.
Even after all this, the six years is up(i think its actually five now), how do you explain why youve had no bank account for six years? Everyone has a bank account now, even my 7month old son has one.
Using the first option at least you'll still have a bank account which you would be able to build up to at least bring you back to some sort of good standing within your bank.
Intersting point thought, which Im sure a lot of people in financial hardship are probably now considering after reading it here.:(
Personally I dont advise it.

chris85

to be honest the credit rating would not be the motivating factor to pay it back. it would be being taken to court over it, they would seek a judgment and then an installment order. criminal offence to not meet this and as such if it was a refusal to pay (rather than no means to pay) you could be sent to jail and the debt would still be there when you get out.

Sir Oxman

I believe it's six years after the loan has been paid back - if you don't pay it back or come to some arrangement like a settlement, the six years never counts down on your credit rating.

You can't just decide not to engage with the lender and count down 6 years and think everythings okay.

frag420

I can see what your saying guys. Was chatting with the lads last night again and it turns out not to be a hypothetical at all and one of the lads is in this situation. He was listening to me go on about doing a TEFL and moving abroad for a few yrs. While he wants to do the honourable thing and pay his loan back he is on min wage at the minute and this is unlikely to change anytime soon and thus he feels if he defaults on the loan and moves abroad for about five yrs of travelling and debt free living( his words )he will be ok when he comes back.

I have seen the letters the banks re sending him and he is under a ****load of stress because of it and tbh I would not blame him for heading away and leaving it all behind.

What would be the way to do it though? Go to court, settle?? Just ignore banks and go? When would the six yrs start? from when he goes to court or leaves the country??

I hate to see any of my mates under this type of pressure so any more advice is welcome

frAg

chris85

frag420 wrote: »

I can see what your saying guys. Was chatting with the lads last night again and it turns out not to be a hypothetical at all and one of the lads is in this situation. He was listening to me go on about doing a TEFL and moving abroad for a few yrs. While he wants to do the honourable thing and pay his loan back he is on min wage at the minute and this is unlikely to change anytime soon and thus he feels if he defaults on the loan and moves abroad for about five yrs of travelling and debt free living( his words )he will be ok when he comes back.

I have seen the letters the banks re sending him and he is under a ****load of stress because of it and tbh I would not blame him for heading away and leaving it all behind.

What would be the way to do it though? Go to court, settle?? Just ignore banks and go? When would the six yrs start? from when he goes to court or leaves the country??

I hate to see any of my mates under this type of pressure so any more advice is welcome

frAg

the bank would seek a judgment and would get it no bother. This is in place for 12 years from the date of the judgement. after that they will enforce the judgement by a variety of means. most of these means would be hard to do if your friend is out of the country but it will not go away for a number of years. at least 12 years anyways.

Sir Oxman

frag420 wrote: »

I can see what your saying guys. Was chatting with the lads last night again and it turns out not to be a hypothetical at all and one of the lads is in this situation. He was listening to me go on about doing a TEFL and moving abroad for a few yrs. While he wants to do the honourable thing and pay his loan back he is on min wage at the minute and this is unlikely to change anytime soon and thus he feels if he defaults on the loan and moves abroad for about five yrs of travelling and debt free living( his words )he will be ok when he comes back.

I have seen the letters the banks re sending him and he is under a ****load of stress because of it and tbh I would not blame him for heading away and leaving it all behind.

What would be the way to do it though? Go to court, settle?? Just ignore banks and go? When would the six yrs start? from when he goes to court or leaves the country??

I hate to see any of my mates under this type of pressure so any more advice is welcome

frAg

Has he corresponded with the bank?
If he hasn't and this has been going on for a while (not paying anything) then that's a bad start.
He should immediately write by registered post, not phone or email, outlining his financial position with a budget statement (doc available for download on mabs.ie)
He has to be honest about his income and outgoings, listing everything, absolutely everything.
On the basis of that, he can see what he can afford to repay after taking care of his living expenses - food, shelter, utilities etc are primary over anything he owes on loans etc. unless the debt is secured.

He has to engage with the lender otherwise it's going to go to court automatically and if he has buried his head in the sand, the judge will have no option but grant the bank whatever per week payment they want which will likely be something your friend can't afford. Back to square onme except the bank now have a judgment.

He really needs to correspond with the bank - it's the only way and believe me, once he does and once he knows how much he can repay, the peace of mind will be well worth it.

I would also ask him to try and makew an appt with MABS though the wait apparently is very long now.
He could ring them, tell them honestly what's going on and they may advise over the phone, especially mentioning how he's let it get this far.

Best of luck to your mate - there's many tens of thousands more in the same boat but tell him get his head outta his arse pronto.

No1XtinaFan

The 6 years doesn't start when he misses one payment, it starts when the debt is cleared/brought up to date.