Next steps with DMP

jones98746

I am self-managing my DMP, I have been ignoring all the phone calls and letters, and waiting for a default notice. This morning I received my first default letter from M and S bank with the wording 'Default notice for M&S credit card account xxxxxxx'  - this is the first one I have received so I am a bit worried.

The default is saying I have reached a certain level and we're sending you this default notice, we are required to send you this default notice under section 87(1) of the Consumer Credit Act 1974.

But the letter says, that if I make a payment now they won't take action - (so I am not sure if this is a default notice) if I don't pay by 01.04.25 they will send a final demand to pay the full amount immediately, and then they will close my account and pass my details to a debt collection agency. 

What is the next step, do I contact them now to offer a percentage of what I can afford or wait until the default shows on my file or am I waiting for another letter confirming I have defaulted or is this the only letter I will receive?  As you can tell I am unsure and want to do the right thing. 

Also when I have received a definite default do I contact each creditor in turn, once I have worked out the percentage pro rata to each creditor? For example, M&S will probably be first, send them my income/outgoings and a percentage of what I can afford, should they be aware of the other debts I owe so they can see I am being fair?

So for example, some months, I may only be paying, for example, £50 to M&S until I receive a default letter from my other creditors.

Do the creditors need to see my bank statements, or just income/outgoings and total debt on all my creditors and the pro-rata payment to each?  

Who am I contacting and writing to, M&S or the debt collector who will be buying my debt and who do I pay the pro-rata payments to?

Sorry, lots of questions and not doing too well mentally.

Thank you in advance, you are all so knowledgeable. 




 

Brie

I'm of the opinion that is you know how much you can afford to pay all of your creditors you don't need to wait for a default if you intend to have a DMP.  It's different if you are going for a different solution.

What they normally want to see is a financial statement - so how much your income is, how much your various expenses are (rent, utilities, phones, council tax, food etc - the essentials) and then a line stating that if your income is £X and your expenses are £Y then you have £Z available to pay all of your creditors.  Then you would list all your creditors and how much you owe and offer each a pro rata amount of your excess income.  

So say you owe M&S £100 and O2 £50 and have £3 available to pay you would offer M&S £2 and O2 £1.  They might accept, they might not, chances are they won't even respond in which case you can assume they accept your offer.  Frankly M&S is quite good to deal with.

No one is going to ask to see your bank statements unless your financial info looks really dubious.  

At this point you are dealing with M&S so just keep corresponding with them.  

And fyi - debt collectors are sometimes just that, collectors who do the work of getting the money that is then paid to the actual creditor.  I.e. they are managing the debt, not buying it.  But that should be clear if/when the creditor passes the debt along.  

jones98746

 Brie said:

I'm of the opinion that is you know how much you can afford to pay all of your creditors you don't need to wait for a default if you intend to have a DMP.  It's different if you are going for a different solution.

Thank you for your reply, I have waited for the default as I was advised a default will last 6 months on my credit file, in contrast to an arrangement to pay which would be ongoing. 

Rob5342

That letter is telling what you need to do in order to avoid a default, so ignore it for now and they will default you. After that someone will write to you at some point to ask for payment and that is when you can stay paying. Make yourself a budget of what you will be paying each creditor, and then start paying them that amount as they default and save the money you've assigned to the ones you aren't paying yet. You can pay them however much you want to, its completely up to you. A proportioal split is a good starting pont but you might, for example, decide to pay a small debt a much bigger share to clear it earlier. Just to whatever works for you. 

The reason for waiting for defaults is thst it is much better for your credit report in the long term. If you default then the default will drop off 6 years after it was applied, if you start paying before you default you are likely to end up with a payment arrangement marker which will stay for 6 years after the debt has been paid off. If you don't default then your credit report could be harmed for much longer than if you hsve, potentially for 10 years instead of only 5. The other advantage of defaulting is that the debt is more likely to be sold to a debt collector who would accept a reduced settlement offer somewhere down the line, so you could clear it for a lot less.

Don't worry about them accepting or not, just pay what you decide. 

sourcrates

Section 87(1) consumer credit act is the clue here, the relevant section of the act that deals with default notices.

Currently you just do nothing, you wait let the process play out, be patient!!

once the time runs out and the dust settles, and that default is registered on your credit file, you wait (again!!) until you are written too.

Whoever picks up the account will write to you, then you can make payment arrangements, oh, and you don`t need to mess about writing to them making offers, showing them this, that and the other, go to the collectors website, you can make payments there, or agree a payment schedule with them.

ManyWays

"I have waited for the default as I was advised a default will last 6 months on my credit file"
that should have been 6 years (you probably know that and it was just a slip when typing.)