Here’s a sobering fact for you – did you know that it takes more than 25 years to pay off the average credit card debt? These kind of statistics immediately show the perilous situation that many in the UK are in when it comes to debt.
Debts can affect anyone, and if you let them go unchecked, they can be a huge headache. Sometimes it can be the creditor who makes the mistake though. When you get a debt defaulted, it can be stressful and upsetting but if you’re active you can sort it out quickly and easily.
But can the same debt be defaulted twice? We take a look at if that can happen, and what to do if it does.
Default notices for debts
You may be confused already – what is a defaulted debt, you might ask? Well, a default notice, or notice of default, is usually a letter that you’ll get sent by your creditor if you have broken the terms of your credit agreement.
The creditor usually defaults a debt when they believe that there is no chance that you can get back on track, and therefore goes and cancels your agreement with them. They’ll usually give you at least two weeks to catch up on any missed payments, and if you do this, they will remove the default and your account will continue as normal.
If you can’t pay off the missed payments in this time period, your account will default. A notice of default is normally sent when you’ve missed or paid them less than the full amount agreed upon for 3 to 6 months. It’s worth noting that default notices only apply to debts regulated by the Consumer Credit Act.
Defaulted debt – next steps
When you get a defaulted debt, and your account goes into default, your creditor will usually ask you to pay the full amount of the debt instead of the previously agreed instalments. You have every right to ask to pay back in instalments, but the creditor may not agree to this.
The further action that a creditor can take against you after your account has been defaulted can include passing the debt on to a debt collection agency, taking court action against you and, if the debt was a ‘hire purchase’, applying to the court to take back the goods under said purchase.
Can the same debt be defaulted twice?
There are all sorts of reports across the internet about people having the same debt defaulted twice. Can this really be done though?
The short answer is no. You cannot have two defaults for the same debt. What sometimes happens in these cases is that the original creditor defaults your account and passes the debt on to a debt collection agency, and if you fail to meet the criteria set out for you by the debt collection agency, they might default your account as well.
While technically and legally, you should only be able to get one default per debt, what can happen is the original creditor marks their entry as ‘closed’ or ‘settled’ and then they sell it on to a debt collection agency. Once this happens, they make their own entry, and they should note the default on the account.
It’s quite often thought to be a tactic used by the debt collection industry, where they immediately default any account as soon as they get hold of it. Unfortunately there aren’t any rules preventing it, despite it being quite an unfair thing to do.
Next steps you can take
So the short answer again – yes, you can have the same debt defaulted twice. It’s not meant to happen or anything like that, but unfortunately it does. Some debts can even get defaulted 3 or 4 times, or sometimes even more times than that. It’s a clerical issue more often than not, and not your fault. There are a few things you can do though.
Take it up with the credit reference agency
There are three main credit reference agencies (CRA) in the UK – Experian, Equifax and TransUnion. They each create and keep hold of all your credit reports, gathering information about your credit history in order to create a credit report and score for you.
If your debt has been defaulted twice, you should take it up with the CRA who represents you, as well as with the original creditor. The original creditor should then cancel the first default as it is no longer valid. The CRA would be able to offer advice and guidance as to what to do and how you can sort out the double default.
Data Protection Act
Another method for rectifying this defaulting issue is to begin a Data Protection Act action against the debt collection agency who have issued the second default on your account. You can also use this against the CRA as well, but be warned – reports from people who have taken this path say it can be a bumpy ride.
Information Commissioners Office
Getting your debt defaulted twice is an error which you have every right to ignore, and you could also refuse to continue payments until one of the defaults is negated. In the interim, you could also raise your matter with the Information Commissioner’s Office, who offer protective services with regards to Data Protection in particular.
They are a really good service for registering complaints to, and they will be able to help you along the process of sorting out the debt that has been defaulted twice.
So that’s the low-down on whether the same debt can be defaulted twice. In some cases, it can happen, but it absolutely isn’t meant to, and the companies involved should know this. Sometimes they just charge in though, and don’t think things through.
If you are looking to complain further about the same debt being defaulted twice, you can get in touch with the Financial Ombudsman Service, who will take matters into their own hands.