What is a DMP ...?

xxsalxx

Hi All

Sorry if this is posted in the wrong place! This may be a ridiculous question, and I have searched for an explanation on google etc, but I'm not sure if my situation is classed as a DMP, or what a DMP really is?

My situation : Used my student interest free overdraft many years ago for some car repairs whilst I was a student. The overdraft balance was just below the agreed limit. As it was interest free, I rather stupidly didn't start paying it off. Once I finished university, the bank switched my account to a 'normal' account and started charging interest on the overdrawn balance. I also moved house several times within a short space of time and did not update my addresses with anyone as I knew I wouldn't be at them for long. In turn the interest being charged monthly pushed my balance over the agreed limit.
Rather stupidly AGAIN it went to the back of my mind as some time had passed by this point, and because I hadn't got any letters advising of my account change, I didn't really give it a second thought. Meanwhile, the interest charges were racking up, and I ended up missing the letters they must have sent, and missed 3 consecutive payments.
It was only once I reached some stability at my current address and updated details with everyone that I recieved a letter from a Debt management company, Moorcroft Debt Recovery, stating the account had been frozen, defaulted and they were seeking to get the balance paid off in full. I rang them and they said I could pay 'X' amount per month, which I have been doing.

Is this classed as a DMP? Is a DMP marked on your credit file somehow?(default is registered already). I feel so stupid as the rest of my credit file is so good and I have never missed payments or been in trouble before for any of my other commitments.

Sorry about the long explanation, any help is appreciated.

sourcrates

Hi,

A DMP (debt management plan) is an informal agreement, between you and your creditors, to repay debt that you owe, at a lower, mutually agreed rate, than what your normal contracted repayments would be.

What you have is a payment arrangement with moorcroft, not technically a DMP.

People who enter DMP's usually have numerous creditors, how it normally works is that after working out how much they can afford per month to service there debts, this money is split, pro rata, between the creditors, it allows you to repay what you owe, at a lower rate, usually over a longer period of time, nothing further is marked on your credit file, if already defaulted, if not defaulted, the creditor can add 'arrangement to pay markers' which stay on your file for a further 6 years after the debt is repaid.

xxsalxx

sourcrates wrote: »

Hi,

A DMP (debt management plan) is an informal agreement, between you and your creditors, to repay debt that you owe, at a lower, mutually agreed rate, than what your normal contracted repayments would be.

What you have is a payment arrangement with moorcroft, not technically a DMP.

People who enter DMP's usually have numerous creditors, how it normally works is that after working out how much they can afford per month to service there debts, this money is split, pro rata, between the creditors, it allows you to repay what you owe, at a lower rate, usually over a longer period of time, nothing further is marked on your credit file, if already defaulted, if not defaulted, the creditor can add 'arrangement to pay markers' which stay on your file for a further 6 years after the debt is repaid.

Sourcrates - thank you, that's very helpful. I was hoping it wouldn't be 'classed' as a DMP, however I'm sure it is probably looked upon in the same way as a DMP in terms of the severity? I was hoping to apply for a mortgage, but I have seen in some/most of the criterias that they wouldn't consider anyone who had been on a DMP within the last 3 years ... I wonder if this is classed as the same in their eyes? One foolish mistake on an otherwise clean and brilliant credit file I think may hold me back

Sharon87

This will be classed as a default of some sorts on your credit record. I very much doubt you'd get a mortgage soon. Defaults are recorded on your credit rating, not DMPs (but to get onto a DMP you have to default on your credit facilities).

Think of it this way - you have a 6 years to ensure you manage your money well, learn to update addresses when you move! (no matter how short you are at that address for) and save up an even bigger deposit so you have to borrow less money for your mortgage.

I would also use these 6 years to improve your credit rating - make sure you're on electoral role, manage bank and credit facilities well, don't build up any new debt.etc