Confused by a creditor on a DMP

milliejon

I've been on a DMP (which I run myself) and have had a letter from one of my creditors which says the following:

I'm writing to let you know that our arrangement to accept reduced monthly payments has finished.

From 21 Dec your interest rate will change to 9.9% APR, which is the Barclaycard standard rate.

We will let you know the amount of your payments via your monthly statements. Your card facility will remain cancelled.

Please note, your required monthly payments will not increase as a result of these changes.

I'm confused by this because the first 3 paras sound like they're going back to normal statements (as I currently have the interest frozen on the account). The last para sounds like I'm still on a payment plan.

I don't want interest added to the account, so I'd like to write to them and to ask them to change their mind, but I need to understand what it is they're trying to say first!

Any help or advice would be gratefully received.

Gemmzie

It sounds like they are happy to receive the same amount of money per month but are re-instating the interest so it'll take you longer to pay off.

Sea78

MIght be worth ringing them to check it out? You could explain that you are disappointed that they have added the interest on and could they not freeze it again as you are unable to find any extra info - they might (probably) say no - but it might be worth it? They might just want you to ring in and update that you can't afford any more?

Sea xxx

milliejon

Thanks both. I think you're right. I've just spoken to my brother in law. He has a debt of about the same amount on a credit card, and the minimum payment is about the same as I'm paying on my account each month.

I think they are saying that my amount won't increase, because they want me to take longer to pay it off (and therefore keep me as a customer when I've paid the account off).

Does this sound like I'm looking at it the right way? Won't this mess up my payments to the other creditors?

Sea78

I think it's just that they want their money - so they'll add the interest and so then you have to pay it all - but I don't think you'll be kept as a customer afterwards though?

milliejon

I think I'm an ideal candidate for keeping as a credit consumer! Not that I'll do it though - I love paying for stuff with cash now!

I've just checked their website, and their minimum payment each month is 2.25% (or £5). With interest added, I'm still paying about £10 more each month than the minimum payment would be. I think I've got past the level of arrears.

Sea78

Ah right - I see now!

Sea xxxx

milliejon

I'll give them a ring tomorrow I think.

milliejon

I didn't ring them. I wrote to ask them to rethink their decision about adding interest. I received a letter this morning, telling me that the original arrangement started in Sept 05 and they agreed to remove the interest for 6 months only and that I had as they hadn't stuck to this, I've received an extension to this. Therefore they're adding the interest now.

I'm still convinced that I've reached the same level of payment if I hadn't been on an debt management plan with them, so they're putting me back to monthly statements. I'm worried about how this will affect all my other creditors who I'm on the dmp with. I think when I write to update them all (when my pay award comes through), then I will just write giving the amount of this account without the interest charges (I keep a spreadsheet) not what is actually on the statement. I'll then take slightly longer to pay off this account, but if I don't do this the payments to other companies will suffer.

Does anyone have any thoughts on this please?

milliejon

Any thoughts on this please?

Sea78

Hi

I think you should include the interest charges - if it means you have to pay less to the others , they will see the reasons, but it's better to be completely upfront I think. But others might have a different view - anyone?

sea xxx