Considering DMP but confused on the process

s7beck

Hello everyone,

I have been reading through this forum and the advice on offer has been very helpful, however I'm still a little confused on the process.

I have read that I should wait until I default on my payments and then set up a standing order and pay what I can afford, does this follow a formal discussion with my creditors? As I have also read that I should ignore them when they try and contact me.

How do I actually set up a DMP? Is this directly with my creditors? 

I have also read that if I default, ignore contact, they will pass my debts over to a collection agency, and I set up a repayment plan with them, is this correct?

I have an old debt from way back with Barclays who passed it over to Link Financial (who have been brilliant I must add) but for the life of me I cannot remember how it got to that stage.

I am very confused (I have cognition issues), any advice greatly appreciated : )

fatbelly

Is Link your only debt?

This will have been defaulted, possibly a long time ago.

Was there ever a six-year period when you did not make a payment to this?

Have you checked your credit file to see if this appears anywhere?

s7beck

Hello. No Link is not my only debt, I have been paying them monthly a small amount without issue.

I have several CC debts which I am now struggling to keep up with. I'm about to miss a payment today for the first time. 

Thanks.

s7beck

Just want to clarify my confusion.

I understand that I should let my accounts go into default and that my creditors will likely sell my debt to a collection agency and when all my accounts default I should apply for a DMP, I don't understand how I personally do this without using StepChange for example.

I also don't understand why a DMP is better than just cooperating with the collection agency and setting up a monthly payment plan. As stated earlier I have been with Link for over ten years paying £20 a month off that particular debt which was initially 4k.

What is the advantage of getting a DMP over paying a collection agency a set monthly amount?

Thank you again.

sourcrates

Forget the terminology, DMP (debt management plan) is just a term used to describe an informal way of repaying what you owe at an affordable rate, you have effectively been in a DMP with link for those 10 years.

It`s basically one and the same thing, the only difference is stepchange do it all for you, and if you self manage, you set up all the payments etc yourself.

We only advise defaulting first because that can benefit you in two ways, first all interest stops, and second, you have a clear 6 year window till your credit file recovers, and the default drops off your file.

Debt collection can be quite complex, there are debt collectors, who simply collect debts on behalf of their clients, then there are debt purchasers, who buy debts, and then chase them themselves, or engage a collection company to chase for them, as I said, it can get quite complex, always read the letters you are sent, as the clue to who you are dealing with will be in there.

s7beck

Thank you, now I understand. My debts are with the Lloyds banking group and Natwest, I'm not sure who they would use to recover the debts. 

Will the letters tell me that my account has gone into default? Or would I assume that if it is stated that my debt has been passed to a collection agency/sold etc then that is by default, the default.

I think it is the stage where my details are going to be passed to an agency for collection, or rather who they are and how aggressive they may be pursuing the debt is what is worrying me the most.

sourcrates

Debt is nothing to worry about, the fear factor gets ramped up by various comments or websites you might read.
In reality there is precious little debt collectors can do, despite what they may say, its not something you should fret about, its simply business.

The term "default" can be applied in various ways where debt is concerned, what we mean by default, is when the relationship between the lender and yourself has broken down to the point you can no longer work together, and the lender demands full payment of the debt, you cannot pay that so the account officially defaults.

That date of default is then marked and recorded on your credit file, it stays showing that status for a period of 6 years, it will then automatically drop off your file.

The account defaulting opens the way for the lender to take a number of actions to recover the debt, legal action, sale of the debt, or assign it to a collector to chase, its usually one of the last two options they choose, legal action at this point is rare.

Hope this helps.

s7beck

This a great advice thank you, and yes it does help, a lot.

Thank you.

RAS

And meantime, do check that Link debt, as it may still be showing on your credit record. If so, what does say?