DMP - any point?

hotlymet

Good Afternoon,

Today, I've decided to check my credit file after setting up a DMP with stepchange earlier this year. I had ~£7K of debt and currently pay ~£100 pm to this plan.

I have found that, although I haven't missed a DMP payment, I have defaulted on 6/8 accounts, despite the amount owed to each creditor slowly decreasing.

The two bank accounts on my DMP are showing as late payments, Soon to default (i'd guess) as it shows 1,2,3,4,5,6,6 each with the text
"agreed repayments are more than three months behind, but you have agreed new repayments with the lender"

Another observation
On two of the accounts, one of the balances have increased on the last month and stayed the same for a few months on the other, even though Stepchange are paying the creditors.

On to the reason for my post
FYI - I'm not looking for anybody to judge me or give me moral advice. I now have more of a surplus each month but i'm keeping the DMP the same as the extra money is allowing me to live and not just scrape!

Please could you explain what may happen in the following scenarios:

If I decided to cancel my DMP, what would happen? - I imagine, the two bank accounts would certainly go to default, would i then be able to look at getting a mortgage 6 years after the last default or would i run the risk of creditors lodging CCJ's?

If i continue to pay off my DMP - when would I be able to start applying for mortgages etc? would it be the same 6 years after last default? and who should i contact regarding the balances not reducing on two of the accounts?

If i find thew full amount from somewhere - How would this benefit me other than worrying about being in debt, the marks would be on my file until date of last default + 6 years?

Thanks

Brightspark87

Hi and well done on starting your DMP. Your accounts may not look good at the moment and there may be additional charges - have any of your accounts agreed to freeze interest? How long are you paying your DMP off over? Is £100 a month all you can afford? Have you got yourself an emergency fund?

Aquamania

Zac_Holt wrote: »

Good Afternoon,

Today, I've decided to check my credit file after setting up a DMP with stepchange earlier this year. I had ~£7K of debt and currently pay ~£100 pm to this plan.

I have found that, although I haven't missed a DMP payment, I have defaulted on 6/8 accounts, despite the amount owed to each creditor slowly decreasing.

The two bank accounts on my DMP are showing as late payments, Soon to default (i'd guess) as it shows 1,2,3,4,5,6,6 each with the text
"agreed repayments are more than three months behind, but you have agreed new repayments with the lender"

Another observation
On two of the accounts, one of the balances have increased on the last month and stayed the same for a few months on the other, even though Stepchange are paying the creditors.

On to the reason for my post
FYI - I'm not looking for anybody to judge me or give me moral advice. I now have more of a surplus each month but i'm keeping the DMP the same as the extra money is allowing me to live and not just scrape!

Please could you explain what may happen in the following scenarios:

If I decided to cancel my DMP, what would happen? - I imagine, the two bank accounts would certainly go to default, would i then be able to look at getting a mortgage 6 years after the last default or would i run the risk of creditors lodging CCJ's?

If i continue to pay off my DMP - when would I be able to start applying for mortgages etc? would it be the same 6 years after last default? and who should i contact regarding the balances not reducing on two of the accounts?

If i find thew full amount from somewhere - How would this benefit me other than worrying about being in debt, the marks would be on my file until date of last default + 6 years?

Thanks

I'm not sure what you mean by if you were to cancel the DMP.
If you mean stop paying the agreed payment, and not pay anything more to those that you owe money to, then definitely expect them to come after you all guns blazing

If you continue to pay the DMP, then hopefully eventually you will repay what you owe. There's no magic DMP fairy that will wipe out all your debts in 6 years.
Note also, that some creditors may still be reporting your credit payment history every month to the credit reference agencies.
Such reporting will stay on your record for 6 years.

If you can pay all your creditors in full now, then that is something you should seriously consider. At least it will mean in 6 years time (assuming you don't get into more financial trouble) then your credit history will be void of any adverse reporting.
I would urge you to seek professional advice before opting to settle up everything now - you need to be sure doing so will not put you into financial difficulties that will result in you again borrowing money and not paying it back as agreed.

Edit: in regards to the individual debts that appear to be increasing despite you paying your DMP, you should have been made aware before entering into the DMP whether or not the creditors, despite accepting lower regular payments, would freeze the interest (if applicable) on those debts.
I suggest you refer back StepChange who assisted you in setting up the DMP originally.

National_Debtline

Hi Zac

Zac_Holt wrote: »

Please could you explain what may happen in the following scenarios:

If I decided to cancel my DMP, what would happen? - I imagine, the two bank accounts would certainly go to default, would i then be able to look at getting a mortgage 6 years after the last default or would i run the risk of creditors lodging CCJ's?


You would leave yourself at the risk of further action by your creditors, and this could extend the time period over which your credit was adversely affected. For example, if Joe Bloggs defaulted you in 2013, you stopped payments now and they then ended up suing you in, say, 2017, your credit file would show the CCJ until 2023 if it was not settled promptly.

If i continue to pay off my DMP - when would I be able to start applying for mortgages etc? would it be the same 6 years after last default? and who should i contact regarding the balances not reducing on two of the accounts?


There is no hard and fast answer, though of course it would be preferable to apply knowing your credit file was clear. Lenders often pay less attention to defaults which are over 2-3 years old; that said, they will usually scrutinise your file in detail, given the amount they are risking.

If i find thew full amount from somewhere - How would this benefit me other than worrying about being in debt, the marks would be on my file until date of last default + 6 years?


Yes, defaults would show on your file for six years, but from a potential lender's point of view defaults + settled balances is far preferable to defaults + outstanding balances.

Thanks

Dennis
@natdebtline

sourcrates

Hi,


See my comments under your original questions.

Zac_Holt wrote: »

If I decided to cancel my DMP, what would happen? - I imagine, the two bank accounts would certainly go to default, would i then be able to look at getting a mortgage 6 years after the last default or would i run the risk of creditors lodging CCJ's?


Creditors may, or may not pursue you, there is no way of knowing, all depends how likely they rate there chances of getting any return from you.

If i continue to pay off my DMP - when would I be able to start applying for mortgages etc? would it be the same 6 years after last default? and who should i contact regarding the balances not reducing on two of the accounts?



I would not think about further borrowing until your present commitments are paid off, and the reasons for you been in debt have been addressed.

If i find the full amount from somewhere - How would this benefit me other than worrying about being in debt, the marks would be on my file until date of last default + 6 years?



Full and final offers are a good way to get rid of debts, for, hopefully, a lot less than is currently owed, its all about negotiation with the creditor.
National Debtline has a very good template letter, for just this purpose, available from there website.
Thanks