Debt Management Programme

Sunraid

I have been on a debt management programme for the best part of six years. Initially I owed around £40k and I have now got this down to less than £20k through this programme.

Currently registered on my credit file are 6 defaults, the earliest of these is Oct/2006. Am I right in thinking that this default will fall off my credit file come Oct/2012. If so will this have a positive affect on my credit rating?

Second question. Although managing to pay debts off through this programme my wife has accumulated debts on catalogues (recently married) and store cards etc... Our mortgage is due for renewal in June 2012 but we are paying a stupid 7% because of my low credit score of 444. Is there anywhere I can go to

A) Get a mortgage with a better interest rate.
I really want to bundle all my debts in one, is it possible to do so?
C) Should I just carry on paying through the debt management programme?

Thanks in advance for any help.

Tixy

Yes the default will come off in October 12.

Are you on a fixed APR with your mortgage? presumably come June you will move to your lenders SVR - do you know what that is at the moment (a lot of people are finding that the SVR is a lot less than the fixed rates they are on).

You could try speaking to an independant mortgage broker with a copy of your credit file for them to give a realistic opinion of whether you would be likely to get accepted for a cheaper mortgage elsewhere - but I'd think your chances are slim with a number of default and that you are in a DMP.

You cann't bundle all the debts into one - but if your wife is struggling with repayments on her debts you could consider a joint DMP?

Who is your current DMP with? is it one of the free/charity ones? or is it a company where you are paying a monthly fee? if its not free then I would suggest switching to a free provider - contact one of the charities for advice at least then all your monthly payments will go towards your debts and speak to them about if a joint DMP may suit you better.

Sunraid

Thanks for the reply and advice. Its not that we cant afford to pay the debts but I am just looking for the best deal I can to stop throwing money away.

Once the defaults are removed from the account, does this improve credit score?

Regards

Paul

Tixy

Once the defaults have all dropped off (and with them the whole record of the account) then it does improve your file yes - although it is against the terms of your DMP for you to take on any more credit whilst in the DMP.

Sunraid

Is it illegal to take more credit whilst on a DMP or just a 'Rule'?
The only reason I would do it is so I can improve my position rather than get in more debt for the sake of it. The basis of all my original debt which was as much as £65k was due to living far beyond my means. Now I am a family man with 3 children and a wife that I want to support properley and get out of debt as quickly as possible.

Tixy

Sunraid wrote: »

Is it illegal to take more credit whilst on a DMP or just a 'Rule'?
The only reason I would do it is so I can improve my position rather than get in more debt for the sake of it. The basis of all my original debt which was as much as £65k was due to living far beyond my means. Now I am a family man with 3 children and a wife that I want to support properley and get out of debt as quickly as possible.

It is not illegal, because a DMP is not a legally binding agreement - but it is not a good idea.
It will be against the terms of the DMP and is quite possible that your DMP provider will refuse to run your DMP for you any longer (especially if its one of the charities or payplan).
Also your existing creditors will be able to see from your credit file that you are taking on further credit - and so are likely to stop accepting your dmp repayments, start charging interest again if they've previously frozen it. There was even one case on here where a creditor took court action to obtain a CCJ with a view to trying to get a charging order which they said was because of the debtor continuing to get new credit.

Who is your DMP with?

Sunraid

Its with Spencer Hayes.

rising_from_the_ashes

Is it a free one or fee paying?

If the latter, look to moving it to one of the free ones which would certainly help clear it quicker - and much better than risk getting "chucked off" your DMP and the consequences that could arise from that (and tbh it'd probably be unlikely you'd be approved for new credit anyway as your credit file is likely to "be shot" with being on the DMP anyway).

As for the mortgage, I agree with Tixy in that you'll probably find the monthly payments go down a lot once your fixed rate ends anyway.

Tixy

Would you like to save somewhere between £2k and £5k?

If you switch to a free DMP provider you'll save something in the region of that just by not paying spencer hayes a monthly fee to run your DMP for you (I'm not sure what % fee they charge but typically its anything from 10% to 25% for commercial providers). With debts of £20k thats a big saving to be made and might cut up to a year off your DMP.
IMPORTANT - Where to seek professional impartial advice about your debts.