Barclaycard - is their formal repayment plan a good idea?

GettingOrganised · 12 June 2014 at 10:22PM

Hi everyone, I've been posting for a few months and picked up lots of amazing tips and advice, but this is my first thread.

I'm looking for advice about my Barclaycard debt which at just under £6,500 is by far my highest debt. They accepted a reduced payment plan for 12 months and froze all interest and charges. The 12 months was up in April, so I sent them an updated I&E sheet and was able to increase my offer.

I received a letter saying that they couldn't accept my new repayment offer as a formal arrangement, however, so long as I made my payments as offered, they would continue to freeze interest. The letter went on to advise that this would be reviewed in 6 months and would probably result in going to their recoveries team.

I was more or less happy with this and thought that this result was probably inevitable, so have just paid as offered. However, today after speaking to them about a query on my statement, they advised that I could go onto a 5 year formal repayment plan at my current offer (£107 per month), but the interest rate would be 6.9%.

Before coming onto this forum, I would've snapped this up, but after reading some posts on here, I'm not sure if this is the best way to go. I'm aware it would be cheaper if passed onto a DCA (as interest would be frozen) but I would rather not deal with a DCA. My main concern is reading posts that arrangements to pay stay on your credit file longer than defaults.

I'm very reluctant to enter a more expensive repayment plan, if in the long term it does more damage to my credit file.

Any help, advice or experience welcomed. Thanks

harveybobbles · 12 June 2014 at 10:26PM

Well your credit file will be trashed anyway having a repayment plan on it for the next 5 years, plus 6 for it to drop off..

double_mummy · 12 June 2014 at 10:29PM

has the account been defaulted? what would they be showing on your credit file for the duration of the agreement?

GettingOrganised · 12 June 2014 at 10:36PM

The account has not defaulted as yet. I'm not concerned about my credit file in the short term, as I know until I've got rid of all my debts it will be very poor, but I don't want me to spend 5 years paying it off to then have a black mark on my file for a further 6 years. If this is the case, I suppose defaulting now would be less damaging?

double_mummy · 12 June 2014 at 10:50PM

defaulting it now would mean that it then takes 6 years to come off of your file rather than 11 if they keep placing markers for the 5 years of the agreement it might be worth letting it pass to a DCA as there will be no interest and charges and it will have already have been defaulted so you will be on the way to it coming off of your file

sourcrates · 13 June 2014 at 10:03AM

Depending on the DCA who picks it up, most allow you to set up payment plans online, from there website, so you never need to speak to anyone, most of the time they will (eventually) agree to whatever your repayment proposals are, plus no interest or fees, so would be a better option in the long run.

National_Debtline · 13 June 2014 at 10:39AM

Hi there,

The chances are that they'll pass it (initially at least) to their in-house DCA - Mercers. I've heard from NDL callers that they're usually very good at accepting arrangements. Getting a default would be useful rather than having a continuing 'arrangement to pay' marker as it'll help you get your credit file looking good faster once you get to the other end!

Best wishes,

David @ National Debtline.

GettingOrganised · 13 June 2014 at 5:59PM

Thanks to everyone who has replied. You've all confirmed what I thought. It just seems crazy that being on a payment plan and paying back everything you owe (plus the additional interest) goes against you more in the long run compared to defaulting.

I'm already in long term repayment plans for 2 MBNA accounts (at 0%) and I'm wondering if these are mistakes too. Not sure how/if I can get out of these now though?

sourcrates · 13 June 2014 at 6:42PM

GettingOrganised wrote: »

I'm already in long term repayment plans for 2 MBNA accounts (at 0%) and I'm wondering if these are mistakes too. Not sure how/if I can get out of these now though?

Could not be more Simple, stop paying, advise creditor the amount your paying is too much, and you will be in touch shortly with a revised payment plan.

They may decide to pass to a DCA, if they don't like what you say to them, either way it will cost you less in the long run.

Lensman_2 · 13 June 2014 at 7:43PM

You need to ask what will be marked on your credit file if you accept this offer. If it is "arrangement to pay" I would stay away.

The best thing HSBC did for me was turn down a "managed loan". I was very miffed at the time, but two good things came of it.
1. My credit file. When they finally defaulted it stayed on for 6 years and then dropped off (last month - Woo Hoo!). I am pretty sure an arrangement to pay stays on for 6 years after you finish the last payment.
2. You would be paying 6.9%. I was paying 0.0% after default.

Sourcrates' advice is good if you are looking at an arrangement to pay. Which I think you are. The only downside is the default and the inevitable bullying DCAs.

GettingOrganised · 13 June 2014 at 8:11PM

sourcrates wrote: »

Could not be more Simple, stop paying, advise creditor the amount your paying is too much, and you will be in touch shortly with a revised payment plan.

They may decide to pass to a DCA, if they don't like what you say to them, either way it will cost you less in the long run.

Just had a look on my noddle report and both MBNA accounts are showing as AP. So it looks like I'm going to have to take some action. Thanks for the advice, it sounds simple but makes me feel sick to stop paying - but I may regret not doing this in the long run.

Thanks again to everyone for replying.

Barclaycard - is their formal repayment plan a good idea?

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