Informal agreement stays on my credit history for 11 ELEVEN years!

savagej

Why are so many people given the same when discharged one year after being made bankrupt?

There are plenty of examples on the board of people re-building their credit record in all cases of breach of contract.

Did she get these products while in the AP or after she was out of it?

Edit: Sorry, I did not read your post fully, you said she got these new lines of credit while her BC was in an AP. I did think you had to default in order to enter an AP, I take it that is incorrect.

It still surprises me that she was in a position were a creditor agreed to stop the interest which I think is part of an AP and then other lenders continued to give her more credit while she was in a position which clearly stated she could not afford the original contract she entered into with BC. Would that not be deemed as irresponsible lending?

Surely all of the money she has used on the additional credit should have been paid to BC in the first instance, to re-comply with the contract, otherwise it looks like she may have been taking advantage of an interest free debt which was deprecating in value year on year.

izools

savagej wrote: »

Why are so many people given the same when discharged one year after being made bankrupt?

There are plenty of examples on the board of people re-building their credit record in all cases of breach of contract.

Did she get these products while in the AP or after she was out of it?

Edit: Sorry, I did not read your post fully, you said she got these new lines of credit while her BC was in an AP. I did think you had to default in order to enter an AP, I take it that is incorrect.

It still surprises me that she was in a position were a creditor agreed to stop the interest which I think is part of an AP and then other lenders continued to give her more credit while she was in a position which clearly stated she could not afford the original contract she entered into with BC. Would that not be deemed as irresponsible lending?

Surely all of the money she has used on the additional credit should have been paid to BC in the first instance, to re-comply with the contract, otherwise it looks like she may have been taking advantage of an interest free debt which was deprecating in value year on year.

Well, yes, she was capitalising on Barclaycards generosity to clear higher interest debt first. Worked out quite well for her.

The stages of "Adverse Credit" in least to worst effect are:

1. Informal Arrangeent
2. Arrears
3. Default
4. CCJ
5. Bankruptcy

At AP merely means the creditor has accepted new terms of repayment, not as per the original contract. When an account is in an AP the creditor also notes whether the payments are adhered to - if they are, the account is marked as paid up to date - the "Arrangement to Pay" is a special instruction indicator.

Having an AP means you aren't behind with payments. Just that payments being made are in line with a new, informal agreement with the creditor - that they're happy to accept.

An AP is what a debtor comes to with a creditor to prevent the account from defaulting in the event of financial hardship :beer:

geordiebri_2

Xbigman wrote: »

Alternatively you could stop whining and be gratefull you're not paying £200 a month in interest anymore and realize the big let off you've just had.
I'd have thought that you'd not want any new credit given your current problems.





X

I can't see where I was whining. I'm over the moon I'm paying off the debt, rather than lining their pockets.

My intention was to ask advice and other people's experiences of such things staying on file for such a long time.

I'll make sure I put plenty happy smiley icons in my next post, since so much can be gleaned from so few words otherwise...

savagej

Before you go, I found this, which is what I thought was the case in the first place it was on the CAG website and I can't yet find its source.

"Arrangement To Pay

A situation where a lender agrees that you can pay less than the repayments legally due, because of a loss of income or ill health. Arrangements to pay are recorded on credit reports and will automatically drop off your report once six years have elapsed from the date of account closure. Lenders will not always inform you about the negative impact that such an arrangement will have on your credit report.

Such an arrangement is usually interpreted by a lender that you are having trouble meeting your existing commitments, and are possibly over-indebted. As such, it is regarded as serious arrears and will have a significant adverse impact while it remains on your credit report."

I see izools mum's AP went back to 2003 but how she managed it keep it going for so long when even the ICO says it is a short term measure, for which you have to supply proof of hardship and inability to first meet standard repayments terms is a mystery to me. I am not going to stick up for the bank as they will have made more than enough money over that time but I would be careful mentioning it again, izools, in the same terms as it was not really "generosity" on behalf of Barclays it could be seen as "obtaining a pecuniary advanatage by deception" (if they checked every 6 months or so and asked "are you still having the same problems?" and she had other credit accounts she was keeping up the repayments on but said "yep, still cant afford to pay you back the x% in the original contact per month" then that is an issue, if they did not bother then fine it is their money after all).

From everything I can find, it seems izools mums case was not a representive example of what goes in relation to an AP, but then you find many cases were lenders allow one person who was discharged from bankruptcy last week after a year to have a full current account and another person will never get one for 6 years until a default for £50 on an old forgetten gas bill drops off. The whole thing is in a bit of mess, in my opinion. Martin Lewis recites a story of an old mobile phone debt at a forgotten previous address not on their credit file stopping someone from getting credit, it is not very transparent is it?

Again, feel free to tell me I am talking nonsense and point out the holes in my position, only way I will learn :-)

Cheers

James

Edit: This webpage outlines some of the ICO draft advice on the matter but it seems it stay on your file for 6 years from the date it was closed not 6 years from the date it defaulted and unfortunately it appears that it is of more benefit to default first!!!! As if you default first then start paying it, even if you continue to pay it off after the 6 year mark the whole account goes from your credit file.

http://www.consumeractiongroup.co.uk/forum/showthread.php?165620-Help-Arrangement-to-pay-on-file-means-adverse-credit-for-10-years-help

It is also supposed to be a short term measure for people in financial hardship, which is sad given that it affects you for so much longer than a default would afterwards and it is not really meant to be an interest fee loan, just saying, dont shoot me, please.

I apologies for hijacking your thread with my ideas on credit industry reform for reporting bad debts.

Clive_Woody

izools wrote: »

Err, not really, mother owes £4000 where in 2003 she owed over £25K.

She has paid off and closed her Creation card now and shifted the rest of her debt on to the Saga card @0% for 9 months leading to 11.9% APR.

Don't judge what you don't know. She's very savvy with money now and is paying off her debt at a record rate; with minimal interest along the way. She's incurred no additional debt other than that caused by interest since putting her Barclaycard into an AP all those years ago - bar that required for a new car due to her being disabled and the head gasket going unexpectedly on her old banger. But that's half paid off already after only six months.

She ain't stupid

I was not suggesting she is stupid, I would not be so rude, but I was surprised she went from an arrangement plan to taking out so many new credit cards and loans in the last 12 months.

But from your post above I can see that she is using this new credit to manage her debt very wisely.

I apologise if any offence was taken, it was not intended.

izools

OK Clive, sorry for overreacting.

Savagej, when my mother placed her barclaycard into an AP she was suffering financial hardshpip and had been until relatively recently. Therefore there was no deception to recieve the advantage.

In regards to

it stay on your file for 6 years from the date it was closed not 6 years from the date it defaulted

There is no default. An account in an AP is not defaulted.

As such, it is regarded as serious arrears and will have a significant adverse impact while it remains on your credit report

This needs more clarity. It is not this simple.

How an AP affects you depends on two things

A. How the company credit scoring you interpretets them
B. How the company you have an AP with reports the account

In regards point A, some companies don't consider an AP to be an issue - they consider it to be much less of an issue than arrears, as arrears show that the creditor has not addressed the problem, wheras an AP shows that you have addressed the problem, in a responsible manner than the creditor agrees with.

In regards point B, some interesting points to note:

> An account in an AP will show each monthly payment status on Equifax as "AP" (Negative effect)
> An account in an AP will show each monthly payment status on Call Credit as "Undisclosed" (Null effect)
> An account in an AP will show on Experian with a "Special Instruction Indicator" or "Arrangement to Pay"
> An account in an AP will show each monthly payment status as either "0" (On Time), (positive effect) or "1","2","3","4" (in arrears - negative effect) etc, or "U" (null effect)

The way in which an account in an AP appears on an experian credit file depends on the creditor.

In my experience:

Barclaycard report the account as paid on time and up to date each month whilst in an AP
Littlewoods (et al) don't disclose the monthly payment status
Provident report the account as in serious arrears

Therefore, when applying to a creditor who searches Experian whilst in an AP, your chances will most heavily be dictated by the way in which the company you hold an AP with reports the account - there is no regulation behind what they "should" report the montly payment status as to Experian - either of the three ways is valid.

Hope that clears things up

Equifax - who are the only CRA who force an account in an AP to have a negative effect no matter what the creditor reports the payment status says, has this to say about mother's credit report:



And they're right, if an account used to be in an AP, but there are regular updates showing all other accounts are paid on time and the account once held in an AP has been closed or up to date for the last 6-12 months (i.e. there are no other risk signals) it shouldn't prevent the applicant obtaining credit.

..... This:



Didn't prevent this:



From resulting in an approval for a Saga Platinum card with £3,300 limit and 11.9% APR

sulkisu

savagej wrote: »

I see izools mum's AP went back to 2003 but how she managed it keep it going for so long when even the ICO says it is a short term measure, for which you have to supply proof of hardship and inability to first meet standard repayments terms is a mystery to me.

Actually it is not that unusual. DMP's, such as those with CCS or Payplan are recorded as Arrangements to Pay and these can (and often do) last for years. If your circumstances change the agreement is usually that you increase the amount that you pay each month, but interest is rarely restarted. My DMP lasted four years. My creditors were just happy to receive a regular monthly payment, which increased once I returned to work (I couldn't work for two years through illness). I repaid my debts, I just didn't pay interest during those four years.

savagej

Thanks izools.

I did read that in the Equifax file it reports as you said as a status indicator (it is in the CAG link webpage), so if you Mum had had the opportunity to keey paying for longer eventually all of the red marks would have fallen off of her record after I think 24 months and a creditor would never have know.

But, then it states with Experian it is not a status indicator, but it remains regardless on the file for 6 years from the date the account was settled. As you say it also depends on what the arrangement is with the creditor.

As I said I dont know the source of the statement in quotes about serious arrears and I get the point about DMP's lasting for a long time, but that is usually when all of your debts are included not just one.

Please have a read through the link to the CAG page and see what you think? I came to the same conclusion by the time I had got to the posts made that people are being made outcast by the credit industry for doing the right thing. I think there might be parties interested in keeping the system as it is, such as debt collectors, if they changed the default so it disappeared after a debt was paid they would not have the same level of bark and giving people abuse as they do now.

It seems this is an odd indictor that affects different people in different ways and you know where you stand with the rest, this one should really be standardised.

I also did not mean to pry or to offend, thanks for the info :-)

James

jen245

I have an AP marker on a loan account that was paid off and settled in March last year, and the AP went back about 3 years on and off (I took some repayment breaks that were paid back by increasing the remaining payments), and Ive just been accepted for a Halifax Clarity Card with £3350 limit, and a Natwest World Mastercard with £5400 limit. Maybe its because the account was settled more than 12 months ago, I dont know, but I was worried it would affect me for the next 6 years, but thankully not!

NekoZombie

savagej wrote: »

Bankrupty would stay on your file for less time and have the same impact as an arrangement to pay, sad but true.

Sorry but this is incorrect - an arranegement to pay will eventually completely disappear from your credit files. However a bankruptcy is for life, in that if asked, a former bankrupt will always have to mention it, e.g. when applying for mortgages.