DMP's agreed, Egg now wanting increased payments

countdown1

Last year, and it took all year, I managed to get 3 creditors to agree to payments I can afford. I have 4 creditors but wanted to try and keep the smallest one off my DMP so I could snowball - i.e. pay off this one and then use the money to pay more off the next smallest debt.

Anyway, Egg, HSBC and Barclays all agreed eventually to my payments, Barclays and HSBC are being fine, keeping the payments as agreed but Egg contacted me last week asking me to pay another £27 a month. Apparently this will bring my payments up to the level that will mean they won't default my account and in a maximum of 5 years my debt will be cleared.

So on the one hand pleased that it means a debt will be cleared rather than just hanging around for years. On the other hand slightly concerned because I haven't missed a payment at the agreed amount (£75/month) and now they're wanting more money, my circumstances haven't changed and if I were to pay the extra I'd be spending £29 more a month than I have coming in. So obv not ideal.

Is this normal for Egg/credit card companies, agree one amount (£75 in my case) and then ask for more money (increased to £102/month) and threaten with defaulting the account if increasd payments aren't made ?

What affect will defaulting the account have ?

Tixy

H

This is normal for any creditor to periodically try to get you to pay them a bit more. The best advice is not to give in. Just write back to say that circumstances have not changed and you are not able to increase your offer to your creditors at the moment.

If you are on a DMP/ paying reduced payments then defaulting on your accounts is almost inevitable. In fact its usual for it to have happened before now (3-6months is typical). Basically it means they enter a default on your credit file which stays on for 6years and makes getting any new credit very difficult in that time. You might find your other creditors have already issued defaults against you.

As a side effect it is often at this point that a creditor will agree to freeze interest if they haven't done so already.

On a DMP you really should be paying all 4 of your creditors in fair pro-rata amounts. Snowballing isn't usually done in conjunction with a DMP as you should be paying all you can afford to the DMP.

countdown1

Thanks, it's not an official DMP as no-one would help me, I didn't have enough disposable income.

I have agreements with them which I've made myself.

I did tell Egg on the phone my circumstances hadn't changed and they asked me to ring them back after thinking about it for a few days, lol.

OH says meet them half way but I'm more of the "circumstances haven't changed so I can't increase my payments" school of thought.

Tixy

I think if you offer to pay them more then they'll know that you can be bullied and keep pestering you every few months.
Even if they agree not to put on a default now if you cannot up your payments next time they threaten the same then all you are doing is pro-longing the amount of time your credit file is affected.

Often once someone is on a DMP its almost preferable to get all the defaults early on and at the same time to minimise the amount of time your credit file is affected.

countdown1

Thanks

I know that 2 of the others have applied defaults and tbh am a bit surprised Egg hadn't as they'd mentioned defaulting the account in their original letter accepting my payment proposals (found all paperwork last night, am now being more organised with my paperwork).

Right so I'll go back to them and explain that as I said last week my circumstances haven't changed and so I can't afford to increase my payments.