Debt Management Plan

LorC

Hi, I have been in a DMP since my divorce back in 2011. I have £2500 left to pay on it and estimate finishing Jan 2017. These debts are showing as default on my credit file. My DMP is with Payplan. I phoned them asking if I could make a full and final settlement offer to the 4 creditors of £1500. The person told me that whether my creditors accept or not it will go on my credit file as a partial settlement and be on my credit file for 6 years from the date of acceptance of the offer. Bearing in mind the defaults occurred in 2011.

I can't do anything else due to the poor level of these defaults showing on my credit file so no mortgage.

I do not know whether to leave it and continue to pay them in full and be finished Dec 16/Jan 17 or to pay off what I can now??

Any advice/help greatly appreciated. Thank you.

Westminster

PayPlan are free - so that is a good thing.

What they are not - is correct in this instance.

Once an account has been defaulted, it will fall away from sight on the 6 year anniversary of that default date. If you do agree a settlement then ensure you get their acceptance in writing that it is a full and final settlement and they will not pursue any remaining outstanding balance. You will want this in writing before you pay.

They would though be correct if an account was not yet defaulted - such an account would be marked as PS and then remain visible for 6 years from when it was settled / closed.

I was with PayPlan and circumvented them totally when agreeing F&F. Once I had agreed a settlement (including the above confirmation in writing) then I simply advised PayPlan that the account was cleared and they then adjusted the budget accordingly so the remaining creditors got a proportionally larger slice of the pie.

Each creditor has a different percentage discount they are likely to accept - debt collection agencies are likely to accept the lowest so I would start at 25% and work up from there.

There is plenty of detailed advice on here about how to go about your F&F - but disregard the advice PP have given you about Partial Settlements remaining visible for 6 years from settlement on an account that is already defaulted.

Thrugelmir

Whether are visible or not makes no difference to the lenders you default on. They are unlikely to lend to you again in the future.

Westminster

Thrugelmir wrote: »

Whether are visible or not makes no difference to the lenders you default on. They are unlikely to lend to you again in the future.

Common sense would cause me to agree, oddly though this has not turned out to be the case for me.

Having been on a DMP previously my listed of creditors who had defaulted was pretty long.

Included in previously defaulted creditors with whom I now have credit accounts are:

• BoS - I had a car lease with BoS and a Lloyds CC and OD. Today I have a £7.5k clarity card (apparently rising to 8.5k later this month)
• MBNA - agreed a partial settlement on 29/01/10 for a large CC balance. MSE indicated 95% likelihood of acceptance last Oct but predictably MBNA declined the subsequent application. Yesterday MSE suggested 100% acceptance - lo and behold, they gave me a 12k money transfer card at headline rate/duration (having asked for 10k) just days after the partially settled account was expunged from my CRA files.
• Barclays - a large overdraft and barclaycard acquired a large defaulted Egg CC. Within a few months of partial settlement of the defaulted accounts (which were past their 6 year anniversary so not visible on CRA files) I received my mortgage offer at 5x salary and 1.29% + BBR on a 2 year offset (this was post MMR too)

So MBNA at least do not appear to bear a grudge or maintain an internal blacklist. Despite my taking (and failing) a complaint against them to the ICO and FOS for not defaulting the account when all other creditors had back in 2007 when the DMP started.

Also Barclays will (presumably not in 100% of cases though) lend to previously defaulted clients.

Thrugelmir

Westminster wrote: »

Common sense would cause me to agree, oddly though this has not turned out to be the case for me.

Then I would assume that your defaults were old and had dropped off the file. In addition you earn an above average wage. The world has changed somewhat. Lenders no longer fall over themselves to advance money. Someone today may well face a different set of challenges.

Westminster

Thrugelmir wrote: »

Then I would assume that your defaults were old and had dropped off the file. In addition you earn an above average wage. The world has changed somewhat. Lenders no longer fall over themselves to advance money. Someone today may well face a different set of challenges.

Yes I waited for all the defaults to drop - didn't make sense any other way in my experience.

Yes I also have a good wage and have conducted my finances without issue since then (the DMP was entered because I had to give up work to look after my wife rather than an inherent inability to manage credit)