Creditors attitudes and Defaults

meredith132

Still running through my options sorry so I have many questions!

If I DMP manage myself and approach creditors, and I am successful in reducing payments will this be marked as a default?

I owe to First Direct, MBNA, Tesco, Nat West, Barclaycard. If approached personally regarding reduced payments until I am on my feet are they generally helpful ?

sourcrates

It does depend on the creditor, sometimes, they may not issue a default, if an early agreement is reached, other times they will issue one straight away, all I can suggest is try it and see.

Steve1994

In my opinion it's best to get a default. Creditors generally mark your credit file as AP or AR for arrangement to pay. This stays on your file for 6 years after the debt is paid. Which means if you finish paying them in 2017 you'll have it on your credit file till 2023. If you get a default now it'll be on till 2020 and you're done.

Either way reducing your contracted monthly payment will affect your credit history.
Steve

meredith132

Ok thank you for that. Coming to terms with the fact i'm a little bit stuffed whatever!

Puzzcat

Hi,


As Steve says as soon as you don't pay your contractural monthly amount your credit file will be hit so it doesn't make a difference if you self manage or go with a free dmp provider such as stepchange. who are fab by the way..!!!


At the end of the day if you can't afford to keep up your current payments you will have to make a decision sooner rather than later. I would also advise that whichever route you take you opt for token payments only in the beginning to allow yourself to build up an emergency fund as once you start your access to credit is gone.


Do pop over to the dmp mutual support thread with any questions, even better make yourself a cuppa and start reading that thread. All dmp'ers, some self manage, most with Sc or PP, lots of newbies and oldies. You will probably find others are/have asked the same questions as you and some questions you didn't know you wanted to ask..!!


I read the current thread and the 2 previous one's prior to starting my dmp and learnt an awful lot.. knowledge is power..!


Good Luck whatever you choose.
Puzz. x

National_Debtline

Hello there,

I would agree with Steve1994's comments that a default may end up being better than having an 'arrangement to pay' marker on your file. The key reason is that a default is finite - it represents a point in time. It will fall off your file after six years.

Any arrangement which involves making a reduced payment to a creditor is likely to have a bearing on a credit file. The reason is that a reduced payment generally breaches the terms and conditions of the credit agreement.

I have occasionally spoken to callers that have been so keen to keep a clean credit score that they've simply borrowed and borrowed to do so - and have used credit to pay of existing credit. This caused the debt level to spiral only for the caller's ability to borrow cease a few years down the line. Of course, their credit file started to take a turn for the worse when they could no longer borrow more to service the existing debt.

Sorry to go off tangent a little, like Puzz has mentioned I absolutely agree that knowledge is power - and once you've got an affordable arrangement in place you'll be able to start moving your situation forward in no time.

If you would like to learn a little more about credit referencing, here's a link to our fact sheet.

Very best wishes,

David @ National Debtline.

Kate_fixing_it

meredith132 wrote: »

Ok thank you for that. Coming to terms with the fact i'm a little bit stuffed whatever!

It took me a while to realise it but the defaults are (ultimately) a good thing. It takes time to learn new skills (budgeting) so defaulting and having no access to credit will give you that time for living within your means to become a habit.

I know it's scary (I fought starting s DMP for 5 months - 5 months of stress and anxiety and sleepless nights) but debt isn't a crime. I'm still learning now. As a child I saw life as "credit is necessary" it has taken me 17 YEARS to open my eyes to the reality.

You are not stuffed at all. You have found yourself in this situation and you are looking for a solution. There are thousands of people here that have been in the same situation and worse. In a lot of ways I think you'll find many posters are envious of you that you owe less than them and you are taking action (me included!).

I won't tell you this is going to be nice or easy but I can tell you that a DMP is MUCH nicer and easier than struggling along as you are.

Kate x

Suseka

I agree with all that's been said so far and am currently pushing for defaults on the few remaining that have yet to do it. Four of our creditors have marked our files with APs.

The only creditor that has not frozen or even reduced interest is Halifax and I'm fighting that as we speak.

We've been in our DMP for a year now, with four to go before we achieve our DebtFree aim. Personally I'm not overly concerned with having a rubbish credit rating because I am never going to live on credit again... the next challenge post DFW is MFW

meredith132

Thank you so much for your comments. Your support and advice is much appreciated.

I am definately one to use credit to sort the problem only to make it worse. In no way is this intentional but I need retraining and to learn to say no!

I am at a point now where my children are self sufficient, I can work longer hours and I am not sharing budgets with a partner so I could actually sort this!