DMP progress and advice

GreenFrogMum

Hello,

I posted back in May about possibly starting a DMP to deal with my debt once and for all.

I have a total of £25,520.69 debt across 10 creditors.

Following advice on this forum, I decided to stop making payments and wait until the accounts defaulted before doing anything else. I now have a very large ring binder full of letters from everyone and 5 of the accounts have defaulted on my credit file - Next, PayPal, Tesco, Asda and Barclaycard. The Defaults were registered between July, August and September for these accounts.

Very, Halifax and Virgin Money have all sent letters stating defaults are imminent, but the accounts are still showing as “delinquent” on my credit file, with no actual Default reported.

The last two creditors are Sky and Klarna. Both been sending letters requesting full payment, saying they would report Defaults to the CRAs if I didn’t pay by the end of July and have now sent my accounts to debt collection agencies - DPO for Sky and Debt & Revenue Services for Klarna. But I can’t see either account on my credit report at all. I don’t understand why they haven’t registered defaults with the CRAs?

What would be the best thing to do now? I had planned on going through Step Change when all the defaults were registered. Should I still wait for the outstanding accounts to default before doing that? Or should I start making payments to the 5 accounts that have Defaulted directly while I wait for the others?

What do I do about Sky and Klarna? Will they ever report the Defaults on my credit file? Do I start paying the DCAs now anyway?

jumire939

Don't wait for every single one to default before starting your DMP, it can take months and some won't ever report. Get StepChange started now on the whole pot, they'll deal with the DCAs for Sky and Klarna too.

ArtyJ931

https://forums.moneysavingexpert.com/discussion/comment/82173444#Comment_82173444

I thought the advice was not to set up payment plans till debts had defaulted

GreenFrogMum

https://forums.moneysavingexpert.com/discussion/comment/82173444#Comment_82173444

That is the opposite of the advice I was given when I posted back in May. The point of letting accounts default before starting a DMP is that a default will drop off your credit file 6 years after the default was registered, whether you’ve finished repaying the debt or not. If you make payments before the default is registered, it might delay the default. And some creditors will report the account as having an Arrangement To Pay rather than defaulting it, so the account stays on your credit file until 6 years after they eventually report the Default, or after you finish repaying it, if they never report the Default. I want to make sure these accounts are gone in 6 years so that I can start rebuilding my credit report, even if I’m still making payments towards the defaulted debts.

At least… that’s how I understood it to work, based on the advice I was given previously.

sourcrates

The general "stop paying and wait for defaults" advice really only applies to lenders regulated by the consumer credit act.

Sky and Klarna are different kettles of fish to regular lenders.

Sky is a service agreement, so I doubt any further interest will be added to this debt, and its uncommon for such accounts to be defaulted, as they are not regulated by the consumer credit act.

Much of the same can be said for Klarna as well, they add certain fee`s, but only up to a limit and won`t add further interest, and have only recently become CCA regulated, they may or may not report to the CRA.

GreenFrogMum

https://forums.moneysavingexpert.com/discussion/comment/82173565#Comment_82173565

ok, so I might as well start making payments to them, I suppose.

I have a spreadsheet with all the details I’ll need to make payments directly, but PayPal is awkward. None of their letters give me the account number and sort code I’d need to make payments by standing order. They want me to set up payments through the app (which I can’t seem to do anyway - since the credit card defaulted, I can’t see any reference to it on my PayPal account) or set up a direct debit, which I obviously don’t want to do. There is a telephone number I can use to make payments by debit card, but I can’t find a reference number or account number on any of the letters they’ve sent me. Why must they make it so difficult to pay them?!

sourcrates

With PayPal, its best if you just wait until they farm the debt out to a debt collector, which they likely will eventually.

That would make making payments that much easier for you.

GreenFrogMum

https://forums.moneysavingexpert.com/discussion/comment/82173579#Comment_82173579

thank you. I’ll do that for now and see what they do next. I don’t really want to call them to set up payments - I’ve spent the last 6 months avoiding their calls 😂

With everyone else, I’m right in thinking that I can just pay whatever I can afford while I’m doing it directly, rather than with Step Change, yes?

I’ve put all the debts in a spreadsheet, worked out what I can afford in total (using Step Change’s budget thingy) and then worked out payments as fairly as I can - so, if one debt is 10% of my total, they get 10% of what I have available for debt payments. So I just send the payments by standing order, regardless of what their letters say they want me to pay?

sourcrates

Yes, you pay according to your available disposable income, whatever you allow in your budget.

Your budget is always used when working out payments, whether that may be your debt management payments or payments ordered by a court, which means creditors will be no better off by taking legal action.

If they are all recent defaults, your lenders will still be deciding what to do with your debts, personally I would wait and see who writes to you asking for payment, as they will more than likely be sold or assigned to debt collectors pretty soon, it won`t usually be the original lender that retains the accounts now.

GreenFrogMum

https://forums.moneysavingexpert.com/discussion/comment/82173699#Comment_82173699

Thank you. I might give it another couple of months and see what letters come. I’m currently building a bit of an emergency fund and also paying towards last year’s tax return every month, to get it all paid off before the January deadline (I’ve been saving as I go for next year’s - last year’s savings disappeared when my relationship ended and I had to replace some household items and pay him off, because I had no actual savings) so it’ll be easier when I finish paying that. Maybe the other accounts will default in the meantime.