DMP and Default Dates

Willing2Learn

Source: [URL="https://forums.moneysavingexpert.com/discussion/comment/68445659#Comment_68445659[/URL]

Is the ICOs own internal guidance for their case officers, quoted below, still valid?

CRA Arrangements to pay - fairness of them registering a default

As stated in the old default guidance, where an arrangement to pay breaks down, a default may be filed when the total value of the arrears is equivalent to three monthly payments under the original terms. However, this should not result in the customer being placed in a worse position than someone who had made no effort to pay whatsoever.

Whether an individual has been left in a worse position or not is something that we will have to consider on a case by case basis. However where we feel that the arrangement to pay has left the individual in a worse position than someone who simply stopped paying, we would normally consider this to be unfair under the first principle and ask the lender to amend the default so that it was the same as if the individual had simply stopped making payments without entering the arrangement to pay.

and

CRA How payments on a debt management plan should be recorded

Payments on a debt management plan can be recorded in several ways, including, marking the debt with ‘debt management program in force’ or DF - account in default, or recording this fact in a notice of correction.

All of the above can be correct, depending on the situation. Essentially, it depends on whether the lender is satisfied with the reduced payment that it is being offered.

The following is based on the information in the old defaults guidance:

Moderate to high levels of repayment — if the payment set out in the debt management plan (DMP) is at a level that a lender considers at least adequate, the agreement should be marked as included in a DMP. A lender may be willing to reschedule the agreement at a later stage (i.e. end the old agreement and start a new one under the new terms) at which point the record should be changed to reflect the agreed rescheduling.

Low repayment levels — If the payment set out in the DMP is at a level that represents only a token sum in repayment because it is all the customer can afford, the account should be recorded as a default. A notice of correction can be added to the credit file by the customer, or the third party debt adviser acting on their behalf, to record the existence of the DMP. This will distinguish the customer from those who have acted less responsibly. The lender should bring the notice of correction facility to the attention of the customer and their debt advisers.