DMP questions

Zzzz_2

sourcrates said:

Zzzz_2 said:

sourcrates said:

Hi,

On these boards we always recommend you never start debt management until all your debts have defaulted, only then is your agreement terminated, only then does interest definitely stop, and only then do you have a clear 6 year window to the defaults dropping off your file, you appear to have made the unfortunate classic newbie error of rushing in too soon, without really understanding how the entire DMP process actually works.

But its not really your fault, Payplan should have explained this process to you, alas its not top of their to do list.

Your direct debts should have been cancelled months ago, its also considered good practice to have saved up an emergency fund, by not making payments to your creditors for at least 6-8 months, prior to starting your DMP, as credit won`t be available to you.

Basically you plan and map out the course of events prior to the start, it appears you have done none of that, and unfortunately this is all too common, if you had asked on here first, we could have helped you organise yourself.

Let me just run through how debt management works, as you appear to be confused, your DD`s need to be cancelled, and pronto, the payment you make to pay plan gets distributed by them, to your creditors, that is now your monthly payment to them, now you've started, you may as well continue, debt management is always going to have an adverse effect on your credit file, as you are not maintaining the contractually agreed repayments, again, they should have told you that, meaning you were prepared for it.

If you hadn't missed a payment, can I just ask why choose debt management so quickly ?

Also defaults disappear 6 years from the date the default was first registered.

This seems to me a very sensible advice.

I have a newbie question, apology if that has been answered many times; just want this ingrained in my head.

Let's say once defauted, interests and charges stops then start the DMP, monthly payments evenly distributed among creditors however, wouldn't each creditor mark credit file with a default every month?

Could it mean even the debt is cleared in 6 years, last default (?)  marked in credit file will be at the end of 6 years and that will take another 6 years to drop off the credit file - essentially it will be 12 years to clear again??

No, defaults stay on file for 6 years, from the date the account defaults, after that they drop off your file regardless of what you do.

Accounts default just once, that status is then updated every month by the CRA`s, they are just reporting that the account defaulted, the default date stays the same, it just gets updated every month for 6 years.

You are confusing defaults with "AP" markers (arrangement to pay) these are how your file may be marked by a creditor, if you start debt management too early, before your debts default, now AP markers do exactly as you described in your post, they remain on file for 6 years after you finish making payments, so yes, potentially 12 years.

So AP markers in debt management are not good, but defaults are.

Thanks. Here's my situation if you could help:

I have £40k on 9 CCs and 1 OD, still continuing with min payment £1k/month with only 2 of CCs (Lloyds & Barclaycard) still on interest free and hopefully will be paid off before/nearer the interest free rate expires.

But the remaining 7 CCs and 1 OD (HSBC) are on high interest, may default within the next six months with my current income/expenditure.

I also have a current account with Lloyds but no OD facility and I'm thinking to switch to them because once I default, I may include HSBC OD in the DMP and they will inevitably close the account/OD and the CC with them.

1. Question: could I exclude Lloyds CC and Barclaycard as I am continuing with payment, just include all other defaulted CCs and HSBC account's OD?
2. I would really want to keep HSBC account that has £4k OD but only problem is HSBC CC is on high interest and has got highest balance. Not sure if you/anyone could offer any advice how to approach this?
3. I have £8k of stock investment as the only asset I own (which has gone down signifantly this year)

Cheers,
Losing my mind.