what is worse for my credit score PLEASE HELP

ianlfc1

Hello everyone,
i am new this this and i would really appreciate some knowledgeable advice, due to recent events regarding my Business i have found myself in a tricky situation, i took a £19,000.00 loan out for my company which i personally signed guarantor for. since then my company has not been paid a £40,000.00 invoice which means i have had to close down my company but the £19,000.00 loan i have now got to pay back personally on top of my current payments to previous creditors such as 4 credit cards total amount owed on all 4 is £4200 and a Barclays personal loan £8000 and a Barclays £4000 overdraft which is all in my personal name even though i used this money to bankroll my company to cover the wage bill in the hope that things would get better. which clearly didn't happen. So would it be better for my credit score if i tried to deal with each lender individual and set up separate payment plans individually or would i just be better off to enter into a DMP and have them deal with my debts repayments? which option has the least impact on my credit score?
Any assistance and advice on the matters raised above would be very much appreciated.
Ian. 

[Deleted User]

ianlfc1 said:

Hello everyone,
i am new this this and i would really appreciate some knowledgeable advice, due to recent events regarding my Business i have found myself in a tricky situation, i took a £19,000.00 loan out for my company which i personally signed guarantor for. since then my company has not been paid a £40,000.00 invoice which means i have had to close down my company but the £19,000.00 loan i have now got to pay back personally on top of my current payments to previous creditors such as 4 credit cards total amount owed on all 4 is £4200 and a Barclays personal loan £8000 and a Barclays £4000 overdraft which is all in my personal name even though i used this money to bankroll my company to cover the wage bill in the hope that things would get better. which clearly didn't happen. So would it be better for my credit score if i tried to deal with each lender individual and set up separate payment plans individually or would i just be better off to enter into a DMP and have them deal with my debts repayments? which option has the least impact on my credit score?
Any assistance and advice on the matters raised above would be very much appreciated.
Ian. 

Both options you are describing are DMP. A DMP is an informal arrangement between you and your creditors to reduce your repayments. Whether you arrange the DMP yourself or through a debt charity, and do make sure you use a charity and not a company who will charge you for the privilege of setting up a DMP, such as Business Debtline the net result will be the same ie defaults and late payment markers on your credit files. 

What's happening with this person/company who has not paid the £40k invoice? 

ianlfc1

Thank you for your response,
The £40k application was due to be paid in December by a company called Bardsleys construction who have unfortunately gone into administration i have spoken to the administration company dealing with the company and as i am not classed as a preferential debt as i was a sub-contractor it is unlikely that i will receive any form of payment against my £40k invoice.
so as per your reply the effect on my credit score will be exactly the same regardless if i did it myself and sorted it out individually to each creditor as apposed to using pay-plan (DMP)? if that is the case i might as well use Pay-plan and let them deal with the lenders so i just have to deal with 1 company as apposed to 6-8 different companies? 
or is there any other options available to myself which would prevent me having to enter into a dmp? i have already spoke to my credit card providers at the begin of January and i went on a holiday break which froze the account and interest but now everything has now continued but my situation has gone worse not better?
Finally does entering into a DMP freeze the interest on all of my debts so i am just paying off the debt which i owe as apposed to continuing to pay the interest? as with 1 of my credit cards if i pay £100 only £37 would come of my debt and £63 would be interest which is killing me?

DCFC79

Your score is only seen by yourself, lenders will see your history.

There are other debt charities other than payplan who can help you.
You can do it yourself, you would need to search for whats needed, Im giessing you would need to speak to the lenders and come to an agreement as to what you can pay.
Your credit history may accordingly be marked as such. 

ianlfc1

Also if i set up a DMP prior to defaulting on any payments or having any late payment markers on any of my accounts will this insure that none of these marks will appear on my credit score whist im in the DMP? or will they still appear as collectively i will not be making the original minimum payments each month so in return will it show up each month as a default?

[Deleted User]

ianlfc1 said:

Thank you for your response,
The £40k application was due to be paid in December by a company called Bardsleys construction who have unfortunately gone into administration i have spoken to the administration company dealing with the company and as i am not classed as a preferential debt as i was a sub-contractor it is unlikely that i will receive any form of payment against my £40k invoice.
so as per your reply the effect on my credit score will be exactly the same regardless if i did it myself and sorted it out individually to each creditor as apposed to using pay-plan (DMP)? if that is the case i might as well use Pay-plan and let them deal with the lenders so i just have to deal with 1 company as apposed to 6-8 different companies? 
or is there any other options available to myself which would prevent me having to enter into a dmp? i have already spoke to my credit card providers at the begin of January and i went on a holiday break which froze the account and interest but now everything has now continued but my situation has gone worse not better?
Finally does entering into a DMP freeze the interest on all of my debts so i am just paying off the debt which i owe as apposed to continuing to pay the interest? as with 1 of my credit cards if i pay £100 only £37 would come of my debt and £63 would be interest which is killing me?

Any agreement you come to with your creditors so that you repay less than the minimum amount according to the original T&C is going to be recorded on your credit files and will still come under the umbrella of a DMP. Have you looked into refinancing some of your debt such as transferring credit card balances to 0% finance deals? Mind you that might be tricky now that you've had some payment holidays. 

Although a DMP is an informal arrangement most creditors do freeze the interest although they are not legally bound to do so. 

Lastly, is there a particular reason you are wanting to protect your credit history from defaults etc? 

ianlfc1

i want to protect my credit score as i have worked very hard over the last few years to build it up after my mistakes as a teenager by getting ccj's etc. my credit score at present is well above the uk average on clear score not that this means much i know, but most of all i want to be able to get a mortgage in a year or 2 which is looking less likely due to recent events.
so there is no difference in the damage to my credit if i used a independent company to sort out my debts?
and im taking it other than coming into a lot money to clear my debts in full this is my only option?
thank you once again for you reply and your time taken to help me out

[Deleted User]

ianlfc1 said:

i want to protect my credit score as i have worked very hard over the last few years to build it up after my mistakes as a teenager by getting ccj's etc. my credit score at present is well above the uk average on clear score not that this means much i know, but most of all i want to be able to get a mortgage in a year or 2 which is looking less likely due to recent events.
so there is no difference in the damage to my credit if i used a independent company to sort out my debts?
and im taking it other than coming into a lot money to clear my debts in full this is my only option?
thank you once again for you reply and your time taken to help me out

As I said in my first post, if you don't want to set up the DMP yourself use a debt charity to do this do not use a debt company. 

You could put together a statement of affairs and post it on the Debt Free Wannabe board to see if posters there have any suggestions on how to cut back your current budget so that you don't have to set up a DMP but if there's not enough fat to trim then you'll need a DMP. 

https://www.lemonfool.co.uk/financecalculators/soa.php

ianlfc1

so by using a debt charity will this go in my favour and not have a bigger effect on my credit as apposed to using a debt company like Payplan? 
you have been very helpful with your advice so thank you. 

[Deleted User]

That's not what I said. It doesn't matter how you set up a DMP in terms of your credit files, you're going to default and those defaults will be recorded in your credit history. I'm saying that if you don't want to manage the DMP yourself use a debt charity to set it up and not a debt company that will charge you for the privilege. 

DCFC79

ianlfc1 said:

i want to protect my credit score as i have worked very hard over the last few years to build it up after my mistakes as a teenager by getting ccj's etc. my credit score at present is well above the uk average on clear score not that this means much i know, but most of all i want to be able to get a mortgage in a year or 2 which is looking less likely due to recent events.
so there is no difference in the damage to my credit if i used a independent company to sort out my debts?
and im taking it other than coming into a lot money to clear my debts in full this is my only option?
thank you once again for you reply and your time taken to help me out

Your history could be (generally it is) marked whether you use a debt charity or not, its down to the lenders themselves to determine if they mark your file as being on a dmp/defaulted.