Badly advised

System

This discussion was created from comments split from: DMP mutual support thread part 13 !!.

apollostarbuck

I regret joining a DMP.

I was naive and in need of budgeting more than a DMP. For context, I was repaying almost £1k a month. I contacted an advisory group. When they calculated my expenses, it showed that, after everything, I had about £200 left a month. I wasn't behind any of my payments. Technically, I could afford them, but it would just be tight. They told me they could reduce to a lump repayment sum of £300, saving me £700 per month.

I was sent an email with a bullet point about credit would be difficult to get in the future etc. I signed the document.

Fast forward, I can't even be approved for a phone contract. I can't rent a flat. Back then, I didn't realise these things could fall under the 'credit' umbrella. We never spoke about that the potential downsides. If I had known, I wouldn't have gone through with it.

I feel that I was mis-sold, but I foolishly signed the document.

I repaid all my creditors in one go. But my credit file has made my life a hell.

Should I consider complaining to the Financial Obudsman? 

sourcrates

Hi,

I've moved your post to the general forum.

This "advisory group" you contacted, I'll have a wild shot in the dark and have a guess that it was a fee charging debt management company, am I correct ?

The reason I know this with a high degree of certainty, is because if you could afford your debt repayments, then non of the free to use debt charities would have advised a DMP.


Fee charging debt management companies are not running an advisory service, they are there to sell you something, whether that may be a DMP or an IVA, both are lucrative to them, and they will sell you one or the other, regardless of whether your circumstances dictate it necessary, or not, because that is what they do, it`s why they are there.


Debt management will nearly always involve defaulting on your debts, its par for the course, and most people who enter debt management are fully aware of this fact, however some tend to rush into things and go with the first bit of advice they get, that advice is not always credible, or in your best interests.

I`m suspecting that was what happened in your case, right ?

The good news is your credit file will heal itself in time, defaults stay for 6 years regardless of what you do, after that they simply vanish, as though they were never there.

You could make a complaint over this, you must exhaust the DMC `s complaints procedure first though, then escalate to the FOS if not satisfied, complaints are best sent in writing, but don`t expect a quick response.

Who were the company you contacted out of interest ?

apollostarbuck

sourcrates said:

Hi,

I've moved your post to the general forum.

This "advisory group" you contacted, I'll have a wild shot in the dark and have a guess that it was a fee charging debt management company, am I correct ?

The reason I know this with a high degree of certainty, is because if you could afford your debt repayments, then non of the free to use debt charities would have advised a DMP.


Fee charging debt management companies are not running an advisory service, they are there to sell you something, whether that may be a DMP or an IVA, both are lucrative to them, and they will sell you one or the other, regardless of whether your circumstances dictate it necessary, or not, because that is what they do, it`s why they are there.


Debt management will nearly always involve defaulting on your debts, its par for the course, and most people who enter debt management are fully aware of this fact, however some tend to rush into things and go with the first bit of advice they get, that advice is not always credible, or in your best interests.

I`m suspecting that was what happened in your case, right ?

The good news is your credit file will heal itself in time, defaults stay for 6 years regardless of what you do, after that they simply vanish, as though they were never there.

You could make a complaint over this, you must exhaust the DMC `s complaints procedure first though, then escalate to the FOS if not satisfied, complaints are best sent in writing, but don`t expect a quick response.

Who were the company you contacted out of interest ?

For further context, I live at home. I explained this to them, that after my expenses and debts, I contribute whatever I have left to the household bills. There was no fixed amount. It was flexible. This allowed me to maintain my repayments.

I was asked what I would normally want to contribute then, and I gave them a figure that I'd be happy to contribute to the housing were I not on a high monthly repayment. They took that figure and put it into the expenses, therefore having the effect of inflating it significantly. According to this spreadsheet,  I was unable to repay my creditors and therefore needed a DMP. The fact that I had never missed a repayment to my creditors didn't seem to be enter the conversation.

I signed the document, excited by the prospect of reduced monthly payments.

I spoke to an advisor from the Financial Obudsman on the phone - not an investigator. After hearing my story, she gave her opinion that it would be difficult to lay blame on the company in this question because:

• I signed the document which included a summary of my expenses, including this 'inflated' rent even though I actually lived at home with parents.
• I could have gone back to the company soon after to cancel the DMP had a better case with my creditors to undo the credit damage, citing that 'my circumstances had changed', which is something GP of course allow.
• The DMP was put in place, and the creditors got less than what they should have, so they reported it to the credit reporting agencies. All done properly.

The fact that the DMP shouldn't have been put in place didn't seem to enter her rationale. It made me realise that any investigation may likely agree with her that GP technically did nothing wrong.

I had hoped to settle all the debts, and have the Financial Obudsman recommend the adverse credit file that resulted from the DMP be removed. But it seems that may not happen, and I will have to wait several years before my life can return to normal after a terrible decision on my part.

sourcrates

Well its not the end of the world, but what you describe is a common ploy used by fee charging DMC`s to sell you something you don`t really need, the problem you may have is that debt management is not a regulated debt solution, not yet anyway.

Its an informal agreement between you and your creditors, you signed, you had a cooling off period, you didn`t cancel, fairly straightforward to be honest.

Your not going to get your credit file wiped of negative information, that`s not going to happen.

However I would still put in a complaint to GP, you have nothing to lose, you may be able to recover some of the fee`s you paid, which would be better than nothing.

Look on it as been a salutary lesson for the future, you are not the first, and you won`t be the last to be duped into an inappropriate debt solution.