Beware the promise of Debt Management programmes

Housebuyer958

Right I'll try to be as simple as I can with this (if you see any of my posts in the mortgage section you'll see why)

About 11 years ago I ran up about £25,000 of credit cards loans, etc. I was 18-19 years old with no money and the banks just kept throwing it at me and I just kept taking. Then one day they wanted it all back, blah, blah.

I looked into a Debt Management Company that was funded by the government and didn't take a fee. My family's advice was just to tell them to stick it but I thought that would make it worse - I didn't want to go bankrupt, have a CCJ or IVA so I was advised a DMP (Debt Mananagement Programme) would avoid all these nasty things and set me on the path to goodness and light.

Fast forward to now, been paying the DMP for 11 years now every month - never missed a payment. Still have 11 years to go but no hassle.

I wanted to get a mortgage....................

Was very careful about everything, checked and checked again, my current address for 3 years showed me as a saint. My previous address not so great but was advised banks only check 3 years history

Applied for a mortgage and was accepted (yay) with a "A" credit rating.

Bewildered, but happy, I carried on and found a house, raised a deposit, etc and made a full application...............immidiately declined

"Ah becuase of the previous address" I thought. Not so.

I found out that I was on a "list" of risky borrowers. This was because my DMP is actually declared to the credit agencies seperately from everything else but is considered just as bad as a CCJ, IVA or bankruptancy. Difference is that a DMP never expires until you pay everything off.

So my advice is unless you need your credit score cleared quickly (like I do now) - tell all these banks and credit cards to go F**K themselves. let them take you court, take your stuff, do whatever they like.

If I had done that I would have been debt free and squeaky clean 5 years ago - and never had to have paid a penny back.

Once again, another example of in Great (or should that be rubbish) Britain, the people who try to do the right thing get shafted, where the bums and low lifes sit and laugh at us.

churchrat

Could I just ask which agency recommended a 22 yr dmp?
Also, I think there may be other reasons why you were refused a mortgage, such as not being able to pay off your exsisting debt before applying for more debt.

I believe that you may have been misinformed about the reporting of a dmp, but do not know enough abut this to advise. Ras and Fermi etc are the real experts.

RAS

Housebuyer958 wrote: »

So my advice is unless you need your credit score cleared quickly (like I do now) - tell all these banks and credit cards to go F**K themselves. let them take you court, take your stuff, do whatever they like.

If I had done that I would have been debt free and squeaky clean 5 years ago - and never had to have paid a penny back.

Actually no, not necessarily.

If you had gone BR or taken on an IVA, the record stays on the Insolvency regsiter for ............guess what.............. the rest of your life.

Even if your credit record is squeaky clean, nearly all creditors check the Register before loaning that sort of money.

tyllwyd

I don't understand - I looked at one of your previous threads and I thought you said you had a £40K deposit available. How have you got such substantial savings if you are only half-way through your DMP?

Tixy

Would be very interested to hear which agency this was? I appreciate this was 11 years ago but certainly all the charities now would advise you of the impact on your credit file and the risk of not getting a mortgage etc.

The DMP is not declared to the CRAs as such, but many of your creditors may have marked you down as 'arrangement to pay' which would certainly indicate to a potential lender that you were in a DMP.

Was the application you made to a bank that is within your DMP?

Had you gone bankrupt it is very likely that you would have been required to pay back money through an IPA.

Did IVAs exist 11years ago?

fermi

I think the OP just doesn't realise how defaults work, and how they are recorded in DMPs.

From their other thread, they have defaults from 2006/6, which would be why they were refused.

Nothing at all to do with the DMP being on record somewhere.

Housebuyer958 wrote: »

So - my credit report says that at my CURRENT address for just over three years everything is a-okay. At my previous address I have 4 defaults from about 2005-6 which I have always paid off every month for about the last 8-9 years. The default dates say 2005-2006 but the updated dates say 30/04/2010.

Now the way I see it is that the reason why I got my AIP all okay is because the bank checks my current address and everything seems fine, when they do a more thorough search (even keeping it to 3 years) it picks up the defaults because THE UPDATED DATE IS CURRENT.

Could my logic be correct?

No. That logic is wrong.

Defaults stay on your credit reference files for 6 years from the original default date.

Since these are dated 2005/6, then they are rightly showing up on your credit report (once the addresses have been properly linked).

Has nothing whatsoever to do with the "last updated date". That is just the last time the creditor updated the outstanding balances and status codes.

After 6 years, so in 2011/12, these accounts and defaults will disappear from your credit reports.

Tixy

It seems unusual that the defaults were registered only in 2005-06 if you have been on the DMP since 1999. It would be usual for creditors to issue defaultswithin the first year of your DMP.

Housebuyer958

Tixy wrote: »

It seems unusual that the defaults were registered only in 2005-06 if you have been on the DMP since 1999. It would be usual for creditors to issue defaultswithin the first year of your DMP.

Sorry if I sound like a madman but that's because the system do what ever they like. If the six year thing is correct then I should have nothing showing on me but the banks just reregister the defaults when ever they want.

Also, the 40K deposit I have is a gift from my Dad and he just refuses to give it to me pay of debts - which is fair enough.

Britwife

I think it's great you are working on paying it back but going into buying a house when you're that much in debt isn't good. Debts are more important right now, especially if you have 4 defaults showing.

I would verify what the defaults are for. The system doesn't do what it likes, there are guidelines and we all have to make sure they are followed.

Tixy

You could have complained about the defaults. The debt collection guidelines are pretty specific about when it is reasonable to apply them. They can only apply a default once for a debt and it should be within around 6months of you paying less than the original contracted minimum.

It may be a bit too late to complain now though, i'm not sure.

debrag

RAS wrote: »

Actually no, not necessarily.

If you had gone BR or taken on an IVA, the record stays on the Insolvency regsiter for ............guess what.............. the rest of your life.

Even if your credit record is squeaky clean, nearly all creditors check the Register before loaning that sort of money.

Do they? my partners not down they were BR like 12 years ago or more