Historic Defaults & DMP

lkman

Hi.

I have four defaults from when I ran into financial trouble in 2009. The dates vary, but the first one was dated in July and the last one in October. Two are Natwest current accounts, one is a Natwest Credit Card and the other is a Natwest loan. Since 2009 I have been in a DMP paying each month to these creditors. All be it, it is a small amount, but they are getting payments. Obviously the balances of these amounts have come down within the last 6 years, but not hugely due to what I am paying.

I have two questions:
Firstly, am I right in thinking that these will all be removed from my file six years from the date the default was recorded on my file, i.e July to October this year?
Secondly, do I have to continue paying the DMP, or can this stop. I don't want to start receiving debt letters etc if I stopped the DMP.

Thank you for your help.

fermi

Yes, they will all drop off no matter what.

If you stop paying under the DMP you would likely start getting letters from collectors, and could even possibly face court action if you ignore those.

lkman

This is what I thought - thank you. So once the default has dropped off and I keep paying the DMP, what record is there that Natwest have been paid now that the default is off the credit file?

Am I right in thinking that if these debts are settled with the DMP, i.e. by them approaching Natwest and asking for settlement figures, they would allow me to settle the debts at a discount due to the age of the debt? Or would it be in my interest to speak to Natwest directly (if I was in a position to settle these) and ask them for settlement figures?

Thank you.

fermi

No record. Once dropped off nothing show on your credit file about the loans ever again. (except if you get a CCJ)

They may be open to a settlement negotiation. If you can get one you may as well, as it won't change the fact that your credit file will clear, so if you can save some pennies, why not.

lkman

Thank you for your help today - you have been extremely helpful.

lkman

One last quick question. I notice a DMP is never shown up on a credit report, so once the loans/credit cards etc have dropped off my credit file and I continue to pay the DMP, the only evidence I have of the DMP is from the monthly payments I make from my bank account, is this correct? I am therefore assuming a DMP is a informal arrangement the DMP provider has with the lender.

fermi

A DMP is an informal agreement between you and the lender, and the lender and the DMP provider, yes.

Only formal agreement on a DMP could be that between you and the DMP company for their "services". That is nothing to do with your credit file though.

lkman

Are you aware if the credit score would increase once the defaults drop off the file, or will the credit score remain pretty much as it is now as the defaults are very old already.

Thanks

Tixy

Once the defaulted accounts drop off your file then they won't be visible to any potential lender searching your file so would no longer affect your ability to get credit.

Forget about the credit scores/ratings that credit reference agencies sell to you, nobody sees them but you and they are a waste of money.

One other point - who is your DMP with? If you are paying a fee charging company and if you do consider offering full & final settlements, the DMP company would take a cut if you go through them, so better to make the offers direct to creditors yourself (in writing). If you are with a free DMP provider they wouldn't take a cut.

fermi

Depends on the criteria of each lender you may apply to, as each has their own and their are no general scores.

Some may be fine already with old defaults showing why some may not touch you with a barge pole until they are gone completely. There is too much variability in that to give any general rule except to say a report without defaults is likely to be a better bet on average.

lkman

Yes i pay £136pm at the mo to Money Debt & Credit (Lawrence Charlton now) and the DMP provider takes £36 of this payment every month, so in essence £100 goes to the debts. Do they themselves though have more ability to obtain a better deal when paying off the debts? If I were to write to Natwest myself say, would they still offer me the same deal, if not a better one. I don't want to open up a can of worms by saying I want a settlement figure and then them requested more money each month if you get me.

By the way, I only use Noodle report as it is free.