Arrangement to Pay - future effect

212

I'm now in an arrangement to pay, they basically said it was a case of agreeing to it, or defaulting and incurring charges. I tried to come to an arrangement to avoid the AP marker - they flat out refused saying that either a AP or overlimit marker *has* to be placed unless I pay the lot back by the end of the week.

I thought it was at their discretion - but do accept I'm in breach of the overdraft terms by not paying the lot back, so they are entitled to place one should they wish.

Has anyone had any success getting the AP marker removed if it's repaid fairly promptly? It won't be by the end of the week, but within 2/3 months if that would get it removed - otherwise I'll use the year.

They say my credit won't be affected, but I thought AP markers were practically as bad as a default!? I know lenders get a monthly feed - what are the chances of others now saying they want to close my accounts/pull overdrafts because of this?

Seems they have done some work to 'help' rather than just defaulting me - but if the AP marker is as bad as I've read, they don't seem to have worked hard enough to help me avoid knock-on effects of it from other lenders.

If I run all my other accounts well (mostly credit cards on 0 balances, so they may be closed down!) will that help mitigate the affect of the AP marker? How long until my credit would be back to normal? I believe 7 years is the 'worst case scenario' (AP ends June 2014, then 6 years).

I have aspirations of a mortgage in 2 or 3 years time. Unrealistic now? Or with just the 1 year of AP markers and perfect conduct every else and no debt is it still possible?

Would be interested to hear how it's affected anyone that used to have one and is now out of it (account reverting to 'OK' status, or closed) - how long until you get cashback/0% etc cards again?

GDVS

They are required to try and help you which is what the arrangement to pay is, telling the CRAs about that arrangement is merely accurate reporting.

212

Which I completely accept - but I'm sure not all companies are as harsh. My friend has an active agreement with a different bank and is still offered other products by them!

As for accurate reporting - that is true, but if someone offered to pay the balance 1 day after the deadline, would all companies say "no, we must be accurate and put an AP marker"? I highly doubt it if they want to keep that customer!

The same then extends to say 1 week or 2 weeks.... and then if you look further forward, where is the cut off point? Some companies may give 28 days grace, others 2 months etc.

I totally accept I'm in breach of the conditions, and knew this was coming - the issue is that if I get my other overdraft pulled as a result (which I wouldn't blame the other bank for as now I look a risk!) I won't be able to pay that back all at once either - so then I may as well default on both. Which hardly looks good for me or either of the banks involved!

Especially as within 90 days I'd have had enough money to pay both back (which has been my intention and I've been paying both down for several months) - just seems very harsh that I'm now going essentially to be labelled as bad as someone who's racked up a massive debt and !!!!!!ed off! If I wanted to take that approach, I'd have had 18k I don't have to pay back! Ok a trashed file for 6 years and then start from scratch, but it looks like that'll happen to me anyway now, and I'm paying every penny back!

pauletruth

depending on how long its going to pay off. a default falls off after 6 years of the default an AP falls off 6 years after you pay it off.

simeyb

GDVS wrote: »

They are required to try and help you which is what the arrangement to pay is, telling the CRAs about that arrangement is merely accurate reporting.

While I agree that the above is true, it's not very helpful.

The AP is correct and provided lenders use it for temporary arrangements it is the right thing to do - this is generally for period of around 6 months, which it sounds like is right for you as you are going to repay in a short period.

Where lenders are wrong is to use AP's indefinitely instead of Defaults. As another post has commented, a Default will stay on your credit file (and be very detrimental) for six years and then come off, regardless of whether the debt has been settled or not.

An AP marker will come off 6 years after the debt has been settled, which for many people on a DMP will mean a 12 year period of having an adverse marker on their file.

Provided you have no other defaults or markers on your file, the AP for a couple of months (it will have a start and end date) shouldn't be too detrimental going forward, especially if you can explain to a prospective new lender, e.g. for a mortgage, that it was a one-off.

InsideInsurance

212 wrote: »

Especially as within 90 days I'd have had enough money to pay both back (which has been my intention and I've been paying both down for several months) - just seems very harsh that I'm now going essentially to be labelled as bad as someone who's racked up a massive debt and !!!!!!ed off!

You are being marked as someone who gets into more debt than they are able to repay or are bad at money management if you say you have been overpaying in recent months but now dont have the money to pay the minimum amount.

Ultimately your situation is your own concern but if there is variability in your income then you need to get a nest egg in place to deal with the low months. Certainly if you are going to get a mortgage together you're going to need to have a fair chunk of savings for the deposit and fees etc so that savings will at least prevent a repeat of these sorts of issues.

All lenders have their own processes and rating scripts. A payment plan from a few years ago as long as all subsequent debts are correctly serviced probably isnt going to be enough to get an across the board. If you can explain it away and show what you've done to prevent it happening again (ie now have savings to cover X months of non/low employment etc)

Thrugelmir

simeyb wrote: »

Where lenders are wrong is to use AP's indefinitely instead of Defaults.

A default is mere to mark as an account as being in arrears i.e. 3 months. An ARP to pay is more serious in that the borrower is obviously in financial distress. Lenders will use these markers to communicate with each other.

An ARP could even turn into a DMP. Which again would illustrate a further decline in the borrowers circumstances.

simeyb

Thrugelmir wrote: »

A default is mere to mark as an account as being in arrears i.e. 3 months. An ARP to pay is more serious in that the borrower is obviously in financial distress. Lenders will use these markers to communicate with each other.

An ARP could even turn into a DMP. Which again would illustrate a further decline in the borrowers circumstances.

Seriously? Is that what you think? An AP (Arrangement to Pay) marker (not sure what you mean by ARP?) is meant to be used by lenders to mark credit files for arrangements of around 6 months, whereas a Default is there to mark a file where the lender has been unable to come to a satisfactory arrangement with the borrower. Not the other way round. As for an ARP turning into a DMP - what are you on about? Try reading these guidelines

http://www.ico.org.uk/upload/documents/library/data_protection/detailed_specialist_guides/default_tgn_version_v3%20%20doc.pdf

izools

Having an AP marker on your credit file is one of the least negative pieces of information you can have, short of a Paid on time "Green 0" of course.

It is much better for the lender to place the AP marker than simply say you've fallen foul of the terms of the account and mark it as in arrears / overlimit with a fat yellow "1".

A prime example of how little effect an AP can have is my mother - she had her old Barclaycard in an AP for no less than seven years straight and she had no problem being approved for other forms of prime lending even still whilst it was in an AP - including two bank accounts with overdrafts and three balance transfer credit cards with mainstream rates.

Within 12 months of paying off and closing the account (of course it is still on her credit file to this day with a history of being in an AP) she hasn't had difficulty being approved for literally whatever she's applied for - including an Amex Platinum and a new Barclaycard "Simplicity" at a staggering 7.9% APR!

Basically, go with it, and once the account has been square again for at least six months you shouldn't really notice any tangible effect on your credit worthiness.

rizla_king

On an Experian report

arrangement - The lender has agreed to vary your payments for a time.

default - The account is in default. You failed to keep to your credit agreement and have not responded satisfactorily to requests to bring your payments up to date, so the credit agreement has ended.

212

Thank you everyone - I do agree re: taking on too much debt etc. I have my own theory about whether I should ever be granted anywhere near that much - but I got into the debt on purpose (needed massive deposit for a rental, due to no guarantor) - I just hoped they wouldn't pull it, and if they did that they may be more flexible regarding the AP marker. I know it's a factual representation of the situation, but if you miss a payment by up to about 21 days on a credit card, you can still then pay it and not get a late payment marker! Yes you get hit with charges, but you could be 21 days late each statement period and appear to be fine!

izools wrote: »

Having an AP marker on your credit file is one of the least negative pieces of information you can have, short of a Paid on time "Green 0" of course.

It is much better for the lender to place the AP marker than simply say you've fallen foul of the terms of the account and mark it as in arrears / overlimit with a fat yellow "1".

A prime example of how little effect an AP can have is my mother - she had her old Barclaycard in an AP for no less than seven years straight and she had no problem being approved for other forms of prime lending even still whilst it was in an AP - including two bank accounts with overdrafts and three balance transfer credit cards with mainstream rates.

Within 12 months of paying off and closing the account (of course it is still on her credit file to this day with a history of being in an AP) she hasn't had difficulty being approved for literally whatever she's applied for - including an Amex Platinum and a new Barclaycard "Simplicity" at a staggering 7.9% APR!

Basically, go with it, and once the account has been square again for at least six months you shouldn't really notice any tangible effect on your credit worthiness.

Wow thank you that's really helpful! 7 years straight on an AP and still being fine for prime things! I'm glad I went with it then, and it's now spread over a year (only needed approx 3 months) - so I'll use the difference each month to build a buffer in another a/c, to avoid this issue if (/when!) they pull the rest of it this time next year!!