DMP Plan - Default

Rebelizabeth23

Hi, so 2 years ago I had a breakdown with all my credit cards as I was leaving myself with no money to live as I was so focused on ensuring my credit cards were paid every month. This all got too much as I wasn’t actually paying much off the balance just interest! I had never ever missed a payment!
I then decided to contact a DMP for support and so I only had 1 direct debit a month…following this 1 of the credit card company’s has put my account into default mode despite never a payment been missed they still get £100 pm from the DMP! This has now cost me in getting a mortgage and will refrain on my file for 6 years! I don’t understand how this works and how they can do that as they have still always received payment! How are people suppose to do better and better themselves n then be knocked right back down!!! However my other credit card just shows no data and then when you click into it it states payments arrangements in place. And becuase I now can’t get credit due to this now a default I can’t even get another card/loan to clear the balances to stop the default. Is there anything I can do to rectify this on my credit file?

thanks in advance  

fatbelly

Defaults are standard with a debt management plan. The whole entry drops off after six years

You have been taken out of the terms that you signed up to.

The alternative mark, as you have found, is Arrangement to Pay. In that case the entry drops off six years after the balance is settled.

MorningcoffeeIV

Rebelizabeth23 said:

I then decided to contact a DMP for support and so I only had 1 direct debit a month…following this 1 of the credit card company’s has put my account into default mode 

All your debts should be in 'default mode'.

If not, ask the lenders to do so ASAP.

Brie

Most unfortunate that you are in this situation as many of these companies don't really explain the process to individuals like you and don't bother to advise on alternatives that may be free, cheaper and/or much more appropriate.  Hope you get it sorted in time.

sourcrates

I`m guessing you are paying a company for this DMP ?

Debt management plans are free when you use one of the debt charities, which is what we recommend.

Defaults are, as others have said, standard in debt management, and to be expected, you can`t "stop" them by paying them off, it will remain for 6 years regardless of what you do.

When you stop paying the contractual payment, that breaks the terms of your original agreement, and accounts will default at some point because of this, no matter how regular or on time your DMP payments are made.

It appears to me from your post, you have not been given all the required information before entering debt management, and I assume this is because you picked the first fee charging debt management company Google listed, it happens a lot unfortunately, they are not working in your best interests, all they want is your cash.

It`s all covered by section 87 of the consumer credit act, the agreement you signed at the start, obligating you to repay 5% of the outstanding balance on a monthly basis, these are known as contractual payments, when you enter debt management, you usually make much smaller monthly payments, but this is on an informal basis, you are still under contract to pay the contractual payment, and as you are not doing that, at some point the creditor will either default you, or add AP markers.

Once that happens the original agreement will end, as you are in default of it, and that default shows for 6 years regardless of what you then do.

Stepchange/payplan, always fully explain the pro`s and con`s of a DMP to you before you start one, fee charging companies are not so gracious in their efforts, they may go through the motions with you, but they don`t want you to know all the facts, as they also know their so called service can be had fee free.

Rebelizabeth23

Thank you, it’s PayPlanPlus I am with! I’m just going to have to keep working at reducing the balances as much as I can and hope that I can get offered a 0% transfer in the coming months for more than £1k so I can clear them and get the defaults cleared asap! So days you just feel like you’re fighting an endless battle with finances! 

sourcrates

Oh, so not a fee charging company then, I would have expected Pay plan to explain the process a little more clearly than they apparently have done in your case.

Obtaining a mortgage while in a DMP should not be impossible, you just need a sub prime broker rather than one who deals with the main banking sector.

MrFrugalFever

Rebelizabeth23 said:

Thank you, it’s PayPlanPlus I am with! I’m just going to have to keep working at reducing the balances as much as I can and hope that I can get offered a 0% transfer in the coming months for more than £1k so I can clear them and get the defaults cleared asap! So days you just feel like you’re fighting an endless battle with finances! 

Sorry to hear that you've reached a difficult point in your financial journey. There will be a light at the end of the tunnel, there's many forum posts which will confirm this.

I just want to re-iterate a few points as I fear your post above (quoted) means that you still aren't quite understanding the default/DMP impact and how this translates to further credit.

From the day the default is recorded, it will remain on your credit file for 6 years, unless you have concrete evidence to present a court as to why it should not have been placed on your reports.

The arrangements to pay will remain on your credit file for LONGER than 6 years because it will be considered an active agreement but on varied terms and therefore the data entry will not drop off until the account is satisfied/settled. This could mean you are tarnished for far longer than 6 years proving any credit application extremely difficult to gain acceptance.

Any lender that will look at your credit report as it stands now will almost definitely decline you for credit because you are a high risk and may not pay them back, so your chances of gaining an acceptance for a 0% BT card will be slim to zero chance, for most of these 6 years.

I suggest having a conversation with Pay Plan and actually discussing whether this is the right route for you.

In the meantime, head on over to the Debt Free Wannabe forums to help with cutting costs and hammering away at your debt.

Best of luck,