Unable to pay back Debt

kimwp

babayaga96 said:

How long does the DMP last? And why is the StepChange guy saying it is better not to default and opt for DMP straight away because if you keep up your payments towards the DMP then your credit score will increase whereas if you default then it will be prominent black mark on your credit profile. 

I am due to decide tomorrow as a whole what needs to be done.

Ask the Stepchange guy about the impact of an arrangement to pay marker on your credit record.

Humdinger1

Also @babayaga96 I think that as Stepchange while an excellent charity in many ways is funded by the finance companies, its focus is always on full repayment rather than F&Fs.  Someone more expert than me will be along shortly to confirm.

babayaga96

Got it. How long does the DMP usually last?

fatbelly

babayaga96 said:

How long does the DMP last? And why is the StepChange guy saying it is better not to default and opt for DMP straight away because if you keep up your payments towards the DMP then your credit score will increase whereas if you default then it will be prominent black mark on your credit profile. 

I am due to decide tomorrow as a whole what needs to be done.

A dmp lasts as long as it needs to last

The other comments come from someone who is rather mixed up. In a dmp you want interest and charges stopped. There are two forms of mark on your file. Both will have a large impact on your ability to get further credit because they tell prospective lenders that you are in trouble.

A default mark means the whole entry disappears in 6 years' time

An Arrangement to Pay marker stays until 6 years after the debt is paid off

The is no one black mark and no official score

We tend to think it is best to get the default as quickly as possible and save an emergency fund while you are waiting

Rob5342

Humdinger1 said:

Also @babayaga96 I think that as Stepchange while an excellent charity in many ways is funded by the finance companies, it's focus is always on full repayment rather than F&Fs.  Someone more expert than me will be along shortly to confirm.

They are funded by the creditors which puts them in a difficult position and as a result they take an approach that favours creditors at the expense of people in debt. I'm in two minds about them, on one hand they advised me to start a dmp straight away without defaulting so my credit record has been harmed for two years longer than it need have been, on the other hand id been in debt for years and if it hadn't have been for them then I might not have started a dmp. 

ManyWays

How long does a DMP last, you cans start by taking the debt in the DMP and dividing by the monthly payment.

That will be shorter in practice if things go well, eg you pay off the HP on the car and can then throw that money at your debts, when your childcare costs drop, etc  But it will be longer if things go badly financially, your income drops, your mortgage/rent goes up, you have another child etc

You may hope to be able to speed it up by making affordability complaints, or get low settlement offers when debts are sold to a debt collector, or have debts become unenforceable if a debt collector cant produce the CCA paperwork. But there is a lot of crystal ball gazing here, which is complicated by not knowing how the debt world will change over the next few years. More debts are marked as defaulted quickly now in a DMP than used to be, especially if you arent paying a large amount to them. The number of debt collectors seems to be dropping, so fewer debts get sold on multiple times. Some debt collectors will rarely accept a full offer. The CCA request route may close in a couple of years with proposed changes to the law (but it may not.)

Humdinger1

@fatbelly you're right if it's  my comment you're referring  to - I may well be somewhat confused.  Later commenters have explained it better but I think we all agree that Stepchange will always go for full payment rather than F&Fs and why.  That's bad news if the CCA route is closed though good it's not certain.   Is there anything the general public can do other than lobby their MP? The odds seem too stacked against borrowers as is and why should debt be enforceable if lenders can't keep paperwork proving it when defaults are built into their business model.  More background and suggestions for campaigning would be appreciated.   Thanks Humdinger 

fatbelly

No I was referring to the Stepchange adviser being confused

Humdinger1

Thanks @fatbelly

kimwp

Humdinger1 said:

Thanks @fatbelly

Funnily enough I thought fatbelly might be referring to my comment, and almost asked too. 😄