Defaults due to debt management

Darren1988

Hi There,

Just wondered if i could have some advice.

In the past I got a loan with Lloyds then refinanced that loan to pay of an unplanned overdraft.

I also got a credit card with capital one shortly after all of the bad dealings with my bank.

After all of this i lost my job and myself and my ex were struggling to keep our heads above water.

My capital one cc was only 200 maxed out which sounds pathetic now i look back and my loan was 6k after the refinance paying back 160 a month so i thought it would be a good idea to join a debt management company debtline.

I only stayed with them for 3 months but in the first instance they fed me a lovely story about negotiating with creditors on my behalf, reducing my monthly outgoings to one single payment, freezing interest etc. After agreeing this i realised that in actual fact i was paying them 100 pound a month to pay them both and they were taking a 30 pound admin fee each month.

I then was receiving letters from lloyds saying im not paying and need to get in contact but debtline told me this was normal, the same began to happen with capital one.

And i then got a default (not knowing quite what it meant) sent to me for the cc.

Luckily my mum helped out and paid out capital one bill as i couldn't being jobless.

Losing sleep about it all and getting rather low i decided to cancel with debtline about two years ago and arranged with lloyds direct a 60 per month fee down from the inital agreement of 160 to them. I am still none the wiser as to whether my creditors actually recieved payments from debtline and didnt realise it wasnt really all that hard to make that call myself. If i had realised what it would mean i would have certainly thought about it in a different light.

Anyway 2 years on i am paying 200 pound a month to lloyds after the initial 6 months of 60 but still in arrears somehow

I have also looked at my credit report and its awful. With the default and arrears my score is extremely red.

Whats the advice, is this all my own stupidity or can i do something about it.

I dont have any written correspondence from debtline etc to tell you anymore though unfortunately

fermi

Unfortunately, despite all the nice stories and positive spin that companies like 'debtline' put on these things, reducing you payments like that means that you will be breaking the credit agreement with the original creditor by not maintaining the contractual payments.

So, they are perfectly within their rights to default the accounts and record those defaults with the credit reference agencies.

How long ago were these defaults?

Tixy

When you enter a DMP then unfortunately defaults are pretty much inevitable. In asking your creditors to accept reduced payments you have defaulted on the original agreement with them.
So regardless of whether debtline made the payments or you had started by managing your own DMP from the start you would have ended up with these defaults.

I know a lot of DMP companies take the first month or 2s payments as upfront fees and then after that start distributing your payments to creditors (after taking their monthly cut). I'm not sure if debtline do this but I wouldn't be surprised, if so and you only were with them for 3months it is possible that your creditors only had 1 or 2 payments from them.

There is not much you can do about your credit file until your lloyds debt is paid off. Once it is cleared then you could get th default marked as a satisfied default which looks a little better, but either way the default remain for 6years from the date they were originally entered and make getting mainstream credit difficult in that those years.

Darren1988

My credit report with Experian shows my Credit card as defaulted but satisfied and the loan just in arrears so i'm pretty sure once I am out of my arrears it will all be ok for the lloyds bit because i didnt receive a default from them (perhaps going back to normal within 6 months) will just be the Default that will harm my chances of credit in the next four years. Am i right?

Superbiatch

Darren1988 wrote: »

My credit report with Experian shows my Credit card as defaulted but satisfied and the loan just in arrears so i'm pretty sure once I am out of my arrears it will all be ok for the lloyds bit because i didnt receive a default from them (perhaps going back to normal within 6 months) will just be the Default that will harm my chances of credit in the next four years. Am i right?

6 years from default date I'm afraid

Tixy

If you didn't get a default from Lloyds (and don't before the debt is paid off) then your payment history is visible for the last 3years of the account so that will still show that you have had problems with the account.

But even without the lloyds account the credit card default will mean you will be classed as a subprime customer for the rest of the 6years from that default.