The short answer is yes. In some situations unpaid defaults can be removed from a credit file, however there are a number of things to consider before approaching a credit provider to remove an unpaid default.
Our most important consideration is giving our clients the best possible chance of a successful outcome.
Generally speaking, a default can only be removed from a credit file on the basis of error, fault or legal technicality being found with the listing itself or the process the credit provider followed prior to recording the event. In other words, if a default is unpaid and it is proven the necessary steps were not followed by the credit provider prior to listing, then the listing needs to be removed, even if there is money outstanding.
Unpaid Defaults on Credit Files
It is very important to note the removal of unpaid defaults does not necessary expunge the debt. The credit provider may still pursue the debtor for the recovery of the debt in accordance with the statute of Limitations, which allows a credit provider to pursue a debt for up to six years. If a Court Judgment has been awarded this term is extended to 12 years.
If a credit provider has to remove an unpaid default due to an error or legal technicality they will often become highly motivated to protect the debt and will often become quite aggressive in their recovery activity. This could involve passing the debt on to a collection company or commencing legal proceedings in order to secure a court judgment. Naturally such activity could prove troublesome for a consumer and it would be advisable to avid this if possible.
For this reason, unless there are special circumstances such as fraud, we always recommend our clients incorporate the payment or settlement of the debt as a part of the default removal process.
There are two reasons for this. Firstly a credit provider is more likely to be amicable and compliant to our requests if they feel the debt is to be rectified as a result of our credit repair activates. Secondly our client can rest assured that the default and the debt will be resolved so they will not need to worry about anything popping up at a later date to course them trouble.
Older Unpaid Defaults
With older debts there is often a genuine opportunity to negotiate and reduce the amount owed, in some cases significantly. Clean Credit has its own debt negotiation area known as Clean Credit Debt Resolutions. This company is actively involved in arranging reduced payout figures for our clients, in some cases we have saved our clients up to 80%, however reductions of 40 to 60% are common.
If you have an unpaid default and would like to have this removed from your credit file, I feel it is important that you also consider the payment or settlement of the debt as this will give you the best possible chance of success and ensure there are no nasty surprises down the track.