Loan / Default Issue Due To Illness

[samlouis83]

I'm looking for some advice and I wonder if you could help.

I have a loan for £20k that I took out in 2015 and is being repaid over 85 months. I've always has an impeccable credit score and never missed a loan payment.

Unfortunately at the beginning of this year I was diagnosed with cancer so have had six months off work which was unplanned. I'm aged 31 so I didn't have savings to cover the loan so I asked the loan company to put the payments on hold.

I called them last month to schedule the payments to start again. They asked if I could pay back a lump sum of what would have been the payments whilst I was off. I said this wasn't a possibility but they said they would send a letter offering me this option before the payments started again. If not then loan would show as a default on my credit score.

My questions are-

1. What are the implications of a default
2. Is there any way to avoid it
3. Could I pay extra monthly or at the end of the loan
4. Where do I stand as the letter hasn't arrived in the mail (I am chasing on this)

Any advice would be greatly welcomed. As I'm sure you can imagine I'd rather not be in this situation and I'm quite stressed about it. I just don't want to be peanalised for being ill and want the best possible future.

[Buenchico]

In reverse order . . .

4: Since you can't take up the offer of bringing your payment schedule back to where it was originally planned to be, there's not much point in concerning yourself over the missing letter ;

3. You can only make extra monthly payments, or extra at the end of the loan, if the lender agrees to it. Given that you weren't offered the chance to do so during your phone call, that would seem to be unlikely ;

2. Unless you can find the money to catch up with the original payments (perhaps by borrowing it from elsewhere) then, unless the lender suddenly decides to accept extra monthly payments, you can't avoid the default showing up on your credit record.

1. Your credit score only matters if you're actually planning on borrowing more money (e.g. through taking on a mortgage) or if, say, you're seeking a new contract for a mobile phone. Otherwise it doesn't matter at all.

A default would show on your credit record for 6 years. However you're entitled to add a brief explanatory note to any credit report:
http://www.creditcards.com/credit-card-news/help/add-written-statement-to-credit-report-6000.php

[Peter Pedant]

no advice
I am just terribly sorry this has happened
and I am sure you will get thro it - I was 47 which it occurred and have clocked up over 20 y a second primary and a recurrence

( but I was insured - not an option for you now)

just good luck and best wishes

[samlouis83]

Thank you both very much for your advice and your best wishes.

PETER I wish you all the best

[Flonska]

A credit/loan agreement is usually marked on a credit file as "default" at the point when the relationship between the provider and the borrower has irretrievably broken down and after a formal default notice has been issued. It does not appear from what you say that this has happened. It also appears that the loan company is completely aware of your circumstances and if they have agreed to suspend the payments then this should be reflected in your credit payment history. I suggest you talk to them again to see what arrangement you can make to bring your account into order. Whilst your credit file might show payment arrears, it may be that the person you spoke to has used the word default instead of delinquent when talking about the data on your credit file. You should also obtain a copy of your credit file to see what has been recorded and it may be appropriate for you to arrange for a notice of correction to be placed on it. The credit reference agency will be able to help you with this.