A reader asked about applying for a mortgage when she is in a Debt Management Plan (DMP):
“I have been in a DMP for 8 years and still have 6 to go as I still owe £16,000. With hindsight, I should have gone bankrupt!
My parents will give us a 20% deposit in 2021, but they don’t know about my debts so I can’t use their money to end the DMP. Will I be able to get a mortgage?”
I’ve written before about the general problem of getting a mortgage when you have debts, but this case highlights many of the specific issues around DMPs and wanting a mortgage.
This article also applies if you have made arrangements directly with your lenders or debt collectors. You may not think of this as a “DMP” but this sort of arrangement to pay is a form of debt management.
If you already have a mortgage and you just want a new fixed rate, this article is not relevant. See Can I get a new mortgage fix with poor credit? which has good news for you!
Contents
Would clearing the debts on your credit file help your credit score?
In debt management, some debts may have been defaulted. Others may be marked as “AP” which stands for Arrangement to Pay. Sometimes the debts aren’t marked at all, but just sit showing 6 months arrears.
Settling the debts that are still showing on your credit record, however they are marked, won’t directly help your credit rating and it won’t delete them from your credit record. They will drop off six years after the settlement date or, for defaulted debts, after the default date.
so for debts that haven’t been defaulted, the old AP/arrears markers will still be visible for 6 years after the debt is settled, showing that you had problems in the past.
It would be better if you can get the three creditors to put a default date on the debts which is over six years ago. Defaulted debts will always drop off your credit file after six years, whether you have repaid them or not, so with a default date of over six years ago, they would drop off your credit file immediately.
Even a default date of three or four years ago can be better if your DMP is still running.
This article What should the default date be? explains what you have to do.
Getting these AP/arrears debts off your credit record will considerably improve your score in a few years. But that’s not the full picture…
A great credit score doesn’t mean you will get a mortgage
Lenders don’t use these credit scores at all – they calculate their own. The credit reference agency scores are only useful as they pick up where you may have problems to resolve: a bad score and you are unlikely to get any credit, but a good score doesn’t mean that you will.
That’s why it’s not worth worrying about why Experian and Equifax have very different scores – no-one actually uses them! And why you shouldn’t fall for marketing hype about Boost increasing your Experian score – lenders don’t use that score so in the real world of a mortgage application it won’t help you at all.
This is especially important for mortgages. Mortgage lenders are fussier because they are lending you a large amount of money for a long while. They also have to use stricter affordability checks, so what you write on the mortgage application is just as important as what is on your credit file.
Debts matter even after they have dropped off your record
Just because a debt doesn’t appear on your credit file any longer, doesn’t mean it doesn’t exist or it’s not important
A debt can still be enforced by the creditor taking you to court for a CCJ. That would be a disaster for any mortgage application so you have to keep on paying these debts if you want a mortgage.
And mortgage lenders almost always ask for six months of bank statements, or for Open Banking access to your bank account which is just the hi-tech equivalent of bank statements. So they will see the debts that you are still paying or the payment to your debt management firm.
So even clearing the debts off your credit file means you still have a problem because the debts still exist. Basiucally they all have to be settled.
Two possible ways to improve your situation
Get lower settlements
The reader said she could pay the 3k to satisfy the three debts showing as AP and work towards clearing the other debts. But really they all have to go so her DMP ends – this will give her the best chance of getting a good mortgage offer.
Instead of settling the AP debts in full, she could try using the £3,000 to try to make full and final settlements on as much of the remaining debt as possible.
She has been in a DMP for a long while so some creditors may be prepared to take say 20% and most would probably take 33%, so perhaps offer 20% at the start? There isn’t a scientific way to work out what a creditor will accept.
National Debtline has a template letter for making this offer. Hopefully this small lump sum could then be used to clear 10k of your DMP. With a year until you are given the deposit, she may be able to blitz the rest of the debts down.
Are some of the debts unenforceable?
As these debts are old, it is likely most of them will have been sold to debt collectors. There is also a chance that the debt collector may not have the right paperwork for the debt… in which case they can’t take you to court. For debts that have already dropped off your credit record or will soon, this means you can simply stop paying them.
See Debts – why, how & when to ask for the CCA agreement which looks in detail at which debts this may work for and how to ask for the CCA agreement.
If this works, you will be able to pay off the debts that are enforceable sooner and will be able to save a deposit faster.
As the debts won’t be on your credit record by the time you apply for the mortgage, the mortgage lender will never see them.
DMPs and mortgages – summary
Being in a DMP makes it very hard to get a mortgage for three reasons:
- it damages your credit file
- it involves a monthly payment to your debts – this is a monthly commitment which goes into the “affordability” calculation
- it is a flag that you have had money problems in the past which are still persisting.
Is it impossible? Well if you have a large deposit there may be a “bad credit” lender that would lend to you – but that would be very expensive and it may be better to use some of the large deposit to end the DMP.
This particular reader has a clear way forward – she has a good chance of cleaning up her credit file by getting default dates added so the debts drop off and using full and final settlement to end her DMP.
This is going to take some time, but hopefully most of it will be completed before she is given the deposit in a year. If some of her debts are unenforceable, that will speed this up.
Many people with old DMPs will be in a similar situation – able to get debts to drop off their credit file and likely to have lowish full and final settlement offers accepted. You may feel reluctant to use some of the deposit you have been saving up to do this, but it is a good use of the money.
If your DMP was started less than six years ago, this is harder as defaults or AP markers will remain. For a very recent DMP, it will also be hard to get a low full and final offer accepted. You may be looking at several years of tough budgeting to clear the debts as fast as possible.
Improve your credit score for a mortgage
What should the default date be for a debt?
Making Full & Final settlement offers
Megan says
Hi
Hope you can give me some advice. My husband and I got into debt back in 2012 and set up a dmp. We have partially settled some debts, and hope to do the remaining this year. We are left owing £8000. We would love a mortgage and they are currently building new properties in our area. My husband is on £50000 self employed and I am on £16000. We can save a deposit pretty quickly of around £15000 and want to do the help to buy.
But upon checking our credit files, even though we haven’t missed a payment through dmp, some companies are still defaulting us every month now! I am disputing this with the companies as we both have a very poor credit file.
We would not apply for a mortgage until the dmp is clear. But once it is clear, do you think we may have a chance of getting a mortgage?
Thanks
Sara (Debt Camel) says
Hi Megan, first you do NOT want the creditors to remove a default and substitute an arrangement to pay. A default will drop off your file after 6 years, which should be in 2018? See https://debtcamel.co.uk/debt-default-date/ for more details. An arrangement to pay will be there spoiling your credit rating until 6 years after the date is repaid. re getting a mortgage after a DMP, you will be fine after the defaults have dropped off. Before that you may need to go to a bad credit broker unless you can save a large deposit?
Ab says
Hi Sara,
I had financial difficulty in early 2009, I went into DMP with different creditors in 2009 it will finish in 5 years. 4 creditors issued default notices in 2009 / early 2010. Lloyds TSB issued default notice on 16/09/2011,I spoke to Lloyds last week, they changed my default notice date to 1/10/2010. They said that they issue default notice after 12 months in a DMP.
My 2 other creditors did not issue default notice at all and they have put me on DMP instead on my credit file.
My first questions is, Can I challenge Lloyds to change my default date to 3-6 months after going into DMP or this is not possible?
My 2nd question is, Can I ask my 2 creditors to change my DMP into default back dated Mid 2009 as they would disappear around this time after completing 6 years of default.
I need to apply mortgage in next couple of months. your advise is much appreciated, thanks
Sara (Debt Camel) says
You should ask the 2 creditors who haven’t defaulted you to do this, see https://debtcamel.co.uk/debt-default-date/ for details.
Yes you could ask Lloyds to move it earlier and go the ICO if lloyds refuse. BUT your real problem here is the fact you want a mortgage with 5 years to go on your DMP. As this article says, your DMP debts still exist even if they don’t show on your credit file. I think you need to concentrate on how to pay off these debts, the Lloyds default date is unimportant by comparison as by the time you sort the DMP out, the 6 year point will probably have have passed.
Jessy says
Hi Sara,
I’ve been on DMP for 8 years now and recently I’ve been thinking to get a mortgage. I understand from your post above that very likely I’ll need to declare my DMP and past debt issues on the application form for a mortgage. I have been making token payments in the past 3 years and on this rate, it would take another 10+ years to clear the debts. My question is, if I successfully get the creditors to accept a partial settlement, would the debts “resurface” on my credit files? If they do appear, what would be the chance for me to get a mortgage at all?
Many thanks!
Sara (Debt Camel) says
If you get partial settlements, these debts will NOT re-appear on your credit files, see https://debtcamel.co.uk/ff-credit-record/ for more details. This could be a very good way for you to bring your DMP to an end and then be able to get a mortgage.
Darren says
I got into financial difficulty back in 2010 when I lost a well paid job and rather than go on the dole I opted to take a much lower paid job. The only way for me to get my debts clear was a DMP. I went into a DMP around 2011, the total was around 9k. The DMP was completed and debts paid back in full in 3 years so now I am debt free. Towards the end of the DMP I got car finance and have since got a credit card which I spend a little on every month a pay off in full. Because I have a “default” on my credit history what would be the chances of getting a joint mortgage?
Sara (Debt Camel) says
Hi Darren, this is one of those occasions when Experian recommend you put a note on your credit record saying that you lost your job in 2010 and it took 2? years to find another good one. I’m not convinced how much difference it makes but it can’t do any harm: http://www.experian.co.uk/consumer/faq/AR5.html.
Your credit score should be improving now as the default and AP markers get older. If your partner has a great credit record and little debts and between the two of you you have a good deposit and income you may well be OK. But go to a broker, not direct to a mortgage lender. Good luck!
Amanda says
Hi,
I am looking to get a mortgage but have a DMP would I be best to pay this off first as I only have £7000 left and I am hoping I can get settlements on them to pay off.
Would this increase my chances of getting a mortgage. I am a partner in a business which I have had for the last four years and my credit file is clear as any defaults were over 6 years ago and my credit rating is going up.
Need advise as to wether to use some of my deposit to clear my dmp first.
Thanks
Sara (Debt Camel) says
Hi Amanda, yes you should try to settle these DMP debts before applying for a mortgage.
charlotte says
Hi,
I’m currently in a dmp and have been for 3 years. I’ve got approx £2500 remaining. My husband and I are currently saving for a mortgage deposit and are hoping to get one by the end of the year. The remaining creditors defaulted my accounts 3 years ago so I’m aware they’ll remain on my file for another 3 years. My question is am I best asking for a full and final settlement now and getting all debts paid or paying the debt in full? What are my chances of getting a mortgage?
Sara (Debt Camel) says
I don’t have a scientific basis for saying this, but with only £2,500 remaining, I think its better to pay the debts in full even though it will cost you a bit more. Do this asap, the longer ago the debts are repaid the better.
Go to a broker, not direct to a high street lender. If broker says NO, you have to choose between waiting another year whilst your credit score slowly rebuilds or going to a bad credit broker and paying higher fees :(
Best of luck, this may feel like a real problem, but you have repaid your debts and avoided insolvency, which would have been worse for your credit score.
Lottie says
Hi there,
This all makes for interesting reading, very useful. Hoping you may be able to answer this query also.
I am currently paying back debts from about 2010/11. To cut a long story short I have set up repayment plans with all creditors, paying £20 per month and this has given me breathing space. Some are almost paid off in full, others I have approx. 8K remaining.
I have just applied for a mortgage and got an AIP. I have disclosed a loan/credit card but having gone through paperwork today realise I need to disclose 2 more before they go through my bank statements.
Thing is, the debts clearly haven’t showed up on my credit file. I have changed my name once and my last 3 years addresses are not the same as on the original credit, so maybe this is the reason.
I am now at the stage where I need to show 3 months bank statements and mine clearly show eg; Natwest/Idemservicing MBNA, Moorcroft,
What I am asking is, if the lender sees I am paying £20 to various creditors, some listed as the name of the bank/card others listed as the debt collection service will they then ask for 1) credit card statements and/or 2)why it hasn’t shown on file.
Will they recognise Moorcroft/IBDM servicing.
I have also tried to log into my IBDM servicing account today and it does not recognise me (using old name/address and account number?)
Some of these are from more than 6 years ago.
I feel like I am getting a little clearer but still confused and quite frankly in a state of panic.
Can you help?
Thanks in advance,
Lottie,
Sara (Debt Camel) says
Hi Lottie,
it is very likely that the lender you are applying to for a mortgage will realise that Moorcroft and IDEM are debt collectors. You may well be asked what the balances on these accounts are. They won’t ask why they aren’t on your credit file as they will know the answer – because you defaulted on the debts :(
In other words, you will probably have to give the lender you are applying to a full list of all your debts, included these old defaulted debts in a DMP. It is possible that your mortgage offer may be withdrawn, but that will depend on the lender and the rest of your application – if you have a good deposit and a very hood income for the amount your are applying for you may be OK.
Lottie says
Hi,
Thanks for your speedy reply.
The lender is Leeds BS, it’s for a shared ownership 25%, for £36k, deposit £2.5k.
Should I go back to the broker, tell him I’ve got 2 more creditors to disclose and amounts? Thing is when I try to log into my IdemServicing acc. the system doesn’t recognise me, so will have to contact them for balance. I think it’s about 4K. Natwest (Moorcroft) is 3K. So I’m adding another 8K to creditors, monthly repayment no problem at £42 for both.
My salary is 35K.
I already have an AIP.
What should I do?
Thanks so much, so glad I found this group.
Lottie x
Sara (Debt Camel) says
I can’t say what you SHOULD do, it’s impossible to be certain about these things.
It is LIKELY that the lender will look at your bank statements and realise you have a DMP. If they do they may well withdraw their offer.
The DMP is very affordable but this isn’t what they will be worried about. First they won’t like the fact you had defaults and you didn’t tell them about the outstanding debts. Second they will be worried that one of your creditors will decide to take you to court for a CCJ.
Will telling them now make a difference? Well it solves the “she concealed these loans” issue but not the rest…
Telling them now however does have the big advantage that if they do withdraw their offer at least it will be sooner rather than later and this will reduce the amount you have wasted on legal costs if the purchase falls through :(
lottie says
Sara, thanks once again.
I am going to find out outstanding balances and inform mortgage broker, in the hope he can add to AIP, before full application.
Will the lender Leeds BS request credit card statements? Is this normal procedure? Or just bank statements and trust your disclosure? It’s a worry gathering creditor paperwork from a previous life!
Hindsight!
Sara (Debt Camel) says
I think different lenders have different procedures – sorry.
Liz says
Hello, I hope you can help. I have been on a debt management since 2011. I got pregnant and had no option as I had reached my borrowing limit and my credit card providers put up my interest rates to 30% – I was spending over £1000 on interest on about 37k. I did own a house but at the time it had no equity. We rented it out and started renting a place elsewhere. Since returning from mat leave I got cancer and took 6 months off work unpaid. I got the all clear and I am now expecting again, due next month. For the first 18 months they didn’t default me but they didn’t stop stop my interest either so they only defaulted me when I went on mat leave and my monthly payment reduced considerably which means I’ve paid practically nothing off in the last 3 years. My house has gone up in value so if I were to sell I would have equity to clear debts but obviously conscious that I need to keep some for a future house deposit. I currently feel like I’m in limbo. My husband has a new business and can’t get credit, we need a family car but no one will lend to us and we need a family house but wouldn’t get a mortgage. What is the best thing to do? Sell up and arrange ffs for debts (Thinking of starting at 25% and working from there) or should I keep on the ladder and wait for my defaults to come off my file? If I sell will my creditors know and expect all my equity? If they agree a settlement figure how soon will I need to pay them? If I clear my debts, how soon will my credit file rebuild? I was told that high street start lending again after 12 months of your debts being cleared is that right?
Sara (Debt Camel) says
Selling up and offering full & Final settlements seems the best option. If you don’t settle the DMP debts, you aren’t going to get another mortgage, even when the defaults come off, so the “clinging to the ladder” option doesn’t really work.
If you offer a F&F you have to have the money there waiting. I suggest selling and then offering 25% – many of the lenders may accept, those that don’t you may have to offer more.
Every £1,000 you spend on a car is £1000 less you will have for a future deposit.
Your credit score will start to rebuild slowly then will get much better as the defaults drop off. 12 months might be a bit optimistic, it depends how many defaults there are.
Liz says
Thank you. I have about 7 defaults from when I started my debt management. The last one is registered in 2014. My current accounts and mortgage through are upto date and no red marks. Don’t know if that will help me or not in the long run?!
Liza says
Hi there I have default on one bank account of £514 that i notice in my credit score I am now sitting at poor 129 points away from fair now will this jump upto fair when paid off ? am going for house going to clear the debt but am wondering when coming to buy our house will this matter if the account now cleared I keep up with everything else was just this one account? Really worried now that I will not be able to get house after saving all the money for it ?
Sara (Debt Camel) says
Hi Lisa, repaying the default will start the process of repairing your credit score, but there may not be a big jump instantly. How old is the default? You may find this article on getting a mortgage when you have debts useful: https://debtcamel.co.uk/mortgage-with-debts/
Lisa says
Hi I defaulted on this bank account in 2012 ? But I can Easily pay it off just am looking to buy house September / October time this year really worrying that this will effect it. Thanks
Sara (Debt Camel) says
You need to settle this debt as soon as possible. It is a pity you didn’t do this before, but that can’t be helped now. As the default is so old, once it is settled you may be able to get a mortgage, read that previous article and definitely go through a broker, not direct to a high street bank.
Ian says
My wife as a dmp. Our current mortgage is in my name and we want to move house. I have applied for a mortgage and I am struggling to get the amount of money we need. We are being told that even though this is a single application they still take into account my wife’s dmp as she will be living at the property.
She pays towards the bills and is self sufficient financially still. We have equity in our current house.
Is there anyway we can maximise what we can get from the mortgage lenders?
Sara (Debt Camel) says
Hi Ian, trying to get a mortgage on one salary is difficult. the lender will be reluctant to take into account the contribution the other person is making to the bills. It will depend how much debt you have and how large your income is on relation to what you want to borrow.
Vicky says
Hi,
I entered into a DMP in 2011 after being made redundant. I have been paying the DMP on time and have not missed any other payments since then. I am in the process of selling my house and am going to use £20k to pay of the DMP in full. What is the likliehood of me being able to get a high street mortgage next year?
Thanks
Sara (Debt Camel) says
are all your current DMP debts marked as defaulted?
how large a deposit will you have by next year?
Vicky Williams says
There are 6 loans all are defaulted, 4 are due to drop off by April 2017 , one by December 2017 and one in January 2018. I will have around £40k deposit (15%)
Sara (Debt Camel) says
Well you won’t have a problem after Jan 18. But it’s definitely worth talking to a broker sooner than that, say June 16 at the point the April 17 loans have gone and you have settled the Dec 17 and Jan 18 loans a year ago.
Vicky Williams says
Thank you, do you think I would be able to go to a high street lender or would it still be with an adverse mortgage lender?
Sara (Debt Camel) says
I think after April next year, with only 2 defaults left, all paid in full and well over 3 years old, a good broker will probably be able to get you an offer from a high street lender.
Lisa says
Hi Sara
My husband had a default from 2008 and we are paying back £40 per month. The default has obviously dropped off his credit file but the fact that we are paying to global debt recovery has appeared on bank statements and as such our mortgage with natwest has just been declined. We have offered to pay it off but they said that because there was adverse credit we cannot proceed. Would it be worth paying it off now and applying somewhere else as we have already had an offer accepted on a house and don’t want to lose it. Or will the fact that the debt will still show on the previous months statements still go against us?
Sara (Debt Camel) says
I suggest you pay it off asp and talk to a broker about which lenders may not mind.
Alex says
Hi Sara
I have been on a DMP for 2 years and with increased payments hope to have my debts cleared in 18-20 mths. My wife has never had any debt problems. do you think we will be able to get a mortgage together as soon as I have cleared these debts as we may be able to get 10% to 15% deposit within a year to 18 mths after my payments end?
Thanks
Sara (Debt Camel) says
I hope so, though of course I can’t predict what the mortgage market will be like in 3 years time. 18 months after the DMP ends and a 15% deposit will be easier than 10% after a year. Go through a broker, not direct to a high street lender.
Hope says
I so appreciate your advice that defaulted debts will not re-appear on credit file! Thanks.
We are on a DMP since 2007 but want to get F&Fs so we can remortgage. Our credit file shows only one default since 2010 – (actually due to drop off today!!) My problem is we have 8 creditors left (2 are still showing as what Experian guy calls ‘delinquent’) but with the others – I don’t actually know if they defaulted as I didn’t keep letters. My fear is that IF they didn’t default previously, they will reappear. Actually, as I’m typing, I’m guessing that IF I missed payments they would DEFINITELY show on credit report previously, sooo IF they are not there now, then they MUST HAVE defaulted pre-2010 and since dropped off?? Is it just that the two delinquent ones never bothered with a default..the two delinquent ones were both overdraft debts, if that helps build the picture. Thanks again.
Sara (Debt Camel) says
If some of your DMP debts aren’t showing, the most likely answer is that they were defaulted and have dropped off. (Another possible reason is that creditor doesn’t report to Experian, you could try also checking your Equifax and TransUnion records)
Full & Finals are a good way to end a long DMP if you want to remortgage. But you also need to get those “delinquent” debts off your credit record… if they have been included in your DMP since 2007, they should have been marked as defaulted way back and you can ask for a default date to be added, see https://debtcamel.co.uk/debt-default-date/
Alex says
Thanks for that :)
Also if we were to go for a shared ownership property would this be more likely to be approved as obviously we would have a much bigger percentage deposit than sole ownership?
Sara (Debt Camel) says
Probably … Yes your deposit is more, and you may be borrowing less, but into the affordability calculations goes the rent you will be paying on the part you aren’t buying.
Also if you are comparing buying a house freehold with a shared property, most shared property will be leasehold so there may well be service charges as well.
Gavin says
I have a dmp plan in place with Gregory Pennington and in 7yrs will be debt free. I have a mortgage currently with halifax which is now out of our fixed price and onto a standard rate variable with halifax. Myself and wife are in full time jobs and would ideally want to renew our mortgage as rates are much better now, I would then have an extra 100pnds to pay off debts quicker. Is this possible?
Sara (Debt Camel) says
Well you could ask the Halifax – but realistically no other lender is likely to consider you. The other way to speed up your debt repayment would be to move to a free DMP firm such as StepChange – the DMP with them would work in exactly the same way but you wouldn’t pay any fees so all your money would be going to your creditors, see “Want to Switch your DMP to Us?” here: http://www.stepchange.org/Howwecanhelpyou/DMPDebtmanagementplan.aspx
Gavin says
Is it easy enough to change over to step change? We have 30plus % equity in the house and never missed any payments etc..on our mortgage with halifax. Is it realistic they will renew the mortgage as already with them! Thanks
Sara (Debt Camel) says
I think the change over should be easy, but why not talk to StepChange and see what they say? GP’s fees for 7 years will add up to quite a lot.
That’s a lot of equity, again it’s worth talking to the Halifax. NB they won’t agree to extend the term or increase the amount.
Debju says
We are considering a dmp but need clarification on a point. We have a mortgage, currently fixed rate (but fixed rate will end in 2 years) with 21 years left. The mortgage is with the same bank we have a loan debt and an overdraft debt we plan to include on dmp – the mortgage will not be on dmp. The question is when the fixed rate ends in 2 years can the bank withdraw the mortgage or are we still in the original contract just without fixed rate ? We don’t want to end up without the mortgage because we are defaulting on loan and overdraft payment. We are changing our current account away from the bank with mortgage overdraft and loan.
Sara (Debt Camel) says
The bank can’t choose to withdraw your mortgage. When your fixed rate ends you move onto a variable rate. This is typically your bank’s Standard Variable Rate, often known as the SVR.
I’m a great believer in asking these sorts of questions in advance – why not phone up your bank and check what the rate will be for your mortgage and ask what that rate is at the moment? I doubt this will be a problem, but it’s good for you to be confident about this.
Will you be using a DMP firm? Which one? How long do you expect it to last?
Laura Elborn says
Good afternoon
I have been on a debt management plan now for about 11 years, my husband and I are desperate to get a mortgage I have checked my Experian credit score and its looks fantastic no defaults or even a mention of owing any money?
We been and seen an independent mortgage advisor and we have been accepted on principle but would need to pay fees before we MIGHT be accepted for the mortgage at a much higher rate than what I would like.
I owe about 10k so my question is… If I make an offer of around 2k to settle the account will I then have defaults on my credit file or can I just go to a high street bank being ‘debt free’
Any advise would be greatly received as I seem to be getting nowhere.
Many Thanks
Sara (Debt Camel) says
It sounds as though all the DMP debts have defaulted and then dropped off your credit record 6 years after the default date – that is normal for a DMP where you are only paying a small amount each month.
If you now settles these, fully or partially, they will NOT reappear on your credit record, it will stay “clean”. See https://debtcamel.co.uk/ff-credit-record/ for more details on this.
I suggest then waiting for another few months when you can safely apply as being debt free – because you are! If you apply immediately the mortgage lender will see the DMP payments from your bank statements.
George says
I currently have two defaults. One of which I am trying to get removed as the process was unfair. Regardless of that, my defaults will be five years old later this year. (One default is with my bank, a credit card, balance 2k, was 5.5k and a store card 3k)
I’d like to get a mortgage as rental prices are huge.
Can you please advise me please?
Thanks
Sara (Debt Camel) says
If you have repaid both defaults, it’s worth talking a broker now as there are some lenders who don’t mind defaults that are older than 3 years and which are settled.
George Aitchison says
Thanks for the reply.
When your bank statements are checked, how far do they go back?
What kind of percentage rate (roughly) would I be looking at? obviously more than the high street…
Sara (Debt Camel) says
A lender can ask for whatever they want. 3 months is quite common.
I am suggesting you go to a normal mortgage broker, not a “bad credit lender”. You may well be able to get a mortgage a good rate – of course that depends on the rest of your mortgage application as well, not just your credit record.
Mark Murphy says
Hi I have been on a dmp for 2 years now after going through a divorce. I have to sell the family home and clear all my debts and then split the money that’s left with my ex partner . I hope to have a deposit of about £30.000 to buy a new property will I be able to get a mortgage now that I have cleared all my debts and no longer on a dmp .
Regards
Mark
Sara (Debt Camel) says
It’s going to depend on the details of your situation – is 30k a 5% or 25% deposit? How much will you want to borrow compared to what you earn? Have your debts been marked as defaulted ? I suggest talking to a broker who can look at the details for you.
Daniel says
Hello… my financial circumstances changed due to going into education and working part time i couldnt keep up with repayments. I took a DMP out which was not free. I was paying monthly amounts and not seeing and change to my debt. After a year I then changed over to a free of charge company and immediately seen a difference. I have 11 months left and only £2000 to go.
I have recently checked my credit score and it shows since i have been with the new company defaults have been made each month. But the company i was with before is flagged up as that payments where made. This is confusing me.
Another thing is my partner and i are looking into shared ownership property as we see renting as dead money. My credit score is poor and hers is average. Do we have more of an opportunity to be accepted for a joint mortgage as it is only for a 25% that we will be buying? Or do i need to clear my debt first.
Sara (Debt Camel) says
Hi Daniel,
it is the creditor who decides whether a debt is recorded as a default or late payments, not the DMP company. It’s quite common for defaults to be added after a while – this may just be what has happened here.
You have little or no chance of getting a mortgage whilst you are in a DMP. With defaulted debts on your credit file, these need to be repaid and show as closed for you to have any chance. Hopefully whilst you are clearing them your partner can work at improving their credit record too and also saving up a deposit?
Poppy says
Hi
I have been in a DMP since December 15 with debts of £8500. Everything will be paid off in full around Sept/Oct this year. One of the accounts has defaulted in March 16, the others show as AP. I am hoping to get a mortgage towards the end of 2017 for approx £80,000 with a 10/15% deposit and a salary of £34,000 plus bonus (total around £40,000 usually). Is it going to be impossible for me to get a mortgage?
Thanks
Sara (Debt Camel) says
With a default only 18 months old it won’t be easy. But you will have a good deposit and are borrowing quite a low amount in relation to your incoem so I’m not saying impossible.
I’m wondering if a default should have been added though – it sounds as though you are making quite large repayments ot the debts in the DMP each month. the rules about default dates are here https://debtcamel.co.uk/debt-default-date/. Have a look at the details of this defaulted debt and decide if you think you were every “3 months in arrears” with them, because if your arrears never got that large, then you may be able to get it removed and an AP marker substituted. BUT you don’t want to do this and then find out a default is added with a later date as this will be worse! do look at how much you have been paying every month and what the arrears have been compared to how much you would have paid if there hadn’t been a DMP.
Poppy says
Thank you so much for your advice I have just spoken to the creditor and they have agreed to request the default is removed from my credit file! Cant thank you enough! :) :) :)
Sara (Debt Camel) says
Quick result! Just get the rest of that debt repaid asap…
Charlotte O'Brien says
Hi Sara,
I’ve checked my credit file and there are late payments (arrears) showing from a previous card. I entered a debt management plan in March 2013 where all my other accounts were marked as defaulted. Should this one also be defaulted? I finished paying off the debt management plan in March 2016,but the late payment for the credit card is still appearing in March 2016. Thanks
Sara (Debt Camel) says
This page looks at what the default date for a debt should be and whether one should be added: https://debtcamel.co.uk/debt-default-date/
Emily says
Hi,
My husband and I have had our DMP for 4 years, we have 3 years left to run. We have 13 years left on our mortgage and have 67k equity in our home. We were hoping to remortgage and pay off the remainder of the DMP but werent sure if this would be a possibility?
Thanks in advance for your help
Sara (Debt Camel) says
I’m not sure why you would want to do this? With only 3 years to go on the DMP, why would you want to remortgage for this debt then pay interest on it for a long while?
Whether it is possible will depend a lot on your incomes, how much debt is remaining in your DMP and how much of a deposit that would leave you with. You could talk to a broker about this. But even if it is possible, it is unlikely the remortgage would be at a good rate.
Liz says
I am in a similar position. I am selling my home so that I can pay off my debt and start to rebuild my credit rating. However, my broker told me that paying my debt off won’t make a difference and I should keep thinking that any defaults will not show after six years and actually there are lenders that will lend at good rates despite the defaults if you have a good rate. Despite this we are going to do it anyway. I plan to offer 25% of the original debt to settle so that this appears on my credit file.
Emily says
Hi Sara,
We were thinking because the info still appears on our credit file for 6 years after everything is paid off, not that we want to have any other loans/credit cards etc. Our joint income is 62k. The reason for remortgaging is because we have recently found out that our house needs a new roof and re-rendering. A total cost of around 15k/18k – money that we don’t have available. It’s just an idea at this stage, we wanted to explore all possibilities.
Thanks x
Sara (Debt Camel) says
However good a reason you have for needing a remortgage you may find it difficult at the moment – talk to a broker about whether there is any chance but the answer could be no :(
Have any of your debts had defaults added? If they have, they they disappear from your credit record 6 years after the default date, not from the point the debts are paid off.
If your debts don’t have defaults, then it sounds perverse, but it may be good if you can get a default added for a few years ago – see https://debtcamel.co.uk/debt-default-date/.
However good a reason you have for needing a remortgage you may find it difficult at the moment – talk to a broker about whether there is any chance but the answer could be no :(
broadsword says
Hi Sara,
DMP 7 years
Just note this is a great site and helped me in many of a dark moment.
I had 9 defaults 7 of which have disappeared the 8th will go at the end of the month. The 9th (which will be the only one on left) was never defaulted and has the dreaded AP/DMP marker!! The Debt is with Capquest (originally Aqua) and I am trying at the moment to get the AP changed to Default 2010 using the advice on this site. I will let you know if I have success.
I have a question though, if Capquest refuse and like other I have no success with ICO or FSO, what is the best thing to do with the capquest debt to improve my CR? should I consider making = above the old contractual payments of 5% as long as the agree to remove the AP/ market for the future etc ? would this start to improve my CR ? obviously the last AP marker would still be visible for 6 years, also the capquest debt of 610 is at a level that I could clear in quickly would this also help ? so in summary what would be best if cant get the default changed
1. increase payment to min 5%
2. Increase payment to above 5% and clear debpt
3. Just clear the debt as quick as I can
I have another few questions about the CRA reporting of this account but I would like to focus on the above
Sara (Debt Camel) says
I think you will succeed in getting the date changed. If you can’t, the best thing is to pay the debt in full immediately.
Broadsword says
Sara
Thanks for the rapid respinse?
Thanks, it’s not just a date change I need then to change it from AP to default. From the posts I have read I see various levels of success.
Sara (Debt Camel) says
You have read this https://debtcamel.co.uk/debt-default-date/, I assume? You case sounds straightforward – the more complicated one is where the debt is an overdraft, but with credit cards it’s easy to point out the date at which your account must have been 6 months in arrears so a default should have been added.
broadsword says
Sara,
Yes however I have read that the ICO guidelines are out of date or only guidelines etc. my biggest worry is that Capquest put at default on my account 2016 rather than 2009.
Sara (Debt Camel) says
I don’t know where you read they are out of date – so far as I know (a) they aren’t and (b) there are no plans to change them.
There isn’t much I can say except give it a go.
Sarah says
Hi,
We have just finished a DMP with CAP and after 6 years paid off over 40k. The defaults on our credit files were placed on June 2011 even though we started our DMP with CAP October 2010.
We are looking to remortgage to get some extra funds for home improvements. Do you think it would be worth enquiring about a mortgage now that they are all settled? Or wait until June 17 before applying. Our combined salaries are 53k currently.
Thanks
Sara (Debt Camel) says
First well done – that is quite an achievement o clear that much debt!
Some lenders don’t like any defaults at all. Others don’t mind if the defaults are over 3 years ago (which yours are) and have been paid off a year ago – basically showing you have got out of debt and stayed out of trouble for a year. But that is going to take you to past the June 17 point, so you are probably going to have to wait until then.
It’s going to be good to be able to have some spending money, but you will dill be doing yourselves a big favour if you could start putting aside half of that DMP payment, first for a good rainy day fund, then to overpay the mortgage or into a pensions. And both get a credit card just for credit building purposes – use MSE’s Credit Club to see what you can get (see https://debtcamel.co.uk/best-way-to-check-credit-score/) and be careful you pay it off in full every month!
goosey says
Sara,
I need some advice …..the long term goal of me and and my wife is to move out of our flat that has a current mortgage of 60k with a value of 85k and buy a house. I fell into financial difficulties after years of mis spending on credits cards and loans….it came to a point where I was head deep in it so I decided my only way out was starting a Dmp with getting the interest frozen this started in sept 2014 with a debt of £18500 owed to 6 separate creditors. My debt is now under 15k, I am aware the defaults stay on file for 6 years mine have a date of january & march 2015 for 5 creditors but my Barclaycard debt was not defaulted and didn’t notice an AP flag where would this be? it just comes up as current debt on my credit file even though Barclaycard have passed the debt over to PRA GROUP , the other debts on file clearly show as debts under default accounts……should I check this out ? I do remember having a letter from barclaycard about 12months going saying they didn’t default la de dah apologies for the inconvenience etc, but thought nothing of it.
This aside if I were to pay off these debts on the Dmp in the next two years (I plan to increase my payment soon in light of a promotion in work) I currently earn 30k per year and my wife 18k ..my wife has an excellent credit rating…..could we realistically expect to be excepted for a new larger mortgage ? We would have at least a 30k deposit (we could have a 50k deposit) and by then and no debts between us….Or do I have to wait until my defaults drop off in 2021 to stand a chance?
Thanks for reading
David
Sara (Debt Camel) says
Where would the AP marker be – have a look at the payments to the Barclaycard debt – if they are all showing as fine, no missed / late payments, then your credit file is clean as Barclaycard is “clean” and their error is in your favour.
As a useful rule of thumb at the moment (and obviously the mortgage market could change in the next few years) some lenders don’t like defaults at all but others are happy if the defaults are over 3 years old and have been settled for more than a year when you apply – which would suggest a possible mortgage application in 3 years time if your DMP completes in 2. Your wife may have an excellent credit rating but make sure you also keep any non DMP debt down to very little – getting a car on finance can mess up the mortgage affordability calculations.
Rachael says
Hi. I have been in debt that is almost paid off, and I have just requested my credit report. I have a number of arrangements on there (approx five), all with the same catalogue group. All are paid off. Three are classed as settled, with dates in 2015 and 2016. The rest are still open accounts but with zero to pay on them. The only other bad thing on my account is a default due to drop off next year (though it says there is £100 outstanding – how do I contact them to pay this off, as I don’t know the account details thought I suspect this was an old student account, without this impacting the date this falls off my file?). My total debt that fell into arrangements was about 3.5k. I am now in a much better financial position. My partner and I earn around £40k between us, and in around three years time we want to get a mortgage with approx 10% deposit. Will my arrangements hinder this, though they will have been paid off for over three years by then? Many thanks
Sara (Debt Camel) says
I suggest phoning up the creditor and saying you have this debt on your credit file … If you can’t seem to get anywhere because you don’t have the account number or anything then you could consider just waiting and seeing if they contact you? If you do settle this debt it I’ll still disappear next year when it is 6 years from the default date.
Once the debts are repaid and no longer on your credit file they won’t be visible to a future mortgage lender (exception – a mortgage lender can check their own internal records, so be careful which lenders you apply to!) and you don’t have to tell them about your old problems.
Donny says
If I’ve been in a Debt Management Plan but I’ve now setup new Agreed Payments to my creditors which I’ll be paying directly to them from now on.
Experian specifically has “Debt Management Plan” against some of my defaults (not many of them actually state this specifically), is this the same thing as “AP” being against them or are they two different flags with different meanings?
Sara (Debt Camel) says
They are the same thing.
Sarah says
Hi,
I am about to enter into a DMP that will last 3 years. I have no defaults on any of the debts (3 credit cards, a personal loan and a catalogue) but my credit score is very poor. My husband has been discharged from bankruptcy since Aug 2008 and has since got a credit card. I have car finance in my name also. My question is can we get a mortgage? We are currently living in a property that is part owned by my mum and uncle and we want to buy him out. The plan I’d like to happen is that mum has a further 25% and we buy the remaining. Where can we go for help if this is even possible?
Sara (Debt Camel) says
It sounds unlikely that you can get a mortgage. If you can’t afford to pay your debts and need a DMP, you are almost certainly going to fail any affordability calculation by a mortgage lender.
Sue says
Hi
My partner and I have 5 credit card debts on DMPs. All but 2( Barclaycard) have dropped off our credit reports. These show debt reassigned dates, with 2 years left before drop off. We still owe around £8,000 in all.
We want to try to get a mortgage, we earn £55,500 between us but are both over 50.
Just wondered what you think our chances are??
Sara (Debt Camel) says
Pretty low. It’s not the 2 still showing that are the problem, although those default dates may be wrong and if they are you can ask for them to be corrected, see https://debtcamel.co.uk/debt-default-date/. But the problem is the 8k still owing on the DMP – this all needs to go!
May be a good idea to use some of your deposit to offer Full and Final settlements to the debts? See https://debtcamel.co.uk/debt-options/less-common/full-final/
Natasha says
Hi there,
My hsbc account went to default in 2007 through a debt collection company. I have been paying off monthly payments of £24 with the current debt standing at 3,900k. I’m trying to get a mortgage but have been told they can not proceed with a DMP. Will it effect my chance in being expected for a mortgage if I pay it off as a
partial settlement or should I pay it off in full? Also once paid off how long should I wait to then apply for a mortgage? I have 85kg deposit for a 185k house. Thank you Natasha
Sara (Debt Camel) says
Assuming this isn’t showing on your credit record, a partial settlement should be fine if you then wait 6 months. By that point there won’t be a sign of the DMP on your last 6 months bank statements. Obviously don’t apply to HSBC for a mortgage!
Mark says
Hi,
After losing my job earlier this year I maxed out my credit cards (while hoping to get a new job) and eventually ran out of savings/credit. I am now unable to meet minimum repayments and have just set up a token DMP with Stepchange for the unsecured creditors with my intention being to sell my house and pay all outstanding debts in full by April 2017 (estimation of time to prepare and sell house at a priced-to-sell mark). I have explained my situation to my current mortgage lender and they have suspended payments for three months with an extension of a further three months if I can demonstrate that the house is then being marketed. I am now starting to question if I have taken the correct approach. I still intend to sell and pay off all creditors from realised equity but wonder if I would have been better (for future credit worthiness) not informing creditors that I was in trouble but simply making token payments to the larger debts, minimum payments to the smaller debts and paying all outstanding balances when I had sold the house. In effect what I am wondering is whether 2 years down the line would having between three and five months missed/late payments on two accounts (and taking the chance that those particular creditors delayed placing defaults) look better to future lenders than AP or DMP markers on six accounts directly prior to full settlements?
Sara (Debt Camel) says
The only difference between these two approaches is that you will get less hassle from your creditors by setting up a token payment DMP. Large creditors seeing only a token payment arrive – and able to see from your credit record that you are paying other creditors in full – would not be happy!
Missed payment markers are not better than an AP/DMP marker. And the late payment markers on your mortgage will be a clear sign you were in trouble whatever happens to your unsecured debt.
Norma says
Hi Sara, I have come across your page and was hoping for some advice. I have been in a DMP since 2005. I cleared off approx 7600£ and my DMP was showing balance of £3700. I tried to get final figure from stepchange as I wanted to clear this off with help of family member, because we are hoping to apply for a mortgage in next 6 months. I was advised to contact original debtors which I did and I found that the banks have higher figures than what I thought was my balance as some of them had continued charging interest, bringing total cost owed to roughly £5000. I am gutted. Some of the debts have been sold to agencies. One debt is now thrice amount, and the other account was closed in 2011 ( with the debt collectors). However I have still been making payments on this account since 2011 via my DMP.
None of these debts show on my credit file and I have an excellent rating.
I am worried about paying off the debts in full and then I get the marks on my credit file, and I am also worried about the F and F as this would also show partial payment. And I also feel that it the difference between the 3700 and 5000 is unfair to be honest because I’ve been working hard all these years to clear this off only to find out the above today.
What is my next best alternative? Thank you for your advice.
Sara (Debt Camel) says
You could consider complaining to the banks about adding interest and ask them to remove it, as this article suggests: https://debtcamel.co.uk/creditor-wont-freeze-interest/.
If you make a full and final settlement, these debts will not reappear on your credit file.
Norma says
Thank you for your prompt response Sara. Do I send the same letter to the debt collection agencies or do I write to the original debtors/ banks?
James says
Hello, I am looking to buy a property in the new year however I am very concerned about my credit score. At the moment my score is very poor, despite having 7 positive Factors and 2 negative.
The first negative factor is “you have defaults on your account”; I had three defaults on my account all of which were settles around three years ago, one has dropped off recently but the other two will remain for the next 12 months or so. The combined default dept is £1200.
The second default is” a recent missed payment”; I recently missed two direct debit payments on my credit card which were paid via the phone but too late to avoid the missed payment penalty.
My score is currently 453/999 and my understanding is I need to be at least in the 700’s to stand a chance of getting a mortgage. Are these two negative factors “real” or will a lender actually look beyond my score and see that the defaults are historic and that for all my other accounts I have never missed a payment!
Sara (Debt Camel) says
The two negative factors are real. Some lenders won’t mind the two remainign defaults beecause they are old – if you go to a mortgage broker they should be able to tell you which lenders won’t mind these.
The recent missed payments, though less serious, is more of a concern as it suggests you haven’t been on top of your finances recently.I am not sure how a “direct debit! payment can be missed unless there was too little money in your account to pay it, which is not good.
It will probably depend how large a deposit you have and how much you want to borrow in relation to your income. If both of these are good, you may be OK. If both are more so-so, then it may be better to wait a year unil the defaults go and the recent missed payments get older. Make sure you don’t miss any more payments!!!
Rhian says
Hi I’m hoping for some advice. Myself and husband are currently renting a house from my parents which they want to sell to us. The house is worth £170000 and they are willing to sell it to us for £130000 they have no mortgage on either of there properties. We have no deposit so this would be our deposit. The problem is my husband is in a DMP only £4000 left on it. He earns £30000 and I earn £20000 what would be the best way to get a mortage please? Me on my own? Or how long after him clearing the DPM would be best for us to buy. Thank for advice
Sara (Debt Camel) says
You won’t get a 130k mortgage on your own if you only earn 20k, that isn’t a possible option. When did your husband’s DMP start? Are all the debts in it shown as defaulted on his credit record?
Rhian says
It started in 2012 and he has £4000 left to pay he’s been paying £450 a month since then. Yes they are defaults on his credit record. What is the best thing to do to improve his credit score and get a mortage asap as my parent want to sell up asap
Sara (Debt Camel) says
So the DMP should be finished in 9 months? You need to check the default dates – if they are in 2012, the defaults will be going in 2018 – can your parents wait that long?
Antony Frost says
Hello, my partner and i are looking to buy a house using the help to buy scheme this year hoprfully in the Summer. My partners credit rating is excellent, mine is poor. I have just finished a DMP in december where i owed 2500 mainly to pay day loans.
Would getting a help to buy mortgage increase our chances of getting a mortgage as the equity load boosts our deposit ?
Would my partners credit score increase our chance of getting a mortgage ?
Thanks so much in advance
Sara (Debt Camel) says
You have little chance of getting a mortgage this summer having just finished a DMP… however if most of the defaults were to payday lenders, read https://debtcamel.co.uk/payday-loan-refunds/ and see if the lending to you may have been “unaffordable”. If it was, then you may be able to get a refund and also any defaults for unafordable loans may be deleted from your credit record. If this works, it could boost your deposit and improve your credit score so it’s worth thinking about.
Antony Frost says
Thanks for the quick reply . I will do that straight away.
Are we best to go for a help to buy mortgage due to the 20% equity the goverment will lend us or should we just see brokers who are used to dealing with these bad credit issues.
Thanks again
Sara (Debt Camel) says
I suggest seeing how much of your payday mess you can improve (if any) then looking at a help to buy broker. If they say no, think about waiting until early next year. Bad credit mortgages are a VERY expensive option.
Donny says
Antony,
Just wondering if you have checked your credit score? When you apply the banks will credit check the both of you and your partner having a higher score won’t help if yours is very poor.
From what I understood (and I could be wrong) the Help to Buy mortgages are only available with mainstream lenders, so you would need to be acceptable to one of them to get a mortgage under the scheme. IIRC having a bigger deposit will tend to get you better rates but not necessarily help you get past the initial credit check. At the Decision in Principle stage you could be rejected immediately for not passing their credit score requirement.
If you check which banks do a soft search (be 100% sure it’s a soft search as not all are) at the DIP stage then you can complete the DIP stage and they will tell you if you are rejected. If you are at that point then it’s usually because your credit score is too low based on their initial assessment.
There are a few high street banks who will give an indication of whether you are likely to be accepted with just a soft search, and those aren’t visible to anybody but yourself. Companies sometimes use them for identity checks, so it wouldn’t be fair if they impacted your credit score adversely.
Like I say be 100% sure it’s a soft check though
Ann says
I have debts from various credit cards and loan in the past. They are all over six years and to my understanding all the accounts has been closed and sold to other companies. I am on debt management plan paying token toward them all. Some of those companies had been approaching to give me a settlement offer. I have not been able to take up the opportunity but now i consider doing so.
The problem is that i had been told the account will be mark with partial settlement and it will be difficult for me to get a mortgage. Please i will like to know the exact implication this will have on me getting a mortgage and on my credit record. Even i was told that if i pay in full i have to wait for some time before i can get a mortgage with good rate.
Please advice
Thank you.
Sara (Debt Camel) says
Hi Ann, I think https://debtcamel.co.uk/ff-credit-record/ covers your situation.
Lisa says
Hello,
I entered a trust deed in June 2010 due to issues with my families business. This was completed June 2013 and satisfied Jan 2014. Its removed from my credit file June 2016. I have a credit card, mobile contract, media agreement all over 1 year old with no missed or late payments. Credit card has a £600 limit but it’s 0 balance as of this month. Other limits are small like £150. I’ve had zero searches in the past year excluding the media account. My bank account is 7 year old and has never been overdrawn. I have recently registered on the voters role as I wasn’t at my previous address, so have been for 1 year and prior to my previous I had 10 year history. I’m saving £500pm towards a deposit and opened a HTB ISA too. Also have income of £36,000pa. I have 1 default on all of my credit file from 2011, which was for an old mobile phone contract at a previous address. This was taken out by an ex partner without my knowledge and I have never personally made a payment to it. I tried contacting them to dispute this at the time and whenever they sent me letters once it was passed to agencies etc they have still registered the default every month since. Even gave his info to contact. I have not heard from them in around 1 year and it’s due to come off at the end of this month. I’m worried about it continuing to cause me hassle especially since I’ve worked hard to get my finances in order and I’m thinking of calling to pay it.. even though it’s not actually my debt and if I was going to acknowledge it then I’d have done it back then. If I leave it and it falls off my file can it re appear and cause me issues? My second question was what do you think my chances are of being approved for a mortgage in the next 6 month? Thank you. Ps my Experian score is 800 & both equifax / noddles are fair as they’re still showing the default.
Sara (Debt Camel) says
Well first well done for such a good turn round in your finance!
How much is the old mobile phone debt? Did the last debt collector have your current address?
Lisa says
Thanks Sara. It’s been a long road and at one point didn’t feel like I’d ever be able to get finance again. Have a little boy who’s nearly 4 so that is my motivation!
It’s £380 and the last letter they sent was to my current address. It’s a company called Lowell portfolio. I can’t remember exactly how long ago I heard from anyone.. Its showing on my callcredit record only at the moment.
Sara (Debt Camel) says
OK, It’s good the debt collector has your correct address – what you don’t want is to find in the middle of a mortgage application that you have had a CCJ registered against you that you knew nothing about as the papers went elsewhere.
With so little time to go until the debt drops off and the fact that you have never made a payment to the debt and always disputed it, your options are:
1) pay it – costs £380 but gets it absolutely sorted
2) ignore it on the grounds it is going to drop off and you can contest the case if taken to court. Not only can you contest liabilty, but it may well be that the debt is also statute barred.
3) ignore it but decide to offer a low settlement if the debt collector later gets in contact. They may well settle for £50 when you point out you deny liability and assert the debt is statute barred.
4) offer a low settlement now. This would be getting the debt out of the way but also is waking up a creditor who may not be going to do anything in future.
M Sajid says
Hi,
I have debts and loan from various creditors amounting to 45K which I am all paying towards, I have never missed a payment but had an agreed break of 5 months on my loan that finsihed and I started paying the monthly installment again. I earn around 37K a year and looking to get a motgage with my brother who earns around 25k a year and has a good credit history, We are looking at a propert value of 250K with deposit of 40K, would having so much credit in my name make it impossible to get mortgage, You adice will be very much appreciated, thanks in advance
Sara (Debt Camel) says
Yes, almost certainly. I think you need to spend at least a year blitzing your debt down to more reasonable levels. I would suggest half your income as a target – that would still be a lot but you two have a good deposit and a good combined income so the affordability calcs may work at that point. Leave all your cards at home, no more credit!
Lisa says
That’s great thank you.
If I had a ccj would it be showing on my credit files? As there’s nothing showing on any of them at any of my addresses.
I think I’ll wait until it’s dropped off then contact them to pay a settlement. I’ll make the point like you said about liability and statue barred
Do you know if there’s any restriction for obtaining a mortgage when you’ve had a trust deed? Even if your credit file is ok now will I need to declare I had a trust deed? It’s just a worry, but I knew it wouldn’t be easy.
Sara (Debt Camel) says
Yes it would show, if it isn’t then you don’t have one :)
After a Trust Deed I suggest you should talk to a broker about who to apply to, rather than go direct to a high street lender. Some won’t mind, but you need to aviod the ones that will!
Lisa says
Great. I’ve been in touch with a broker and passed the AIP check, but he only a soft search.. I asked for a bit of time before proceeding any further, as I didn’t expect it to go so quick. All seems reallygood so far though. Also, they know a couple of lenders who don’t mind. Thank you again for your advice, very helpful :)
Ann says
Hello Sara,
Had written to you a week and half ago but received no respond. If you can please help. I had been on formal DMP for about eight different companies, all the debts had all came off of default. I hope of getting some fund from my equity but I may not be able to get enough money to pay everything in full. I plan to contact the companies to ask for the settlement offer. Will the company be able to settle my account without marking the as partial settled as they are no longer on default.
Please advise
Sara (Debt Camel) says
(I can’t see any previous comment from you.)
the chance of you being able to release euqity to repay your debts is very slim. But if this does happen, then partially settling them will not cause them to re-appear on your credit record.
Ruth says
Hello
My husband and I are abiut to start to put all papers together for our Mortgagee broker. I have a £1100 debt on a bank card but my bank sold it to a debt collector. The debt is from 2005.
Bearing in mind that, should I disclose to the lender when applying for a mortgate? I wasthinking to just pay it and then disclose the information to the lender when applying for a mortgate. However, if it does not apper on my records, can i not say anything and just pay the amount? Would that be ok?
The house we are looking to buy is £13500 and we are giving a good deposit earning £51000 between the 2 of us
Sara (Debt Camel) says
When did you last make a payment to this debt?
Kellie Appleby says
Hi,
My boyfriend had a DMP and paid it all off back in Dec 2015, we applied for a mortgage in Jan 2016 and had to go through a specialist lender as my boyfriend had 8 defaults (don’t ask this was prior to me!!) however we had a decision in principle and the mortgage was going through- at the last hurdle our mortgage offer was declined due to him having in the past a DMP as they said it needed to be closed for a total of 36 months before applications would be considered and his had only been closed 13 months. So we are holding off for 12 months just to get him credit rating improved and hopefully be able to apply with a normal high street lender and not specialist at the int rates are higher. I have in the last 3 months managed to get taken off 5 defaults just by writing to the lenders and simply asking for them to be removed so we are now left with 3 defaults which I am still trying to sort out. However my question is even if I manage to sort the remaining defaults or potentially just left with 1 default on the account and we apply with a high street lender are they just going to say no because he had been previously on a dmp? even though it is now paid and his credit rating is good? Thank you Kellie
Sara (Debt Camel) says
Anecdotally, if all your defaults happened more than three years ago AND have been settled more than a year ago some high street lenders will consider your application. By that rule of thumb, Jan16 would have been too soon to apply but now may not be.
Go though a broker, not direct to a lender. but it doesn’t have to be a “bad credit” specialist broker. Find one that seems interested in the details of your situation and clued up.
Ian doyle says
Hi,
This is a great site!!!
Me and my wife had been on a dmp since 2010 and have just made a payment to settle the full amounts with the creditors as in recent months we have been in a better financial position due to doubling our income.
My credit reports show no defaults with any creditors and a good score. My wife’s on the other hand shows arrears (6) on a current account which dates back to 2010 then in may 2016 they put the account into default, we paid the account off straight away.
We have been shopping around for a mortgage as we have had an offer accepted but this is making it really hard to find a lender that will accept us even though we are looking for 80% LTV due to the sale of our current home.
Any ideas what we can do to obtain a mortgage? We have had a dip but failed at the underwriters because of the arrears and default.
Sara (Debt Camel) says
Your wife needs to ask for the default on her overdraft to be backdated to 2010 when it first showed as 6 months in arrears, see https://debtcamel.co.uk/debt-default-date/. The debt will then disappear from her credit record :)
NB don’t apply for a mortgage to any lender you had a debttointhe DMP astheywill still be able to see this from their own records.
Ian doyle says
Hi Sara,
Thanks for your speedy reply. Our next move was maybe applying to A lender who was one of my creditors. We have passé the AIP stage and We have had our current mortgage with them with no missed payments in 9 years. I was in 2 minds about applying but was hoping they would take my good conduct in my current mortgage and my improved financial situation into consideration. You think not then?
I read the dated default column you made and you said there is different rules for defaults made on flexible accounts such as current accounts. Is there anything different I need to do?
Thanks again for your reply, this is a very helpful website and will help thousands of people in our situation.
Sara (Debt Camel) says
Applying to you current mortgage lender is often a good idea because they do know that you have managed the mortgage repayments even when you were having other problems. But I can’t really guess whether this will get passed their underwriters, sorry.
It can be difficult to get a default added for a current account, but the fact that the bank marked it as being 6 months in arrears is a good reason for them to add the default. Most problems arise when the account has simply been left opened, unused and with no late payment markers added for many years.
Ian doyle says
Hi Sara,
Thanks again for your reply. I will give the default date change a go. Got nothing to lose! How long do you think it takes? I will draft a letter today. Do you recommend to send it recorded delivery?
Sara (Debt Camel) says
Sometimes a date will get corrected within a couple of weeks, sometimes it takes many months and you have to take the case to the ICO if the bank rejects. Recorded delivery is a good idea.
Lucy lou says
Hello, hoping you can advise. I had. DMP which was started in 2010. It was due to run for 5 years but I managed to pay it off by Sept 2013 with accepted partial settlements on all outstanding amounts. Since then I have only taken out a credit rebuilding credit card, which I use for small things and pay off in full each month. I have had 2 credit increases on the card since I started it. I have checked my Experian credit score in recent months and I have no defaults or outstanding balances. My score is 999 excellent. My partner and I are looking to apply for a joint mortgage, he also has an excellent credit score. We will have a deposit of £75,000 and looking at a mortgage for £225,000. Our joint income is £76,000 per annum. He currently has a mortgage with a high street lender. What do you think the chances of my previous problems in 2010 affecting our chances now are? Your advice is appreciated.
Sara (Debt Camel) says
I think you should be OK but don’t apply to any lender that you had a partial settlement with and go through a broker!
Joanne says
Hi,
I am looking to apply for a right to buy mortgage towards the end of this year, but I had a DMP which was paid up September 2016. What are the chances of being accepted for a mortgage? The only other debt I have is £1,700 on a credit card which I transferred over to 0% balance transfer for 18 months to bring the balance down which I pay £120 per month on.
Sara (Debt Camel) says
Well after September all your debts will have been repaid for over a year. Provided you meet the mortgage affordability checks you will probably be OK if you go through a broker.
BUT I’m going to be a bore here because I am tired of seeing people who have later regretted their Right To Buy “bargain”. Will you have to pay a service charge? If so, are there any big works being planned? I’ve seen people hit with £20,000+ service charge bills :(
And how secure is your income? It’s a lot easier to get help with your rent from the benefits system than help with a mortgage.
Lucia says
Hi Sara, I must say this guide has been incredibly useful for me! I would be really grateful for your view on this situation:
My partner and I both have a pretty poor credit history. We bought our flat in 2006 with a 100% mortgage and shortly after started getting in to unmanageable debt. We had mortgage arrears (which were fully paid up in July 2015) and payday loans. No missed mortgage payments for well over 4-5 years though.
We managed to hang on and are now stable, recently paying off a secured loan we had for 10 years. We have an existing DMP with Payplan for which we are looking to settle with around 30%. All of the debt (except one) have defaulted and are no longer on our credit files.
We are trying to pay off debt but with no savings, we have relied on further credit in emergencies for car maintenance, childcare and the like.
Our flat is valued at £200k. Our mortgage is £91k. We plan to pay off ALL debt with the equity and estimate we need a maximum of £35k to do so (this includes the DMP). The rest will be a deposit and moving costs.
Where I need help is this: I know it is unlikely that we will get a mortgage based on our current situation. Could you confirm if this is correct?
Secondly, we have a close friend who has offered to purchase our flat at full asking price, allow us to remain in the property, releasing our equity to pay all our debt. We would then rent it back for as long as required to get the best mortgage we can. My question is, would coming out of the market be ok and how long potentially would we need to be debt free for our worthiness to improve? We don’t want to end up stuck in the flat for years! We were looking at maybe 3 months in which time we could save £1,500 a month in addition to the lump sum equity.
My salary is £26,800, my partners is £56k.
Sara (Debt Camel) says
How large are your non-mortgage debts at the moment? are they all in the Payplan DMP? how much are you paying to the DMP each month?
do you need to move because the flat is too small? How much will a new place cost, how large a mortgage will you need?
Lucia says
We have approx. £30k in the DMP so are offering around 35% as F&F settlement. The rest is credit cards, catalogues, a small loan totalling about £15k. All of these however have been managed well outside of the DMP (taken out after) but we want them all paid off and closed so that we have more disposable income to save. We plan on leaving a small card open each to use and pay off in full every month.
We desperately need to move as we have a 4 year old son and the place is so claustrophobic its making us all miserable. We think the house will cost approx. £350k and will have £60k plus (could be more – depends on settlement offers) as a deposit from the remaining equity (after costs and stamp duty). So a mortgage of £290,000.
Sara (Debt Camel) says
The debt in your dmp which hasn’t yet dropped off your credit record – who is the creditor and does it have a default date? I assume there no late payments on any other debts showing?
Your DMP debts are quite old. I think it would be worth asking them all to provide the Consumer Credit Act agreement for the debt – template letters and more about this here: https://www.nationaldebtline.org/EW/factsheets/Pages/getting-information/credit-agreement-advice.aspx. If the creditor can’t produce these, the debt is unenforceable in court and you can stop paying it. No need to offer to settle these.
You mentioned payday loans – if you got into the trap of repaying one and borrowing again, or rolling these loans, read https://debtcamel.co.uk/payday-loan-refunds/ and set about asking for refunds. Having mortgage arrears on your credit record is an excellent reason why you should not have been given these loans!
Have you looked into whether there is any PPI you can reclaim? See https://debtcamel.co.uk/ppi-out-of-debt/. Don’t use a claims firm, they charge a fortune and are slow, you can do this yourself and you need every penny you can get.
Lucia says
Its Barclaycard (PRA) and I have already gone back to them to ask them to change the default date as it is way out – everything else was registered when we entered the DMP in 2007.
I will do that with the old debts and try – thank you.
We are already in the process of claiming back from pay day lenders. Wonga, QQ, PDUK to name a few. Some are over 6 years old so they are declining to investigate but I have referred them all to the FOS.
We did PPI claims a few years ago. I had none but my partner claimed back a lot. It got us through my maternity leave!
Does it look promising for a mortgage of we get our debts fully repaid? If we can demonstrate 3-6 months worth of excess income being saved with no debt and a small manageable Credit Card, are we on the right track? We don’t want to sell our flat and then end up having to rent for years! Months we can do….
Sara (Debt Camel) says
If you can get the PRA default date changed, then the only problem showing on your credit record will be your old mortgage arrears. Is that correct?
If that is correct, then you should be OK to apply for a new mortgage 6 months after your DMP has ended. That means the mortgage lender won’t be able to see a trace of your DMP on your credit record or your bank statements. You will need to make sure you don’t apply to any banks which are connected with any of the debts in your DMP of course. And because of the mortgage arrears showing you will need to go through a broker.
When you clear the debts, you want to each keep a credit card, preferably one which is old and has a good credit limit. You need to both use these each month but repay in full each month – it is a myth that having a balance is better for your credit score, it isn’t, see https://debtcamel.co.uk/credit-score-change/
Lucia says
Thank you Sara. Great advice and we will go for it. Otherwise, we would be paying our DMP and debts off for an eternity!
Sara (Debt Camel) says
Well actually I am not recommending this rather odd arrangement with your friend. I couldn’t comment on that except to say that I think you should take some legal advice and there could be lots of problems which mean that you could lose a friend… But selling and renting is a way forward that is worth looking at. Being “out of the market” carries some risk of course that house prices will shoot up and this will leave you less well off. And you may not be able to get the mortgage you want in 6 months if the mortgage market changes.
Lucia Cook says
Oh of course yes I understand that. She actually has a few rental properties and was looking for another. She already owns the flat below us. She has a lump sum and is not borrowing to buy and we are having a formal tenancy agreement drawn up so it’s all above board.
It’s very hard to judge but I am hoping this is the best (possibly only) way forward. Thanks