Help Please - DMP & Settlement Question

kirstle99

Hi there. We are in a DMP with Payplan. We have done this since June 2007.

Some of our creditor accounts have been defaulted, and some have not.

My question is: To the accounts that have not been defaulted, would it be wise to settle these ASAP in full with the creditor to get the red off the credit file sooner?

Also if we do this would Payplan see this as a void of contract between us & them & terminate things? Some of these accounts I am talking about have balances of less than £300 (3 creditors in total). A family member has offered to clear them for us.

camuk81

Speak to your payplan operative and see what they recommend

BlushingRose

camuk81 wrote: »

Speak to your payplan operative and see what they recommend

Yes, I wouldn't do anything without a discussion with your DMP people.

kirstle99

Yeah I was gonna do this, hubby wanted to just pay off the smaller ones in full, but I think Payplan will probaby tell us to pay them the whole amount the family member is giving us, then they will share it out like they do with our monthly payment. That sounds more like it doesn't it?

camuk81

I would guess this would be the plan but propose it to them and explain about the default scenario

DVardysShadow

kirstle99 wrote: »

... My question is: To the accounts that have not been defaulted, would it be wise to settle these ASAP in full with the creditor to get the red off the credit file sooner?

Also if we do this would Payplan see this as a void of contract between us & them & terminate things? Some of these accounts I am talking about have balances of less than £300 (3 creditors in total). A family member has offered to clear them for us.

My take on this is that if you clear the non defaulted accounts, they can no longer hurt you. And [apart from fairness rules which require you to treat creditors fairly], perhaps they deserve better for not defaulting you.

If the family member gives you the money and you then pay it over, it would be a breach of your obligations to Payplan. But if the relative paid the money over direct, without going through you, although Payplan might see through it as sharp practice, in all honesty, I don't think that they would have grounds for complaint.

DS4215

If the debts are so low and have been defaulted you could try offering them less as a Full & Final settlement - 25%-50% to start with. All they can do is say no. It is from a 3rd party and solely on condition of settling the debts.

However, it will not disappear from your credit record for 6 years from the date of default.

sickasachip13

Hi

We recently did two small F&Fs with our two smallest creditors. We did this while on a DMP. We made the initial approaches to the creditors, got their offers in writing and then spoke to CCCS, who manage our DMP - they fully supported us and said that if we wanted to do the same again to run it by them first and they, or us, could make the approaches. We settled for less than 50% on each debt which were still both with their original creditors.

You should speak to Payplan and ask what they advise. Make sure you use the template letter from National Debt Helpline if you do make the approaches yourself, and go in with a really low offer.

best of luck

SAAC

DVardysShadow

DS4215 wrote: »

If the debts are so low and have been defaulted you could try offering them less as a Full & Final settlement - 25%-50% to start with. All they can do is say no. It is from a 3rd party and solely on condition of settling the debts.

However, it will not disappear from your credit record for 6 years from the date of default.

As there is only £300 to settle the debts in question AND they are not defaulted, it makes sense to have the family member settle them in full rather than do partials. Doing partials or letting them go to default will put further marks on OP's credit record at some time a few more months fro now, which will just extend the time for the credit record to go clear.

kirstle99

Thanks for the replies everyone, lots of food for thought there! I'll speak with Payplan & see what they say

Hopelessly_Hopeful

Morning

There may be some misunderstandings about defaults and credit ratings. Many on DMPs now realise that defaults are a good thing as this means that your six year clock has started clicking. Take for example someone on a 4 year DMP and has two creditors A and B. Creditor A defaults after one year, this falls off the credit rating by year seven. Creditor B keeps account marked as arrangement to pay for the duration this still marks the credit file for six years after the DMP so drops off your file at year ten. No matter whether arrangement to pay or another category they could still choose to default you up to the end of the DMP anyway.

Hope that helps.

HHx