Life after a DMP and Mortgage Application

Decked

First, apologies, I should have put the first part of this on almost 2 years ago.
Wind back to January 2013, £58,000 of debt,credit cards, store cards and overdraft.

I had no arrears, never been late with a payment, but couldn't keep up in the long term.
Very worried, we went on a DMP with Stepchange.

Move on to summer 2017, lots of debt cleared, main one left was Barclaycard, who I spoke with separately and agreed a payment plan running until March 2018.
So I ended the DMP in summer 2017 and just continued separately with Barclaycard.

As we were paying £1250 a month near the end, when the DMP finished we were left a lot of surplus each month.

We both bought new cars and got credit cards.

Each month we put quite a lot on the cards but the difference is we religiously pay off in full every month.

Being on the DMP taught us a lot about budgeting and managing our money, It is fair to say we have had a bit of a blow out over the last year or so, but I think a lot of what we have spent has been catching up on things like house maintenance, clothing and treating the kids a bit more.

Was the DMP good for us? absolutely, although we were somewhat fortunate to get better paid jobs which helped us to clear it of faster. (originally we paid £623 per month rising to £1250 at the end)

As explained earlier, we have not had an issue getting car finance or credit cards.
However we are looking at having an extension built and have applied to our mortgage provider (Nationwide) for extra funds. Unfortunately we have been declined, it seems they view the DMP pretty much the same as an IVA.
We have never missed a payment with them in the last 15 years and likewise we never missed a payment on the DMP.

When you look at the credit file, some payments on the DMP are shown as defaults, some as in an agreement, some in arrears, others just show as OK, so bit of a mixed bag.
Some may drop in the next year or so.

We have been told we can appeal the decision with Nationwide and have sent them some information explaining the circumstances.
We are due a decision next week.

I have spoken to a mortgage broker who thinks he can sort something via a company called Kensington, which although the rate would be more than the high street, it isn't absolutely horrendous.

We bank with the Coop, we have been with them since the start of the DMP and we are 100% squeaky clean with them. Might give them a shot, but if anybody has any similar experience I would be interested to hear what you did.
If anyone has any specific questions about my DMP experience, please feel free to ask and I can tell you what we did.

Thanks for reading and good luck to all on a DMP. It is daunting at first but very satisfying when you get it all cleared.

sourcrates

Ideally all your acounts should have been defaulted within 3-6 months of you originally getting into financial trouble, but as you have found out, not all creditors will do that, this "mixed bag" needs sorting out.

Defaults stay on file 6 years, then automatically drop off.
AP markers (arrangement to pay) stay for 6 years, after the debt is repaid, so potentially twice as long as a default.

My advice would be to write to each creditor, ask them to default the account, and backdate it to 2013, that way they will all drop off your file this year, your reasoning behind this would be that you have repaid your indebtiness to them, but they have treated you the same as someone who has not repaid their debts, thus extending the time this matter will effect you.

You can always escalate the matter to the ICO if you remain unhappy.

By doing this you clear your file of negative information, so your chances of a re-mortgage at a reasonable rate should increase.

Decked

Hi Sourcrates,

Thanks for responding.

I'll have a route through the paperwork, I know Link financial are showing the accounts as defaulted but only from mid 2014 (I assume that was a debt sold on from the original creditor).

Ironically, Barclaycard to whom we owed the largest amount actually show the account as ok for the last 3 years we were paying them.

I remember reading about defaults etc at the time we started off the DMP, but to be honest we were just so relieved that we weren't being hounded by the creditors, I think we glossed over the importance.

Looking at my credit report, I can't see some of the original creditors, maybe they defaulted us, so if they did they may well have dropped off, however if they sell the debt on, does the new owner of the debt have to take the original date it was defaulted to calculate the 6 years from?

Thanks in advance

sourcrates

Yes, no matter who buys it, or however many times a debt is sold, it disappears after 6 years regardless.

Suseka97

This is indeed a good news story and should offer hope to those about to launch into a DMP, or who are still on that journey. There is light at the end of the tunnel. So well one for achieving debt freedom.

I just wanted to comment about your 'mixed bag' credit report file/s - and to say it's definitely worth going back to the original creditor to get them to backdate any default that either wasn't applied (eg. APs) or applied much later. I successfully got Halifax to backdate a default to the beginning of my DMP which was at the time managed by LINK. I had actually paid off my debt to them and it took me a year further on before I decided to chase that default down.

I too started my DMP in 2013 and all Ds have fallen off and I also bank with NW. I do hope they reconsider their rejection, which to me sounds somewhat harsh.

Decked

Thanks for the feedback.

Nationwide have been back in touch and it's a no.
Apparently we have a high credit usage, which we do, every month we put about £1500 on credit cards and then religiously pay it off! Never paid interest on a credit card for years.

Also the DMP is going against us, not sure there are too many people who have paid £58k back over 4 1/2 years, on top of their mortgage payments, but seems to count for nothing.

I thought responsible use of a credit card was supposed to help your credit profile, but it seems not, or at least not with Nationwide, neither does it seem that our impeccable mortgage repayment history over the whole time we have had our mortgage with them counts for anything.

We were looking at a LTV of approx. 60% and with a combined salary of £100K. for a £144K mortgage, I thought we would have been accepted.

So over the next few months we will change our habits and use the debit card instead and just put a token amount on the card each month.

Anyway, it is what it is, I haven spoken with couple of mortgage brokers who seem to be of the opinion that in a year or so the DMP will be over 3 years and have much less of an impact. In the meantime I will follow the previous advice and see if I can get the credit files cleaned up by having some defaults removed.

I'll post my progress on here.

So has me experience changed my mind about enlisting on the DMP, absolutely not, NW might not want to play ball, but my debts were £58K and now they are £0 and that feels so good. To all you DMP'ers out there, stick with it and follow the advice on this forum

EssexHebridean

Remember you have to think how the Building Society will see things - they look at your useage of cards and see a whacking great amount going on there every month. they also see that at the moment, you clear that each month. You know that you intend to continue to clear that each month - they can't be certain that you're not going to change that arrangement tomorrow to minimum payment only and start racking up further debt though.

At least you know that the decision is nothing to do directly with the DMP (and well done for getting through that and clearing it all off!) and just to do with the habits you have currently. You mention having bought two cars as well - and then mention car finance - so is this additional longer term debt to the "transient" monthly CC debt? if so that will also be taken into account.

Final point from me - are you now putting money aside ready for future replacement of cars so that as and when those you have bought fail you won't need to go down the line of amassing further debt?

Decked

Ok, so here's for an update.
Nationwide rang me back and their decision is partly to do with the DMP because they want to see everything clean for the last 3 years.

Thanks for the comments ref clearing the DMP, I wasn't proud for getting in the mess, but I am actually proud for clearing it.
Cars are on pcp, no plans to save up for new ones. You'll sere why in a minute.
Nationwide wouldn't play ball, so I rang a bad debt mortgage broker, they reckoned they could get me a mortgage at probably 1.6% above high street rates, fixed for 2 years but no overpayments allowed. (they reckoned in 2 years I would be back to a status where the high street would accept me again) I agreed and thought that was a very responsible approach.
I was pleased at this and almost fell into the, well 'you are doing me a favour trap'.
As no hard searches were done at this stage, I thought it might be worth ringing another broker just in case there was a better deal to be had.
I am so glad I did, they told me that I wasn't such a bad person and they thought they could get closer to high street rates. So the mortgage offer has been received in under a week, fixed rate, approx. 1.25% cheaper than the other one and I can overpay (which is why I am not saving for a new car). The plan is to batter the repayments with extra each month. So roll on the extension.

I really shouldn't say this, but I was nervous of approaching a mortgage broker, I almost thought they were a bit dodgy. In both instances I could not have been more wrong. Albeit the deal at the first one was not as good as the second, they were great to deal with. However, if you are careful at how you manage the application (and they guided me) you can shop around without damaging your fragile credit report any further.

Last week I was a bit disheartened, but now I am feeling very positive and can't wait to put it all behind me.