Credit file / debt management plan question

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Hi,

I owe money to various lenders in forms of loans and credit cards. When Covid happened, I've been made redundant and I went into a debt management plan as the monthly interest total was way too much and I couldn't afford to pay it.

I used StepChange to set up a debt management plan and I assume all lenders have been notified. Yet some of them (American Express) continued marking my credit file with missed payments whilst others didn't. 

The question is, is my credit file going to be clear 7 years after the date I went into the debt management plan, or from the last attempt marked on my credit file as a missed payment (American Express for example)?

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  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
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    Each account will drop 6 years from default, so make sure that each has defaulted.
  • ItsComingRome
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    Each account will drop 6 years from default, so make sure that each has defaulted.
    The guidance says that accounts shouldn't be defaulted if there is a payment arrangement in place that is being adhered to.
  • sourcrates
    sourcrates Posts: 28,993 Ambassador
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    Each account will drop 6 years from default, so make sure that each has defaulted.
    The guidance says that accounts shouldn't be defaulted if there is a payment arrangement in place that is being adhered to.
    Its not always to your best advantage to start debt management too soon, zx81 hits the nail on the head, defaulted accounts are removed from your file after six years, those subject to an arrangement, marked with an "AP" marker, will stay on there six years after your final payment has been made.

    Guidance does not always benefit you unfortunately.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • chrisdem
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    Each account will drop 6 years from default, so make sure that each has defaulted.
    The guidance says that accounts shouldn't be defaulted if there is a payment arrangement in place that is being adhered to.
    Its not always to your best advantage to start debt management too soon, zx81 hits the nail on the head, defaulted accounts are removed from your file after six years, those subject to an arrangement, marked with an "AP" marker, will stay on there six years after your final payment has been made.

    Guidance does not always benefit you unfortunately.
    Thank you very much for your replies. I pushed this issue under the carpet and have now realised I really have to sort it out.

    Does that mean I should stop paying the debt management plan, thus forcing the accounts into default, THEN re arrange a debt management plan? 

    My credit is in ruins anyway, I have lost two years basically:



  • chrisdem
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    Each account will drop 6 years from default, so make sure that each has defaulted.
    Would StepChange be able to help me with this, or would I have to call all lenders separately and talk to them. 

    Thank you.
  • sourcrates
    sourcrates Posts: 28,993 Ambassador
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    And what would you say to them ?

    Neither your creditors nor stepchange will be interested in the state of your credit file, this is something you have to do yourself, for your own benefit, but your two years in to debt management now, this is something to be done before you start paying them back ideally, not half way through.

    Your options are to carry on regardless, or stop paying altogether, ignore everything for a year or so, in the hope they default you, you could save the money into an emergency fund, and that could be used to make full and final offers to your creditors, although this works best when the debt is sold on.

    I don`t want to steer you down a path that will keep you in perpetual debt, for any longer than is necessary, its better to get it all paid off, and just let time heal your credit file.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • chrisdem
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    And what would you say to them ?

    Neither your creditors nor stepchange will be interested in the state of your credit file, this is something you have to do yourself, for your own benefit, but your two years in to debt management now, this is something to be done before you start paying them back ideally, not half way through.

    Your options are to carry on regardless, or stop paying altogether, ignore everything for a year or so, in the hope they default you, you could save the money into an emergency fund, and that could be used to make full and final offers to your creditors, although this works best when the debt is sold on.

    I don`t want to steer you down a path that will keep you in perpetual debt, for any longer than is necessary, its better to get it all paid off, and just let time heal your credit file.
    That makes a lot of sense, thank you.

    There is one thing I don't get, why wouldn't lenders default me, what difference does it make to them.

    And lastly, despite the payment plan where I am paying monthly/religiously towards 4 lenders, one of them sold the debt to an agency that is now chasing me to pay more/revise the current situation. That is fine, but is this a case where the said lender probably defaulted me?
  • sourcrates
    sourcrates Posts: 28,993 Ambassador
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    There are no hard and fast rules over defaulting accounts, only guidelines, and different lenders interpret those guidelines in different ways, they are as savvy about the situation as anyone else, they understand the difference between defaults and AP markers, but all they want is there money back, so if you don`t scratch there back, they won`t scratch yours.

    You only pay what is affordable to a debt, according to your budget, if they ask for more, just tell them no.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • chrisdem
    chrisdem Posts: 20 Forumite
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    edited 11 February 2022 at 7:57PM
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    I called StepChange and I have explained I do not see any point paying towards my debt through the debt management plan since the lenders see those as missed payments. How are those missed payments is beyond me, what am I paying for then. 

    The advisor tried to talk me into bankruptcy which I won't consider at all. He then suggested I review the debt management plan as they suggested a while ago, see if I can pay more or provide a more detailed/up to date financial situation, then maybe the creditors will default my accounts, which sounds like a lot of crap, not even my 6yo would believe that.

    I will renew my plan, wait for a few weeks to see if there is any change, then stop it. This is not about me not paying the debt back, as I want to, having shown willingness to do so for the past years. It is about me having the payouts acknowledged rather than getting the money and keep messing up my credit file with missed payments, just because.
  • LaDerniereSemaine
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    chrisdem said:
    I called StepChange and I have explained I do not see any point paying towards my debt through the debt management plan since the lenders see those as missed payments. How are those missed payments is beyond me, what am I paying for then. 

    The advisor tried to talk me into bankruptcy which I won't consider at all. He then suggested I review the debt management plan as they suggested a while ago, see if I can pay more or provide a more detailed/up to date financial situation, then maybe the creditors will default my accounts, which sounds like a lot of crap, not even my 6yo would believe that.

    I will renew my plan, wait for a few weeks to see if there is any change, then stop it. This is not about me not paying the debt back, as I want to, having shown willingness to do so for the past years. It is about me having the payouts acknowledged rather than getting the money and keep messing up my credit file with missed payments, just because.
    The ICO guidance specifically states that defaults should not be registered where there is an agreement in place and the debtor have kept to that agreement.

    I suppose, in theory, there is an argument that this only applies to action taken unilaterally by the lender, although I suspect there is little to be gained by a lender sticking their neck out here, they'll likely be "rewarded" by an FOS complaint if the debtor decides at some point in the following years that they didn't want a default after all.  Sticking to the guidance and doing no favours is probably the best course of action for them after all is said and done.
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