DMP & Mutual Support Thread - Part 10

Sazzie23

Mikedfw wrote: »

Hi everyone!
After posting on here a couple of weeks ago and receiving some very kind and helpful advice I am now in the process of setting up my DMP, and although I'm very nervous about it I can't wait for it to get started and finally start to clear my debt!

I have currently in the process of switching my bank account from Natwest, who I have an overdraft and credit card with, to First Direct. The new account seems great and I have agreed to the switching service that they provide and everything seems to be moving along. However, I have received an email from Natwest today telling me how sorry they are that I am leaving (not surprising when you look at the amount of interest I have paid them over the years!!) and explaining what happens next in the process.
In the section on outstanding overdrafts it says that if the overdraft is not transferred to my new account, which it isn't as I have requested no overdraft, then the amount will need to be paid of in full within 10 days. Obviously this isn't an option for me so I was wondering if somebody could tell me what will happen after the 10 days has passed and the overdraft amount is still outstanding? The overdraft forms part of my total debt that is to be paid from my monthly payments to StepChange, but will Natwest accept this and allow it to be paid off monthly or will they start proceedings to recover the debt immediately?

The switching process to my new account has already started and is due to be completed on 17th June. Do I need to cancel the switch if it isn't too late and manually change all of my direct debits myself and keep the old account open?

Many thanks,
Mike

Hi Mike,

Nice to hear from you again. My debts include a £5k Nat west OD. We didn't switch accounts though, we sneakily moved all our essential DD to our new account, then SC sent the letter to NW to say the OD was included in the DMP. All NW could do was 'close the account', allowing us to cancel any other DD which were not essential. If you have any money in savings accounts with them, or have your wages or other income paid in to NW, then now is the time to move it all. NW will use any savings accounts, in either sole or joint names to offset. But they did warn us and we were happy to let them have the £11 savings towards repaying the debt:o

SC will calculate the repayment to OD as a proportion of the repayment and wil send the money to NW. I don't remember any problems in the case of NW, although right and left hand seemed to get confused and no one,knew anything when we called them one time. We had a PPi repayments which cleared the debt after about 6 months so I don't have to deal with them now.

Hope it helps, come back and say hi again soon.

Karen777

KID77 wrote: »

Hello!
I am about to start a dmp via SC, maybe 1st July or 1st Aug, dont know whether to stall a month to allow me to put a little extra away for emergencies. or just start it asap?
I have a mortgage on SVR so would like to remortgage which i know wont be for a long time so ideally i want all my creditors to default me asap so i can remortgage 6 years on. What is the best way to ensure you get a default without court action? Can i write and request this? If I get AP markers and settle debt in year 5, is it a further 6 years so 11 in total before this disappears from my file?
Any advice on this would be appreciated, I know you guys anwser these sort of questions all the time so apologies for maybe repeating but i couldnt find exact answer on defaults when trawling through the forums.
Thank you

Hi and welcome.
Definitely get yourself an emergency fund at the start of you may ending up derailing payments early on as 'stuff' happens (stuff always happens...)
I have found that different creditors have different processes and times for defaulting but in all cases you must be making payments under (way under) the contractual minimum payments for each account in order to get defaults asap. And creditors even have different policies for different accounts which is unhelpful. AP markers do seem to be different yes but I'm not sure of the exact specifics. Many people here are wiser than me but wanted to chip in.

Also this is from a few years ago but is quite detailed about APs.
https://forums.moneysavingexpert.com/discussion/comment/35008199#Comment_35008199

fermi

KID77 wrote: »

What is the best way to ensure you get a default without court action? Can i write and request this? If I get AP markers and settle debt in year 5, is it a further 6 years so 11 in total before this disappears from my file?

Previous history freezes and remains visible for a further 6 years at the date of settlement.

fermi

Useful recent info from the ICO.

From the ICO guidance to case officers.

CRAs - Lines to take

From: http://forums.moneysavingexpert.com/showpost.php?p=68445659&postcount=10

CRA Arrangements to pay - fairness of them registering a default

As stated in the old default guidance, where an arrangement to pay breaks down, a default may be filed when the total value of the arrears is equivalent to three monthly payments under the original terms. However, this should not result in the customer being placed in a worse position than someone who had made no effort to pay whatsoever.

Whether an individual has been left in a worse position or not is something that we will have to consider on a case by case basis. However where we feel that the arrangement to pay has left the individual in a worse position than someone who simply stopped paying, we would normally consider this to be unfair under the first principle and ask the lender to amend the default so that it was the same as if the individual had simply stopped making payments without entering the arrangement to pay.


CRA Default on a credit file Vs default under the CCA

I was not sent any default notices, should the default on my credit reference file be removed?

In most cases, the answer will be ‘no’, provided that adequate fair processing information was provided when the account was originally opened.

It may help to explain that a “default” on an individual’s credit file does not mean that an individual has been defaulted under the Consumer Credit Act; essentially, the same word is being used to describe two slightly different things (which can obviously lead to some confusion). Instead, a “default” on a credit file simply means the lender considers the relationship between itself and the individual to have broken down.

Therefore, whilst it may be a requirement of the Consumer Credit Act to issue default notices, there is no DPA obligation on a lender to issue a default notice to individuals before marking an account as being in default on their credit file. Although we advise that it is good practice to issue a notice, lenders will often have provided individuals with fair processing information about defaults and notices in the terms and conditions when the account was opened. Provided this was the case, then it is likely to satisfy the “fairness” aspects of the first principle.


CRA Defaults - Guidance for filing defaults

Updated guidance for filing defaults with credit reference agencies was published on 1 January 2014.

The official site can be accessed at http://www.scoronline.co.uk/key_documents/ and the relevant document is entitled Principles for the Reporting of Arrears, Arrangements and Defaults at Credit Reference Agencies.

This is not the ICO’s guidance but a new document drawn up by the credit industry in consultation with the ICC which is now intended to be the main source of information for the public on this topic.

This may create some impact on calls to the Helpline or complaints received where an individual is concerned that a default has been registered incorrectly on their credit reference file.

Although the new guidance does not cover this in any depth, it is important to make individuals aware that there is a difference between a ‘default notice’ and a ‘default’ registered on a credit reference file.

A ‘default notice’ is a communication a lender should usually send to a borrower before defaulting a credit agreement regulated by the Consumer Credit Act (CCA). There is not necessarily any DPA obligation on a lender to issue a default notice to individuals.

Although we advise that it is good practice to issue a notice, lenders often provide individuals with fair processing information about defaults and notices in the terms and conditions when the account is opened. If this is the case then this is likely to satisfy the “fair” aspect of the First Principle.

The term ‘default’ on credit reference files is used to refer to the situation when the relationship between lender and borrower has broken down, and this scenario is explored in more detail in the updated guidance on defaults.

So essentially, the absence of a formal ‘default notice’ would not prevent a default from being registered on an individual’s credit reference file. If there are outstanding payments or arrears in respect of a loan or other account then an organisation would be within its rights to record this at the credit reference agencies. Providing the information recorded is an accurate reflection of events then the Fourth Principle would not be contravened. Legislation DPA


CRA Defaults - Necessity of recording of defaults with multiple CRAs.

Body There is no requirement in the DPA for lenders to report details to all of the Credit Reference Agencies(CRA). There isn’t a requirement in the DPA for them to report any information to the CRA’s.

However, it won’t be a breach of the DPA for lenders to report the information to the CRA’s as it will be in their legitimate interests and the legitimate interests of other lenders to help them make responsible lending decisions.

It is up to the lender to decide which CRA or CRA’s they use (if they decide to use one).


CRA Defaults - Recording of defaults relating to debts that have been sold.

The practice of selling/buying debts is widely used. As long as the information is correctly recorded on a credit file by the lender selling the debt and the lender buying the debt, then two entries relating to one account would not be considered to be a breach of the Data Protection Act provided that:-

• both recorded entries are shown as being in relation to the same account/debt;
• the original debt entry should be shown on the credit file as being either ‘settled' or ‘zero' balance and should show that the debt has been ‘re-assigned’;
• the new DC who shows the debt in their name should maintain the original default date and the correct balances;
• the retention period for maintaining the information on a credit file should be based on the original default date regardless of who is responsible for the entry/debt.

CRA How payments on a debt management plan should be recorded

Payments on a debt management plan can be recorded in several ways, including, marking the debt with ‘debt management program in force’ or DF - account in default, or recording this fact in a notice of correction.

All of the above can be correct, depending on the situation. Essentially, it depends on whether the lender is satisfied with the reduced payment that it is being offered.

The following is based on the information in the old defaults guidance:

Moderate to high levels of repayment — if the payment set out in the debt management plan (DMP) is at a level that a lender considers at least adequate, the agreement should be marked as included in a DMP. A lender may be willing to reschedule the agreement at a later stage (i.e. end the old agreement and start a new one under the new terms) at which point the record should be changed to reflect the agreed rescheduling.

Low repayment levels — If the payment set out in the DMP is at a level that represents only a token sum in repayment because it is all the customer can afford, the account should be recorded as a default. A notice of correction can be added to the credit file by the customer, or the third party debt adviser acting on their behalf, to record the existence of the DMP. This will distinguish the customer from those who have acted less responsibly. The lender should bring the notice of correction facility to the attention of the customer and their debt advisers.

In summary, marking the account as “debt management program in force” or similar means the lender is satisfied that the reduced repayment offered is adequate.

Marking the account as defaulted means the lender does not consider the reduced repayment that has been offered to be acceptable.

It should be noted that accepting a token payment does not mean the lender is considered to have accepted the amount as satisfactory. The lender can take such token payments (as the only realistic means of reclaiming any of the money it is owed) and still file a default. However, the lender should take particular care to ensure that the individual and/or debt adviser is made aware that this will happen and is not led to believe that the reduced payment constitutes a satisfactory reduced payment if this is not the case.

Ultimately, from a data protection perspective, it is up to the lender to decide whether an offer of reduced payment is satisfactory or not. Organisations like the FCA or the F08 may be able to look into whether the lender has generally treated the customer fairly, but this isn’t something we could get involved in.

It is worth noting that we are currently discussing this particular issue with the industry. This particular line may therefore need updating in the future. In the meantime, it would be useful if First Contact can make Strategic Liaison aware of any complaints about this so that we have some examples to discuss with stakeholders.

fermi

New thread due at 5,000 posts.

If anyone fancies writing something nice and inspiring to start it off rather than me doing the normal blah blah blah, give me a shout.

fermi

https://twitter.com/ExperianExperts/status/609261376331091969

blisteringblue

I withdraw my praise for Barclaycard.

Even after writing again to say they acknowledge our token payment and we are placed on an "informal" plan, and interest and charges are cancelled. Well low and behold the next statement has 12.9% interest again. Complete muppets.

And just to cap it off, we received another letter saying because we've not kept up the formal plan this is now cancelled, and they sent all this to Stepchange, who we left at the end of March.

Couldn't organise a P1ss up in a Brewery, seems somewhat fitting. :mad:

Anyway we must be another month closer to default. Here's hoping.

Good weekend all

KID77

Thank you thats my Friday night reading :-)

Blisteringblue: how long have u been on dmp with barclaycard? we have 2 credit cards with them plus loan and overdrafts. Now starting dmp from 1st july or august.
Thanks

KID77

Read something good today that a company called Brightstar/Precise Mortgages are offering mortgages for people on DMPs. 75% ltv and not sure what sort of rates but hopefully it will be the start of more banks willing to mortgage to dmpers :-)

Riorio

Hi all

I'm new here....just this week I had my lightbulb moment where I realised my debts are way out of control. After checking my credit rating on equifax iseeim in excellent level BUT IM £50k in debt

So I've contacted stepchange after some google research and they have advised a DMP where hopefully I will be all paid off in four years time :T

So expect me to be asking a load of questions on here...feel free to nudge me if they have already been asked and I need to not be lazy and find where the answers are

My debts are owed to mbna, barclaycard, tesco credit card, tesco loan, Halifax credit and OD, first plus & GE loan. Hopefully thy will accept my DMP and it will be smoothing ride to paying of my own stupidity of debt!

Have a good Saturday :beer: