Debt questions around DMP

2021rdsunshine

Discounted2024 said:

Ah ok, thanks.

So for this loan is just says 'In arrears' with clear score.

For now just ignore that letter?

You can ignore it. If the creditor sent you a default notice by letter, keep an eye on your credit file and eventually the default will appear. Then they will write to you to let you know if they are still managing the debt, if they send it to a debt collector or if they sold it . You can then engage with whoever owns the debt and start your DMP if that’s what you want to do. 

Rob5342

It will change to saying in default at some point but it can take a while. I'd wait until you have confirmation that it has defaulted before you make any payments. Things move very slowly in the world of debt management so there is no need to act immediately. 

sourcrates

Try not to react to every letter you get, they will try to get the money from you by writing to you before defaulting you.

Keep an eye on your credit file, once it says default in the status box, then your balance is frozen, and no more interest can be added.

After that its up to you what you do.

thelibrarian11

Can I just check I understand this - does interest automatically stop if a debt defaults?

Grumpelstiltskin

thelibrarian11 said:

Can I just check I understand this - does interest automatically stop if a debt defaults?

Yes it does.

stu12345_2

thelibrarian11 said:

Can I just check I understand this - does interest automatically stop if a debt defaults?

yes as you have broken the credit contract of the card or loan. the card or loan borrowing is no longer active , but in default mode.

all that can happen now is repayment of the balance

sourcrates

thelibrarian11 said:

Can I just check I understand this - does interest automatically stop if a debt defaults?

When an account defaults, it means the financial relationship between yourself and the lender has ended.

When the agreement between you ends, the lender then demands full payment of the outstanding balance, which, for credit cards, will remain whatever the balance is on the date of default.

No more contractual interest or charges can or will be added.

Your balance is then frozen at whatever figure you owe at that point.

For loans, the full balance you would have paid over the loan term becomes payable, but nothing more after that can be added.

Occasionally, and in most cases this won`t happen, but you might find a collection agency will add their own "fee" to a debt, they are assigned to collect, and try and get you to pay it, these fee`s are generally unenforceable, as you cannot add collection fees to a debt unless the original credit agreement allows 3rd parties to do so, and by far the majority do not allow that, especially CCA regulated debts.

But as a general rule of thumb, once defaulted your balances are frozen.

thelibrarian11

Thankyou so much this is so helpful, I'm loving the crystal clear detail.

Discounted2024

Hi All,

I've just checked my credit report and see 2 defaults have now appeared.
I've not had any letters around collecting the debt.
Do I now start looking to pay what I can reasonably afford or wait until I get a demand of sorts?

Rob5342

There's no rush, I'd wait until someone starts writing to you about it.