Kensington mortgage DIP and paying a DMP debt

LMJ10

Hi. So we have sold our house and have a DIP with Kensington. 

My adverse credit is pretty terrible and we are in a DMP.
Last night I got a devastating email that one of my creditors who haven’t been reporting any information to the agency’s have now decided to start.they have had my account since 2017 and reported nothing!  And will register a default, 2019 it seems! This will now show next month and will take us out of the criteria for Kensington ( and every one else) 
the email says they won’t report the default or debt if we pay it off in full or a final settlement, we can pay it off but it is in our DMP, I’ve seen story’s that paying debts off in the DMP directly doesn’t go in your favour ( even tho paying off) can anyone advise please? Really don’t want to lose this chance of moving! 😞 

MWT

I'd be inclined to ask this one over here: https://forums.moneysavingexpert.com/categories/debt-free-wannabe

LMJ10

It’s to do with a mortgage application so hoping brokers on here can advise as to what lenders look at. So that’s why it’s on the mortgage site. 

MovingForwards

I 'snowballed' and F&F'd my debts while in a DMP, started with the lowest and just kept picking them off. DMP company didn't care, creditors didn't bat an eyelid as they were getting a bit more money each month. In your situation I would want proper letter headed paper that (1) paying if off wouldn't result in the default being added (2) a receipt saying it's settled, they nor any other company will chase of anything else and they won't be adding any default or other marker to the credit reports.

Thrugelmir

LMJ10 said:

 I’ve seen story’s that paying debts off in the DMP directly doesn’t go in your favour ( even tho paying off) can anyone advise please? 

Clearing the DMP should be your primary objective. Until you do you'll be paying well over the odds to borrow on a mortgage. Saving money instead can be a false economy in the longer term. 

ukri

OP, in your place, I would take the F&F. If you do pass up the offer and they put a default on your report, your mortgage will be scuppered. Is it really worth that risk? I assume it’s a 90% adverse mortgage so it isn’t like you have a lot of choice in bad credit lenders.

Your creditors probably saw a mortgage hard check on your report and swooped in.

The brokers aren’t debt advisers, they are not going to risk giving you debt advise with half baked  information on a forum.

LMJ10

Yes, I’ve had a 15% adverse DIP issued, and with the house sale I would be able to clear the DMP, one of the main reasons to move. 

I’m unsure what date it will be but have an inkling it will be 2019. Which will decline is the mortgage. 

I’ve seen where mortgage lenders don’t like you paying out of your DMP tho, bit like breaking the terms as your not treating all creditors the same.