Debt Management Plan - Words of Warning

Hatecreditors.com

Just a few words of warning for those considering a Debt Management Plan.

Don't get me wrong, without a DMP I probably wouldn't be debt free today, but anyone considering a DMP has to seriously consider the damaging effects of your credit file.

You may ask 'but you're in debt, why do you want more credit?'. The simple answer to that is you probably won't - whilst in a DMP. But what about after your DMP? A phone contract? A car loan or most important of all - a mortgage/remortgage.

In my particular case, only one of four creditors applied a default. A default is one of the worst things to appear on your credit file so it's a scary proposition. However, defaults only appear on your credit file for 6 years (if the debt is subsequently settled or not). My DMP lasted roughly 5 years so that particular debt will drop off my credit file next year. GREAT!

However, 3 of my other creditors applied either Arrangement to Pay markers or late payment markers. The problem with this is the markers stay on your file for 6 years AFTER THE FINAL MARKER (which will be your final payment to settle the debt). Therefore, I now have to wait 6 years from now before that adverse data is removed! If they had of applied Defaults, they would have all dropped off next year! I'll not get started on how crazy I think this system is as it's been covered in previous threads.

So in my particular case, I would have had adverse data on my credit file for 11 years!! I'm sure you don't need me to tell you that this is a very long time.

My mortgage is on a Standard Variable rate and I'm dreading the day the Bank of England base rate starts to creep up. Something I will have to live with for 6 years!

Chrisblue1962

Hatecreditors.com wrote: »

Just a few words of warning for those considering a Debt Management Plan.

Don't get me wrong, without a DMP I probably wouldn't be debt free today, but anyone considering a DMP has to seriously consider the damaging effects of your credit file.

You may ask 'but you're in debt, why do you want more credit?'. The simple answer to that is you probably won't - whilst in a DMP. But what about after your DMP? A phone contract? A car loan or most important of all - a mortgage/remortgage.

In my particular case, only one of four creditors applied a default. A default is one of the worst things to appear on your credit file so it's a scary proposition. However, defaults only appear on your credit file for 6 years (if the debt is subsequently settled or not). My DMP lasted roughly 5 years so that particular debt will drop off my credit file next year. GREAT!

However, 3 of my other creditors applied either Arrangement to Pay markers or late payment markers. The problem with this is the markers stay on your file for 6 years AFTER THE FINAL MARKER (which will be your final payment to settle the debt). Therefore, I now have to wait 6 years from now before that adverse data is removed! If they had of applied Defaults, they would have all dropped off next year! I'll not get started on how crazy I think this system is as it's been covered in previous threads.

So in my particular case, I would have had adverse data on my credit file for 11 years!! I'm sure you don't need me to tell you that this is a very long time.

My mortgage is on a Standard Variable rate and I'm dreading the day the Bank of England base rate starts to creep up. Something I will have to live with for 6 years!

I think it is an absolute scandal that AP markers stay on your credit file for a further six years even if when you pay the debt off!

Even a CCJ falls off your credit record after six years, satisfied or not

Also contrast "AP" markers with bankruptcy, where the bankruptcy entry will again remain on your credit reference file for six years from the date of the bankruptcy order even if you have been discharged and have told the credit reference agencies. The lenders whose debts were included in your bankruptcy then mark the entry on your credit reference file to show that you no longer owe money on that account (perhaps by marking the entry as ‘partially satisfied’ or ‘partially settled’ or in some other way).

jmhgibson123

i agree with you im tied to a mortgage with my ex and cant do anything about it as i have the dmp and ap markers for years to come

blisteringblue

When starting a DMP it is almost worth sending token payments for 3-4 months before you even start, so as to make sure your account is passed to a DCA.

However if you fancied a quiet life DMP with minimum contact from the creditors it ain't gonna happen if you do that.

We've just started and while I would like them to default its not the end of the world. I think I'm past credit in any form after this. All I need is a good budget once we come out the big black hole in a few years.

Chrisblue1962

Update: I've just dug out my paperwork from 2010 regarding a Barclaycard credit card debt which was sold onto Cabot Financial (Europe) Ltd.

Cabot have the debt marked on my credit file as "AR" but I've found a letter from 15th January 2010 which is a Default Notice from Mercers debt collections , acting on behalf of Barclaycard.

So, I think a letter to Cabot Financial (Europe) Ltd is warranted...:)

Hatecreditors.com

I had exactly the same. The problem is, they're default notices not an actual default. Not sure if it's a scare tactic or something to do with compliance but they don't have to follow a default notice up with a default if your payments are acceptable etc.

What amazes me is that any one begging to get a default removed have no chance and those who want a default added have no chance. Backward system if you ask me