Urgent advice. DMP now or default first. Please help on a plan

RAS

They must terminate the agreement with you before they can take legal action. Which is why you need to read the mail because you need to respond promptly. Ideally, have a paper file for each creditor and once a week, open the mail, file most of it after a glance.

If you get a default, the provider might tell you how to pay, assign the debt to another company who will tell you how to pay, or sell the debt on to another company, who will tell you how to pay. 

At that stage it makes sense to make a monthly payment if you can. Make sure your budget is reasonable but not overly generous and don't be freaked into paying more than the creditors fair share if they act early, otherwise you get in a mess later.

If you don't pay anything, creditors are more likely to pursue legal action. On the other hand a few seem to lose your file, in which case don't prod the sleeping bear.

HolyLad

I want to thank all the comments and guidance and help so far.

A further question(s) if I may..

1. Once debts default, I am aware some may never send a LBA, some may. I guess is it a gamble to wait it out say 6 months or longer before negotiating or paying anything to see if you get reduced final sentiments? My aim would be to pay back less than what the balance initially was at default..like 50% less.

Or can I contact them with reduced offers right away the day after a default appears on my report?

Or is it advisable to start paying right away after a default?

Basically waiting it out play the long game with no payments or start asap AFTER default..

Thank you

RAS

Once the default is issued, you may want to make a much reduced monthly payment. It's up to you.

Regardless, the creditor may keep the debt in house, more commonly they either assign the debt to a collection agency, or sell it on. In all cases, they should write to you with your new reference number and details of the bank account into which to pay.

Making payments reduces the chance of a letter before action. Why expend money on legal costs when they are already getting a steady income?

Amex and credit unions seem more likely to take legal action. Otherwise, it's pretty random.

sourcrates

Holyt said:

I want to thank all the comments and guidance and help so far.

A further question(s) if I may..

1. Once debts default, I am aware some may never send a LBA, some may. I guess is it a gamble to wait it out say 6 months or longer before negotiating or paying anything to see if you get reduced final sentiments? My aim would be to pay back less than what the balance initially was at default..like 50% less.

Or can I contact them with reduced offers right away the day after a default appears on my report?

Or is it advisable to start paying right away after a default?

Basically waiting it out play the long game with no payments or start asap AFTER default..

Thank you

Answers......

About 1-10 original creditors will take legal action, this changes to around 2-10 for debt purchasing companies if you ignore them for a long period of time.

Obtaining discounts of that nature requires you to play the long game, nothing happens quickly in the world of debt collection, it can take a few years of tooing and froing to obtain discounts that big.

Debt collectors/debt purchasers will go through their standard letters and calls process with you for a period of up to 3 years or more, as I said, things move very slowly, there is no rush.

The average time it takes for them to respond to a letter is 30 days, so you may want to extend your timescales here a tad longer.

HolyLad

sourcrates said:

Holyt said:

I want to thank all the comments and guidance and help so far.

A further question(s) if I may..

1. Once debts default, I am aware some may never send a LBA, some may. I guess is it a gamble to wait it out say 6 months or longer before negotiating or paying anything to see if you get reduced final sentiments? My aim would be to pay back less than what the balance initially was at default..like 50% less.

Or can I contact them with reduced offers right away the day after a default appears on my report?

Or is it advisable to start paying right away after a default?

Basically waiting it out play the long game with no payments or start asap AFTER default..

Thank you

Answers......

About 1-10 original creditors will take legal action, this changes to around 2-10 for debt purchasing companies if you ignore them for a long period of time.

Obtaining discounts of that nature requires you to play the long game, nothing happens quickly in the world of debt collection, it can take a few years of tooing and froing to obtain discounts that big.

Debt collectors/debt purchasers will go through their standard letters and calls process with you for a period of up to 3 years or more, as I said, things move very slowly, there is no rush.

The average time it takes for them to respond to a letter is 30 days, so you may want to extend your timescales here a tad longer.

Thank you, your replies are invaluable to helping me. it really is appreciated.

i want to try be as prepared as possible. So a further question;

1. Lets say a default still hasn't been applied for 10 months... how do i get them to add a default and why are they delaying it? and backdate it to 3-6 months. is there a template i can use to get them to refund all the charges and fees since they havent defaulted me for multiple months of missed payments?

any other advice you can give me to be well prepared? 

HolyLad

for example. Very. the balance is at 1800 as it stands now. the interest APR is about 68%. this could balloon to double within a year or so if no payments are made and no default. the late fees and charges. where do i stand with this for example? all the balances will be so much higher waiting for a default if they take longer than 6 months.. due to the late fees and charges. how do i tackle this? 

sourcrates

Just because a company adds fee`s and interest to a debt, does not mean that you have to pay such fee`s or interest.

FCA guidance states "a default can be registered after between 3 and 6 missed contractual repayments" which equates to about 6 months.

So a default issued within that timescale is acceptable, outside of that timescale you may have cause to raise a complaint with the lender.

You can site unfair added charges/interest, you can say its unfair on you as the lender has not followed guidance etc, but to be honest you are withholding payments from them, so your case may not be that watertight.

Why do they delay defaulting? any number of reasons, could be company policy, or they may be hoping to retain you as a customer, as a default is kinda final and ends that customers relationship with that lender.

If your plan is to enter a DMP after the floods subside, then your balance at that point is relevant, but isn`t relevant, if you get my drift, no one really pays back the full amount in a DMP, many deals are done later in the process to settle for less than is owed.

Which is why an emergency/settlement fund is essential, when debt buyers get involved, as they will, they buy debts in bulk for pennies in the pound, so they can afford to pass on those savings to you to get a quick deal done.

But all that is a long way off yet, just keep doing what your doing and try not to overthink things.

HolyLad

sourcrates said:

Just because a company adds fee`s and interest to a debt, does not mean that you have to pay such fee`s or interest.

FCA guidance states "a default can be registered after between 3 and 6 missed contractual repayments" which equates to about 6 months.

So a default issued within that timescale is acceptable, outside of that timescale you may have cause to raise a complaint with the lender.

You can site unfair added charges/interest, you can say its unfair on you as the lender has not followed guidance etc, but to be honest you are withholding payments from them, so your case may not be that watertight.

Why do they delay defaulting? any number of reasons, could be company policy, or they may be hoping to retain you as a customer, as a default is kinda final and ends that customers relationship with that lender.

If your plan is to enter a DMP after the floods subside, then your balance at that point is relevant, but isn`t relevant, if you get my drift, no one really pays back the full amount in a DMP, many deals are done later in the process to settle for less than is owed.

Which is why an emergency/settlement fund is essential, when debt buyers get involved, as they will, they buy debts in bulk for pennies in the pound, so they can afford to pass on those savings to you to get a quick deal done.

But all that is a long way off yet, just keep doing what your doing and try not to overthink things.

This is a great reply and reassuring. Is it true that if a debt is sold onto a 3rd party they will also register on my credit report? Ie. I will have a seperate account listed on my credit report and they will also report payments? Can they add a default also or how do they report it?

ManyWays

an account sold to a debt collector is normally added to your credit report and from then on they report your payments. But only one of the two "defaults" for the same debt is actually used in the scoring calculations, if you are worried about your credit score implications. 

sourcrates

When a debt is sold, the new owner retains all rights and privileges of the original creditor.

As for credit file entries, when a lender sells a debt, it has usually already defaulted, a debt can only default once, the new owner will place their entry on your file, under their name, it should show the original default date, and the outstanding balance.

The original entry should show the same default date, and a zero balance, as it has been sold.

Normally the old entry will disappear, leaving just the new entry, but occasionally both will stay visible, this is perfectly normal, and it relates to just the one debt, one default date, but two entries.

All entries will disappear at the 6 year point regardless of any other actions.