Worried about arrears and defaults on a dmp

shoret

I have 28k in debt and had my first missed payment mark on my credit file, this was due to not paying the minimum payment amout, I'm on a dmp with Stepchange and paying as much as I can, do I just wait until it defaults? Does this then get passed onto a debt agency?? Wouldn't an IVA be better, is it normal to keep paying off debt like this on a dmp?? 

fatbelly

Yes, this is normal.

On a debt management plan, by definition, you are paying less than the contractual payment. After three to six months of sub-contractual payment the guidance says that the lender should register a default.

In our view, a default is the preferred marker as you now know that the whole entry will drop off your credit file six years after that date.

The default does allow the lender to sell the account to a debt buyer, like Lowell for instance, but that's a matter for them and it just means that stepchange send your payments to the new owner.

IVAs are notoriously mis-sold and so it's worth saying again that this is bankruptcy for those with an asset to protect, So if you're a homeowner with maybe over 30k of debts and £100-400 surplus available that would be an option to consider. Below that level of surplus it's unlikely an IVA would succeed and above that level it's unlikely you would ultimately pay less than in a dmp and would still have the uncertainty of having to remortgage in year 5.

RAS

Whether you do a DMP or IVA, your credit record will be marked for non-payment. Ideally you want them marked as defaulted as soon as possible, as that way your credit record improves after 6 years.

With an IVA your details are also listed on the Insolvency Register.

Did you stop paying before you set up the DMP and save for an emergency fund? As this encourages the creditors to default you sooner.Or did you rush into a DMP before the creditors recorded the defaults?

elsien

If you’re not understanding the DMP and it doesn’t sound as if you fully do, then going back to step change and asking your questions might be a good starting point.

sourcrates

It`s all been explained previously on the OP`s other thread -

Missed payments, defaults and credit score with DMP — MoneySavingExpert Forum

I agree if they are still not understanding the process, they should perhaps speak to Step change again, however, they are more likely to learn more about the process by reading this forum, than by speaking to call centre staff with a long que of people on hold waiting for advice.