New to DMP and having a wobble

StartingFresh_2

Good afternoon,

After a few years of sticking my head in the sand and just keeping up (but slipping further into debt) with payments on my credit cards, I discussed my situation with Debt Free Helpline and they proposed a DMP for me.

I had to cancel the DD for a Barclay Card Loan and stop payments on my BarclayCard, Capital One and MBNA credit card. All went through so far and I had letters from MBNA and Capital One that they for now accept the arrangement and BarclayCard wasn't happy but asked for me to pay the monthly suggested amount via the DMP and Barclays Loan went straight into Default.

I have checked yesterday for the first time my credit report and yesterday the Capital One entry was at 2 late payments and today it was updated to Default but has a note of 'Arrangement' in it.

Do I need to worry that they now take me to court or is this normal as part of a DMP?

Thanks for your help.

Tixy

Hi

Do you know that rather than using debt free helpline (who will charge a fee to run your DMP) there are charities that will do the same for free see here - http://forums.moneysavingexpert.com/showthread.html?t=2077631

Your DMP provider hopefully warned you that being on a DMP will mean in all likelihood all of your debts will be defaulted. These defaults will stay on your credit file for 6years and make getting any type of credit near impossible.

As it says arrangement it does suggest that they have for the time being accepted your reduced payment. However that doesn't mean that they might not decide to sell the debt or take your to court in the future (but equally they may just keep it as is for now and accept the payments).

Do you know whether your DMP co has asked your creditors to freeze interest? do you know which, if any, have agreed to do this - if you don't then its worth finding this out.

gonzo127

hi,

defaults are generally a normal part of a DMP, mainly becuase in reality you are defaulting on the original contract you agreed with them to pay a set amount as a minimum.

i wouldnt worry since they have marked your account as having a arrangement so sounds like they have accepted the DMP.

just one thing to bare in mind, a DMP is a voluntry agreement by your credits to freeze interest and charges on the understanding that you will pay everything you can reasonably afford from your debts. the problem with this is that it is informal and so not legally binding, therefore a creditor can still try and pursue it further and take it to court if they wanted. HOWEVER a court would only grant a CCJ which in simple terms is a court ordered repayment plan, and 95% of the time they will order you to pay EXACTLY the same as you are under your DMP, which is why most companies will never take it this far as it is just not worth the hassel for them

keep your chin up as it is sounding very promising at the moment

StartingFresh_2

Thanks for your quick reply Tixy. I didn't know there were charities doing this for free Yes they did advise me about the defaults and the credit score impact.

To answer your questions:

BarclayCard advised that for now they are not freezing interest but asked me to pay the offered amount. Strangely enough, this is a 'satisfactory' on my credit file.

BarclayCardLoan have advised that they are not freezing interest and that they have passed this on to a DCA. However this was near enough 6 weeks ago and they have accepted two payments so far. I have no idea where I am standing with this one as all it states is Default on my credit file. The outstanding debt for this is £1366 and should I get my promissed bonus I want to try for a F&F but not sure what they would accept? Anyone got any experience with this?

MBNA and Capital One have both frozen interest on the account.

I guess I am just worried that one of them will take me to court? Or is it unlikely as they have accepted for now the payments?

Thanks

StartingFresh_2

Thanks gonzo. Any idea's with regards to what I could offer for a F&F?

gonzo127

well here is a ROUGH guide on what companies have been known to accept,

please remember some people get lower amounts other have to pay much more than this,

these things depend on so many variables including what side of the bed the person in the company got out off

anyways rough guide is below

Debt still with original creditor NO default = 90% or more
Debt with original creditor but with a default = 75% or more
Debt with 'in house' debt collectors of the original creditor = 60% or more
Debt with external debt collector however still property of original credit = 40% or more
Debt owned(purchased) by external debt collectors = 25% or more



GENERAL RULE OF THUMB - WHAT EVER THE SITUATION WITH WHERE THE DEBT IS, START VERY LOW THE WORST THEY CAN SAY IS NO AND THEN YOU CAN ALWAYS SEND A REVISED OFFER

StartingFresh_2

Thank you very much. So if I could offer them in the region of say £700 it would a good chance they would take F&F for this loan?

Tixy

You usually find the better F&F deals are available after you have been in a DMP for 6months or more.
Barclaycard may well have only passed this to their inhouse DCA, which are really only another collections department and generally are not much more likely to accept a F&F than the creditor. As youhave been defaulted there is a chance they would go for a F&F, however you need to be careful as you still have other debts with barclaycard. Best bet is to say any money being used for a F&F is a gift from a relative, otherwise they can turn down the offer anyway and still expect the money to be pro-ratad between all your debts (so don't mention bonuses to your creditors).

As to being taken to court - its always possible but a creditor will consider the benefits - if you are paying the debt anyway, and they think you are paying all you can afford then all they will do is cost themselves money for the judge to possibly say continue paying the same amount.

The larger the debt the more likely they are to take you to court but really nobody can say for certain what will happen in your case.

StartingFresh_2

Thanks again for the quick reply. I would certainly state that the money is from a relative and not a bonus although my bonus is not contractual anyway, if the company does well, we get one or not if it doesn't.

Anyway, I guess I am just panicking as even though I have been in debt for so long (and put my head in the sand for so long) I always paid the minimum of every card even if it meant borrowing back to live.

My debts are quite high -
MBNA - £13297
Capital One - £10279
Barclay Card - £5567

But as I said, MBNA and Capital one have frozen interest and confirmed that for now they are accepting the monthly payments. I compared the Capital One payment to what I used to pay as a min. monthly payment and it is only £45 less whereby MBNA is getting £276 a month less. But hopefully if I can pay a F&F on the BarclayCardLoan, we can allocate the funds for that to MBNA and thus paying debts off quicker

Based on DFH, I should be debt free in 6 years and 5 months unless I can get more funds together and pay off quicker.

Thanks for all the support, I certainly feel now less stressed about this.

Tixy

You may be happy with DFH.

If at any point you decide you are not you could still switch to one of the free DMP providers (usually you just have to give your current provider 4weeks notice).
As you wouldn't be paying a monthly fee all your money goes to your creditors and that in itself should reduce your debt free date.