Paying monthly but still "in default"

Al-48

Hello,

I'm in a difficult financial situation at the moment and am not sure what to do. Sorry - it's a long post.

I've been on a debt management plan with a debt management organisation (DMO) for about 3 years. All has gone well with that until last November. All my payments had been on time and the creditors were happy with the payment plan. I was working on a full-time contract for low-ish wage.

Last summer, a much better paid job came up in a hospital, which I went for. Didn't get the advertised post, but was offered regular part-time work on their staff bank, at the higher rate, and I took it. My original employer was keen to retain me, and surprised me by creating another part-time post (also at a slightly higher pay rate) - which I applied for and got. So far, so great.

However... the timing of the job changeovers caused problems. The hospital job start-date took a couple of months to sort out, which made it difficult to plan for. In the end, the timing of starting the hospital job meant I had a radically reduced income for October/November (as in, barely able to cover rent, food & utilities). I then further screwed up my budget planning due to a wedding commitment to a very old friend, and realised that I was not going to be able to make my debt plan payments again until December. In classic stressed ostrich fashion I avoided dealing with this until early November, when I spoke to my DMO. They advised me to contact my creditors, explain the hitch and confirm that I would be restarting my payments on the original schedule from December. Did this. They all seemed remarkably civil about it - on condition I did re-start payments as discussed.

Income & budget settled down. I re-started payments as normal in December and that's still continuing. The single payment goes to the DMO and they distribute it, as agreed, amongst my creditors. All seemed fine.

Because I tend to get stressed/depressed when I deal with the creditors directly - and the depression manifests as decreasing ability to function outside my front door/bed, which then impacts my ability to earn a living in order to meet my debt repayments - well you see the circular problem there. So, my flawed way of dealing with that is to regularly read the monthly statements on my debt management organisation website, to check everything's going along ok - but I rarely read the creditor statements - since I (naively) have expected them to show the same information.

By February this year I realised that something was definitely not right - I was getting demand letters from creditors, even though the payments were clearly leaving my account, and according to the DMO, were being transferred to the creditors. When I braced myself and phoned creditors, it turned out they were waiting for a formal confirmation of re-starting the payment plan - from the DMO. So I contacted the DMO, and they agreed to send all the relevant information to the creditors (this was stated in an email dated 15 Feb, so I have proof of this). The debt collector demands stopped coming, so I thought we were back to normal.

In March I had trouble getting a new mobile phone - the company was vague, but they seemed to imply there was a problem with my credit rating. I was a bit concerned, but put it down to the long-term damage to my rating from being on a payment plan and missing 2 payments in the autumn. In late March/early April I was looking more closely at my Barclaycard statement and noticed that although they were still receiving my payments, there was a note at the side saying I was still in trouble with them. So I phoned them.

Barclaycard informed me they had received no information about my re-payment plan since my call in November, and as a result my ongoing payments were not part of an agreed re-payment plan. While I find it irritating that this administrative glitch was marking me as a payment defaulter and impacting my credit rating, I focused on resolving the situation and requested the DMO check if the information had originally been sent, and, either way, to re-send it. They agreed to this, and when I called them back the next day they confirmed it had been sent.

A couple of weeks later I had a letter from Barclaycard informing me that I am still in default. Again, I consulted with the DMO. Was told all the info had been sent as previously discussed. Was advised to point out that I'm doing everything to resolve this and see if Barclaycard will ease up.

Phoned Barclaycard and was informed that they still had received no information from the debt management organisation. Was told they could do nothing more. Worse still, I was informed that I've now been "in default" so long that they would not accept any further repayment plan. "Policy" dictates that they could now only accept either full repayment of the outstanding balance (obviously not an option), or immediate payment of £220 (and presumably ongoing monthly repayments at a level to be agreed...). Or I can wait until June, at which point the debt gets farmed out, my credit rating dies on it's back, but the interest charges stop.

I explained my efforts to resolve the situation and pointed out that while I was falling fowl of the technicalities of their system, I was making payments exactly as previously agreed, and am making no attempt to avoid payments. I understand that their systems have to be set up to discourage defaulting on payments, but in this situation they seem to be sticking to the letter of their policy beyond the actual aim of their policy. Was told they couldn't do anything more, but I could speak to the complaints department. By this point I was really upset and was struggling not to cry (and tbh, failing), so couldn't speak to anyone else. Sometimes it's difficult not to feel like a victim. It's not pretty, and it's really not much help, but there it is.

Next day I went back to the debt management organisation. Was advised that I hadn't fully completed my online budget update in December and this could be a factor in a creditor not accepting the payment plan. Why this hadn't been explained to me earlier is a good question, but again, I focused on resolving the main problem with Barclaycard. Was assured completing the budget update would not only improve things, but Barclaycard would then be obliged to accept the debt repayment plan. Went off to do that online but hit a technical glitch and had to do it over the phone with a different member of the DMO staff. Completed the budget update - worked out I can increase my monthly debt management payment by about £25. Since I was a bit sceptical about the earlier comment that Barclaycard would now have to accept the payment plan, I asked this other member of staff if that was true - he said it definitely WAS the case.

So here we are in May, and my new Barclaycard statement is still saying exactly the same things about being in default.

At this point I feel totally confused. I dread dealing with the Barclaycard people anymore, but I no longer have faith in my debt management organisation - they've given me inconsistent advice (why was the significance of completing my budget update not mentioned before April?), I don't know if they originally did send the information to my creditors in February or not, they categorically stated that Barclaycard would have to accept the repayment agreement - and that clearly hasn't happened.

I'm beginning to feel a bit desperate.

rizla_king

TL;DR

but basically you are in a dmp so will be in default of contractual payments no matter what

sourcrates

Hi,

Your missing the essential point here, your in a debt management plan, so by its very nature, you will be paying less than the contracted payment, so you are in default of your original agreement.

It makes no difference that your paying on a regular basis, your not paying what you were originally contracted to pay, your credit will naturally be trashed by this.

This should of been explained to you before hand, I suspect you are also paying a fee charging company for this service as well, am I correct ?

You should cancel straight away and contact stepchange who are a free to use debt charity who will not charge you a fee.

http://m.stepchange.org

Al-48

Have just checked previous Barclaycard statements and, prior to my missed payments in Oct/Nov, they don't tell me I'm in arrears - they say "Your Payment Plan - please continue to make the agreed monthly payments of at least £36.47"

That's the amount agreed on the DMP.

sourcrates

Al-48 wrote: »

Have just checked previous Barclaycard statements and, prior to my missed payments in Oct/Nov, they don't tell me I'm in arrears - they say "Your Payment Plan - please continue to make the agreed monthly payments of at least £36.47"

That's the amount agreed on the DMP.

You are in a DMP, so you are making payments less than what you are contractualy obliged to make, therefore a lender has to show the true status of your account, if it's Barclaycard they probebly haven't defaulted you, you will be in an arrangement to pay (AP) which can be worse for you in the long run.

Please take my earlier suggestion and give stepchange a call, they will explain the DMP process to you, as it appears to me no one has fully explained your situation to you.

Al-48

Sourcrates,

Not sure where we're miscommunicating, but seems like we are.

My understanding of what you're saying is that my dmp payments are not going to be the standard minimum monthly payment that would normally be expected in a non-dmp situation. Therefore my dmp payments will appear as insufficient payments. Is that what you're saying?

If so, my point is that Barclaycard were accepting the dmp payments without any complaints, letters or statement notes to the contrary, for over 3 years. They have only started issuing letters and putting these notes on my statements in the past few months.

Am already with a debt charity - same as StepChange. Am in a dmp with them. Creditors were all on board with the dmp for past 3-4 years - as shown in letters and statements.

Problem has only arisen following the missed payments in Oct/Nov. Am sticking to original agreement because I can't afford more. The debt charity have been reporting this to Barclaycard - and I have no reason to assume they aren't.

However, Barclaycard appear to be either not receiving or not accepting the debt charity information - despite never having had a problem with either the debt charity or the dmp in the past.

Do I still appear to be missing your point?

sourcrates

Ok, that's a little clearer yes.

I understand what your saying, lots of people on this forum have problems with Barclaycard, they don't have an "across the board" way of dealing with debtors, it can be hit and miss dependant on who you deals with you.

But you see they are under no obligation to accept lower payments on a long term basis, they will, eventually, if pressured, but it usually takes a letter of complaint to get them on board, I suggest you try that next.

National_Debtline

Hi Al-48


Your "contractual" payments on a debt like a Barclaycard will normally be the minimum figure stipulated on your card statements - this is often 3-4% of your overall balance, assuming you've not exceeded your card limit. If you can't meet these contractual obligations, that's where a debt management plan may come in to help you arrange reduced payments and (subject to lender agreement) a freeze on further interest and charges. As a result of making these concessions, lenders will reserve the right to report such arrangements to the credit reference agencies on an ongoing basis. Sourcrates has explained this very well above.


If you are paying any sort of fee for this debt management plan, you need to look at the free alternatives as those fees could be going towards reducing the debt more quickly.


Dennis
@natdebtline


EDIT - cross-posted the above with OP's most recent post.

dancingfairy

Who knows what Barclaycard are doing. Perhaps they have changes the way they are reporting things now?
Point is you're on a payment plan ( whether they like it or not). How they account for it their end/ on their system is up to them, although I can appreciate it doesn't help and is making the situation feel worse for you.
The important thing is whether they have stopped interest and charges on your account. This is where you need to be focussing your attention and any complaints.
Whilst you are feeling let down by your current organisation it might be worth redoing your budget, just to make sure it's uptodatw and contacting a free debt management charitable organisation such as national debtline or stepchange.
Regards
Df

edrushuk

Have you looked at your credit file to see what month Barclaycard defaulted you? It would be interesting to see what it says.


From my experience Barclaycard change their process with different accounts. Some they default, some they put on an Arrangement to Pay (AR). Also they may not default in the months after you start the payments they may decide to do it 6 months after and it will have very little to do with your payments.