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
John says
Dear Sara,
First of all, thank you for this website and all your advice – it has been extremely helpful over the years. I was wondering whether I could ask for your opinion on a couple of matters.
I set up a DMP with Payplan in November 2009, in order to make repaying my debts more manageable (and I wouldn’t have done so in retrospect!). I didn’t miss any payments and fully settled the amount of £25 000 I owed at the end of February 2015. Two creditors added three defaults, which have since dropped off (a year ago I requested that the default dates be made earlier, as they were added at a later date than the start of the DMP). On my Experian credit report, Santander shows some late payments 37 – 72 months ago, green for the rest, marked as ‘DMP’ only for the last three months of the DMP, and showing settled. Equifax and Callcredit shows the same, and, in addition, ‘AP’ (but green) for Barclaycard for the whole period until it was fully settled in February 2015, and ‘DMP’ for the last three months for Idem (MBNA), rest green. I have a credit card which is fully paid at the end of every month, and not other debt, no dependents and a decent income. I know it means nothing, but all three reports say my credit score is excellent.
I am extremely keen to finally get on the property ladder after working tirelessly to repair my credit record for the last 7.5 years. I have reserved a Help To Buy London property, got the green light to go ahead, and the developer’s mortgage adviser applied for a mortgage on my behalf. He knows of my circumstances, and said we should be fine, but I’m not so sure! He applied for a mortgage with one of the creditors whom applied a default (the amount was about £4500, but fully settled in February 2015, as mentioned before). The reason he used them, is because they are prepare to lend the biggest income multiple (I’m applying on my own). Needless to say, they will check their internal records.
My application was made a week ago, and I can’t detect any soft or hard credit searches on my credit files yet, even though the mortgage adviser said that the mortgage in principle wasn’t declined – it was referred. The narrative mentioned something to do with my address, when he applied.
My questions are:
In your opinion, is there any chance at all that my application might be approved, seeing that I had a fully settled default with this high street lender more than 6 years ago?
Also, I have been out out of the DMP for 26 months, and not the three years that some say you have to wait. Will this necessarily be an issue?
A week after my full application, I am a nervous wreck. In some ways it would have been easier if I were just declined at the initial stage, but I guess I can only wait and see now!
J
Sara (Debt Camel) says
You have to trust your broker here. Applying to a bank in that situation isn’t normally a good idea but if your broker says this one won’t mind, he *should* know what he is talking about.
being out of the DMP for two years should be enough for most lenders.
John says
Thank you for your prompt reply, Sara. I guess I’m a bit sceptical because I’m using the (free) mortgage adviser that was suggested by the developer, and they have a good reputation, but they aren’t adverse credit specialists, as far as I know. Also, they were happy to only look at my Experian credit report (I did offer to send all three), which looks the best of the three, as only the Santander DMP shows, and neither the Barclaycard AP nor the Idem DMP, which comes up on the other two reports. As far as I know this lender checks all three reports in addition to their internal records.
I know I shouldn’t make several applications, but I guess trying a good adverse credit mortgage adviser remains an option, if this doesn’t work out?
It’s difficult to imagine my application being successful having had an old, settled default with this lender, but I’ll just have to wait patiently for the outcome – the waiting game is awful!
Thank you again for the advice.
Sara (Debt Camel) says
Well, let us know what happens. It may be fine.
John says
Hi Sara,
After a month long wait, I have had an offer from a high street lender this morning. I’m delighted, to say the least! I really didn’t think it would happen!
Regards,
John
Sara (Debt Camel) says
Excellent – I hope the purchase goes through smoothly.
Sam says
Hi
My partner and I are looking to buy a property together as we currently live approx. 40 miles away from each other. Between us we have 2 houses and a buy-to let flat to sell, which would net us about £250k after repaying the outstanding mortgages and other sale costs (the 2 houses are currently SSTC). We have found a property to buy, and would be looking to put down a 40% deposit (60%LTV), and require a mortgage for the balance. Income-wise we are also in a good position with salaries of £52k (me) & £35k (partner). The only fly in the ointment is that I have a DMP for approx £18k, which will be paid off in full when one of the houses completes. On my credit report these debtors within the plan are showing as defaults. The DMP has been running since about August 2014 when my circumstances were significantly different. I’ve not missed a payment to the DMP, and have recently increased the amount I pay off per month. Our mortgage advisor has been trying to find a non-high street lender, who would be willing to provide us with a mortgage. Unfortunately, he’s struggling as they either appear to be OK with the DMP but not the defaults, or vice versa.
Is there anyone out there who will lend to us? Or anything I can do very quickly to improve the situation?
Sara (Debt Camel) says
I suggest completing on one of the houses, pulling out of the other sale, so one of you moves in with the other and probably has a horrible commute for 6 months. So you can repay your DMP and sell the BTL. After that look again at finding somewhere to move to and selling the other house.repaying your DMP, selling the BTL.
Mel says
Hi,
I think I already know the answer to this but I’ll ask anyway… I’m in a DMP, it’s for about 14k and has been running a couple of years, and hoping to end it soon with a FFS. The account was defaulted in Oct 2015. I am self-employed and earn approx 13k a year, I’ve been SE for 3 years and income doesn’t fluctuate much, all tax returns are filed and I can get accounts signed off by an accountant.
I now want to apply for a mortage of about 50k, I’ll have a 15% deposit. After reading the above I’m guessing I have no hope.
A financially squeeky clean friend has offered to be a joint applicant for a few years until I can apply for a mortgage on my own, but I’m guessing this won’t help either?
Sara (Debt Camel) says
I think you have a problem. You have debts that exceed your annual income. If you can end this with a full and final settlement, then trying for a mortgage a year afterwards (going through a broker) would ba a better way forward.
Sean Bratherton says
Hi Sara just would like some advise I had a bad break up with previous partner around 2010 .. and in last 3 years been trying to find all debt . 4 accounts went in to default on experian report and though I repaid them in full and anything else that was on there … only one default left due off in Dec. I also have too building credit cards and have had 3 loans all paid up in full in last 3 years too .. my question is is there anything else I could do to improve my chances of getting a morgage when last default is off my report I earn £25.000 per annum .. or should I see a morgage broker
Sara (Debt Camel) says
You sound like you should be in pretty good shape. It’s worth checking Equifax and Call Credit to make sure nothing unexpected is there: https://debtcamel.co.uk/best-way-to-check-credit-score/.
Two credit builder cards is enough, don’t take out any more credit at all. Make sure you use the card each month and repay them in full each month, you want a zero balance on them, see https://debtcamel.co.uk/credit-score-change/.
The defaults – when was the last one repaid? If it was more than a year ago it’s possible you could get a mortgage now! Talk to a broker, don’t apply direct to a lender. And tell the broker about the old defaults that have gone as you want tonavoid applying to those lenders because they may still be able to look at their internal records and see your old problem.
Shelly says
Hi, so I think the answer is not a chance but I’m currently renting from the local council and have been a tenant for over 20 years never missed my rent payments. I would like to purchase my house under the right to buy scheme but have been in a dmp for over 10 years. Could I get a mortgage to cover my debts and buy the house. Obviously I will get a massive discount on house price.
Sara (Debt Camel) says
I think that’s very unlikely. What a shame you have got trapped in such a long DMP and didn’t go bankrupt at the beginning. When will your DMP end? Who is it with?
Shelly says
I was never advised bankruptcy and was very naive. I owe over £15000 and see no prospect of paying it off in the near future. I am currently with PayPlan but have a car in finance for another 3 years so unfortunately I’m trapped. I need a reliable car for my job and also elderly parents with care needs. Easily be able to afford mortgage my rent payments and dmp payments are over £600 a month
K sikandar says
Dear, first of all I want to say that your web site is very helpful. I previously in 2007/2008 went defults in 7 accounts one loan and two overdrafts and rest of them were credit cards.i lost my job that time and did not pay them for long time. The creditors sent my accounts to debt recovery companies such as Robinson way, CARS, IDEM, Wescot etc. I set up a minimum pay plan according to my income-expendutres which review after every 6 months. Since that time three of the creditors was fully paid . Rest of them i am still paying and i never ever have missed any payment since last 6 years or more that time.my personal loan is still 17000£ remaing. Credit cards balance 700£ , 950£ 850£ etc are remaing which i am paying minimum amount every month. Moreover, now my all defults are dropped off from all three credit reference agencies since May 2017 and My credit r score are coming high.However,i am still paying my remaining creditors according to my income -expenture.My questions are? Can i get mortgage now?Do i have to first settled my remaing creditors?May be partial settlment or i can get mortgage without settling them? Or after getting mortgage it would be hard to get partial settlement after buying house .Many thanks
Sara (Debt Camel) says
No you won’t be able to get a mortgage now. You have to settle, partially or in full, the outstanding debts even though they aren’t showing on your credit record.
And the you must not apply for a mortgage to any lender you defaulted to.
K sikandar says
Many thanks.Can i apply for mortgage within two month after partially settling with my all defaults accounts.thx
Sara (Debt Camel) says
Probably best to wait a few more months as you may be asked for 3-6 months worth of bank statements.
Kerrie says
Wondering of you can help me. My husband owns our house, we are looking to sell to move to a bigger house which involves a bigger mortgage. So I am needed to go into the mortgage with my income. Our financial advisor has checked my credit report and I have a DMP with very which is caisomg me a pronlem. Its only £90 in arrears and 200 on the account and once the arrears are paid they are transferring me back to a normal account with very. Will this take away the AP marker I’ve been paying so I can proceed with the mortgage? I need help x
Sara (Debt Camel) says
Once your account is back to normal you will start to get ticks every month. But the old markers showing your previous problems will continue to show until 6 years after the account is closed.
After a year of no problems, these old problems probably won’t stop you getting a mortgage, but they may in the short term.
the arrears need to be paid off asap. And you should consider repaying the whole account and closing it as this means in 6 years time all trace will have gone.
Kerrie says
So if I paid it all off tomorrow it won’t change the fact it’s going to go against me?
Sara (Debt Camel) says
No, but it will look better to a lender. Some lenders may not mind, some will be fine after a year. the sooner it is all cleared the more chance you have of getting a mortgage.
Kerrie says
Ok thanks. Really not was I was hoping for but will look to get it all cleared asap. We’re looking to move really soon. Will talk to my financial advisor again tomorrow. Fingers crossed we can do something. I’ve always been on time with the payments and been trying desperately to get my credit rate up.
Sheila Weightman says
Hi.
My credit score is brilliant but my partner has 3 CCJ… this is £8000 all together. We are working on a payment plan. Will be able to apply for a mortgage after a payment plan is done ? Or what do we have to do until we are be able to apply for a mortgage ?
Thank you
Sara (Debt Camel) says
How old are the CCJs? CCJs drop off your credit record after 6 years – you will find it VERY hard to get a mortgage at an OK rate until they have disappeared even if you have a good deposit.
Yasmin Mohidin says
Hello there
Please can you clarify something for me? I have had a look through your posts regarding old debt and debt management plans and how these debts could eventually “drop off” your credit history. What I would like to know is this: I currently owe about £10k to various credit card companies and banks for personal loans. These debts will be 6 years old next year (around summer 2018). I currently pay £1 per month towards each debt. I am due to come into some money before Christmas. Would it be better to make all the companies an offer of settlement using my money so that I can then apply for a mortgage? Can you please let me know what the best course of action would be? I have applied for a mortgage together with my partner but was not allowed to appear on it due to my financial position. I just want to know if it would be better to make an offer of settlement to all the companies I owe money to or whether I should keep my windfall and save it towards a deposit for a mortgage. I should be grateful for a response. Thanks!
Sara (Debt Camel) says
Are you saying the default dates showing on your credit record for all the debts were in summer 2012?
Yasmin Mohidin says
Yes that’s correct – I did check my credit scores but don’t have the document to hand to give you the exact dates but they will be 6 years old by summer next year.
Sara (Debt Camel) says
You do need to settle these debts before applying for a mortgage. Even when they drop off your credit record, they still exist and the mortgage lender will be able to see the monthly payments yiouvare making to them… and if you stop the payments the creditors may go for a CCJ which would be a disaster.
So offering a partial settlement to these debts would be good. Then when they have dropped off next summer you can safely apply for a mortgage.
Yasmin Mohidin says
Thanks so much!! That’s really helpful – when you talk about them “dropping off” do you mean after the 6 year period?? Thanks again!! Best advice I’ve received!!
Sara (Debt Camel) says
Yes, if there is a default on a loan on your credit record it will drop off totally 6 years after the default date. Do check your credit records so you are sure what these dates are.
Sarah says
Hi, thanks for the advice, really useful. Do I have to declare a settled DMP (closed in Jan) if no markers exist of my account? Last default dropped off this month.
Sara (Debt Camel) says
You should answer any questions on a mortgage application honestly. I think it would be unusual to be asked about this but I suppose it is possible. If you are asked to list current debts – the DMP debts no longer exist.
miss christina tague says
thanks but could you tell me how long a DMP stays on your credit scoring ? ss am thinking of purchasing my council house .
Sara (Debt Camel) says
The DMP itself doesn’t show on your report, but the debts in it do. They will stay for 6 years from any default date or 6 years from the date th account is settled if there is no default date.
Has your DMP finished?
Tony Jones says
Hi
Im on a DMP for the last five years after getting divorced, and my regular payments are all under control.
The house is in my name now, but part of the divorce was that I took ownership of all credit cards and debts we had, including some business debts, it is £70k
I am going to now downsize and will be left with a large deposit (after mortgage being paid off, Im left with about £250k deposit).
I know Im likely to get a mortgage using most of the deposit, but with a high arrangement fee and inflated interest rate. Thats the way it goes, but I want to ensure that the money left over from my downsizing (about £40k) will be transfered directly to me – so I can use this money directly to negotiate an early settlement via my DMP provider – and draw a line under my debt finally.
is this how it works?
Tony
Sara (Debt Camel) says
The money from the sale of your house will go to you (obviously after paying the mortgage etc) not your unsecured creditors.
Many DMP firms aren’t very helpful when it comes to negotiating partial settlements, wanting the same to be paid to everyone. One option would be for you to ignore the DMP firm and make the offers yourself. 40k should be enough after 5 years of a DMP, but if you have any large business debts in there that haven’t been sold on to a debt collector, they can be more difficult.
Tony Jones says
Thank you so much Sara. There are no more business debts…just unsecured loans and credit cards.
Lee says
Hi there,
I was previously on a DMP, which caused a few defaults (all dropped off my credit report) and also an ‘Arrangement to Pay’. This was on an account marked as settled in October 2013. I have just been accepted for a Mortgage Agreement in Principle; do you think that this AP affect my proper application for a mortgage? (I wasn’t aware of this AP when I did the AIP application).
Thank you for your help, your site has been excellent in helping me get ready to go for a mortgage.
Sara (Debt Camel) says
It could affect your application but as the account was settled so long ago, many lenders wouldn’t mind it. If you are going through a broker, talk to your broker about this.
Lee says
Thanks for the response. We are with an estate agent in-house broker, not our desired way but they have the house we want; I am surprised my credit file wasn’t interrogated during our discussions and I only noticed the ‘AP’ marker when I joined Noddle (it isn’t clear on Experian or Equifax).
Does the mortgage supplier (Leeds BS) look at credit reports when Agreement is Principle was applied for?
Sara (Debt Camel) says
I don’t know what that lender will have checked – I hope you will be OK.
Lee says
Finally getting round to respond to this – we got a very competitive mortgage offer; frustratingly though we haven’t completed yet as our new build house has been subject to a series of delays – we’ll get there though. Thank you for all the help and advice on this site!
Ralph says
Hi there,
Firstly, I must mention that this website has some great advice and has helped me feel much more positive about sorting out my debt problems!
I am currently in a Debt Arrangement Scheme which began in 2014 and I had six accounts at the time. I recently discovered that four of the accounts were defaulted but the other two are still active with DMP flags on them. As these won’t be removed from my credit file in 2020 when my defaults drop off, I spoke to HBOS about defaulting the accounts with a default date from the beginning of the DAS. Unfortunately, they seem to think that they can’t do this, as the person I spoke to thought that as a DAS protects you by law from further defaults, and that they couldn’t even apply retrospective ones before the DAS started. I understand that as this scheme is in Scotland only that information may be limited, but does it sound like they might be correct? If I can’t get anywhere with HBOS, is it worth speaking to the FOS about it?
Many thanks!
Sara (Debt Camel) says
As you say, I am not an expert in Scottish debt options. But that doesn’t sound right to me. During a DAS a creditor can’t take you to court – but that has nothing to do with when a default should be registered on your credit record.
I suggest you put in a formal complaint to HBOS’s data controller (see https://debtcamel.co.uk/debt-default-date/) and take it to the FOS if HBOS don’t correct it.
Ralph says
Hi Sara,
Thank you so much for your swift reply. I think I’ll contact the Accountant in Bankruptcy to confirm the rules re: DAS and defaults, and continue trying to get HBOS to correct it if they are mistaken in thinking they are unable to do it.
I’ll keep you posted!
Ian says
Is it illegal not disclose DMP to mortgage?
Council tenant 20 years, getting worried of security of house when retired bed room tax etc.
Looked at right to buy the 50% discount as deposit. My mortgage would be cheaper then rent.
Went to one today and was totally honest, and was refused as I expected. Was advised look at credit file and possibly see independent Brooker.
Checked my credit reports all looked good, as DMP no longer show, never got in arrears, no ccj. Only thing would be the £1 month on bank statement.
Sara (Debt Camel) says
Any mortgage lender will look at your bank statements and see the £1/month. You need to clear your DMP debts before you apply for a mortgage. If you stop paying the £1 then you may well find you get a CCJ.
(Also there is no need to worry about security of house when you retire because of the bedroom tax, pensioners are exempt.)
Ian says
But would be easy to pay by another means, so they don’t show. Feels morally wrong to hide, but would it be illegal to not declare?
Other changes to Housing Act 2016 and end to life term tenancies are also a concern, they seem to be going to 2,5 or 10 years. Don’t fancy being force out home after 10 years if I can get a mortgage.
Sara (Debt Camel) says
When you apply for a mortgage you will usually be asked questions about your finances, if you lie that is fraud.
Ian says
Thanks makes sense, kind of clutching at straws.
And guessing those mortgage brokers that do take on bad credit charge stupid interest rates.
Had a search for local independent mortgage brokers and didn’t trust any of the websites and lot seem home based or from very small offices
Sara (Debt Camel) says
Bad credit brokers don’t normally deal with the Right To Buy, it’s quite a specialist area.
Cassandra welch says
I have an AP with Very after my husband was involved in a car accident last year and off work, meaning we couldnt make full payment. Rest of my account is in good shape. 2 late payents back in 2016/2015 with virgin phones.
We are planning on paying off ALL debt with the sale of our current home. We can easily afford the repayments on our new dream property. How likely will this AP stop us from getting our mortgage?
Sara (Debt Camel) says
Is there a reason you can’t increase payments to the Very debt now? I think you need to talk to a good broker about this
Andrew says
Hi there I’ve got £1200 left to pay on my dmp. Currently paying £60 per month. My default was well over 6 years ago and I have been paying regular for years I have £4000 off of the debt and have 19months remaining. My and my girlfriend desperately want to get a mortgage but worried about this dmp! Any advice greatly appreciated
Sara (Debt Camel) says
So all the debts have disappeared from your credit record? It’s a bit late to offer full and final settlements to the debts – the creditors know they will get the full amount in 18 months. Are you saving for a deposit? If you are it’s probably best to throw that money at the DMP debts to settlement asap, then be able to save up an extra £60 a month to the deposit. You really want to have at least 3 months, preferably 6 months with no DM
Andrew says
Yes the debts have disappeared. My partner is getting quite a large deposit from her family. But hard for me to expect them to pay my debt. Do you think that there is a chance we could still get a mortgage at all? Thanks
Sara (Debt Camel) says
Not at a good rate, no. Sorry it’s best to be honest with her family, if your debts are paid now, then you stand a great chance of a good mortgage in 6 months. If they aren’t it’s going to be 6 months after the last debt is paid.
But what could you two do to blitz the debts down? This isn’t a huge amount of money, have you looked at not going on holiday this year, eating out less etc?
Andrew says
They said they would take a part settlement of £1020! I think I could raise those funds. Would a part settlement go against me on my application for a mortgage?
Sara (Debt Camel) says
So this is just one debt? If it has disappeared from your credit record it will not now reappear if you agree a partial settlement, see https://debtcamel.co.uk/ff-credit-record/.
NB obviously don’t apply for a mortgage to the same banking group that you have agreed this settlement with!
Andrew says
Yes it is 1 debt. So I should settle the debt completely?
Sara (Debt Camel) says
if it has disappeared from your credit record, there is no harm in a partial settlement. If it is still on your credit record that is a harder decision, see https://debtcamel.co.uk/dmp-partial-settlement/
Dean says
Hi, I have been in a DMP since March 2013 – I owed about 45k to 8 Creditors 6 have defaulted (all in 2013/14) but 2 have continued to mark my credit file as up to date (I’m sure that will leave AP markers though). So I need some advise as I want to get a mortgage in a few years. So the 2 up to date debts have been passed to collection agencies for example Creation Credit Card has been passed to Lowell.
If I was to write to these 2 creditor and ask for them to default me – would I write to Creation and Lowell or just Creation, I feel my best chance of a reasonable mortgage is for all debts to be defauted and dropped off and time is running out I’m 42 !!!!!!!!
Thank you
Sara (Debt Camel) says
To get a mortgage you also need to have settled all the debts, even if they have dropped off your credit record… when is that likely to happen?
Dean says
Hi Sara, hoping to have all debts paid in 2 years. Will sell a flat I have which is just creeping out of negative equity plus my gf will have some deposit. I guess it’s worth trying to get the 2 creditors to default me?
Sara (Debt Camel) says
OK then yes, asking for a default to be added for the 2 un-defaulted debts is a good idea. Ask the original creditor, not Lowell. See https://debtcamel.co.uk/debt-default-date/
Dean says
Is there a risk they could default with a 2018 instead of 2013/14 ?
Sara (Debt Camel) says
Well in theory. That’s not a common response to the being asked to add a default back in xxxx though. Did the catalogues stop adding interest when the DMP started? it’s worth checking that and complaining about that too if they didn’t: https://debtcamel.co.uk/creditor-wont-freeze-interest/
Dean says
Yeah they have frozen interest from the start I think
Dean says
Just FYI – I have today written to Barclaycard and Creation requesting that they default my accounts back to 2013 when I started my DMP. I am hopeful they will do this as will be better than AP markers being reported and ruining my credit report for another 9 years (6 years from when debt settled). Here’s hoping for a slightly brighter future. Fingers Crossed :-)
Dean says
UPDATE – just had a lovely call from a lady at Barclaycard who has agreed to default my account back to March 2013. Definitely worth writing to your creditors. Just waiting for Creation to do the same – then all my defaults will end in 2020, and should have some financial freedom (not too much of course) in the future.
Anne says
Hi
I am currently 8yrs into a 10yr dmp. I think I owe about £6000 total now do I need to wait until all my debt has been clear for sometime before I could even think of getting a mortgage?
Sara (Debt Camel) says
Are all your debts already off your credit record?
Anne says
Yes I think they all came off last year
John Smith says
Hello, firstly let me say what an informative and useful website this is and has certainly helped me over the past few years.
Secondly I would like some advice as to my prospects of getting a mortgage after my DMP in 2015. I was defaulted on 6 accounts (credit cards, overdrafts and catalogue companies), for the combined amount of around £18,000 accumulated after being made redundant in 2008.
I entered the DMP in March 2015 and my latest Default was added in December 2015. I decided to enter the DMP in order to clear my debts with the hope of gaining a mortgage in the future. I paid off all of the debts in April 2017 and have saved £27,000 for a deposit (I am in Wigan, Lancashire). I have been debt free since then and have had no credit problems since then. My credit score is still showing as poor (almost on fair). Honestly, what are my chances of getting a mortgage this year? Is it worth waiting until my credit score improves?
Many thanks for your help.
Sara (Debt Camel) says
I think it’s worth talking to a mortgage broker now.
John Smith says
Thanks so much. I will speak to a broker and see what happens.
Dean says
Hi Jon, please let us know on here how you get on. I will be in a similar boat soon – Good Luck
John Smith says
Hi Dean,
Happy New Year to you all. Well I spoke to a broker and was offered a mortgage with Skipton which I gladly accepted as I had a Lifetime ISA with them and it made things a little simpler. Fingers crossed I will be moving into my new home around August time. Thanks to Sara and everyone who contributes to this wonderful site. Good luck, Dean.
Russell says
Hi
My wife and I are looking to apply for a mortgage , we have various debts ( credit card , car finance ) and my wife has a debt with a debt collection agency ( is this the same as being on a DMP?) of about £9000 . Even though this has dropped off her credit report , from what I’ve been reading a mortgage lender would still identify this debt on the bank statements , the debt is with Wescot services . At the moment she’s paying off the debt ,monthly ,in small amounts but we’ve been thinking of getting a loan to cover our debts and consolidate them into one debt between the 2 of us . Even though this sounds counter productive in that we’ll probably end up paying more interest , but, in the eyes of the mortgage lender would having one loan to pay off between the two of us look better than having various debts dotted around plus a DMP ? Obviously we’d wait for 3 months so our bank statements would reflect just the one loan . What would be best?
Sara (Debt Camel) says
Yes an arrangement to pay a debt collector is the same as a DMP.
What do all your other debts apart from your wife’s defaulted debt add up to?
The defaulted debt, what was it originally – loan, credit card overdraft? When was the account originally opened and who was the creditor?
Do you have a deposit for the house saved up?
Russell says
The other debts are about 5000 , her defaulted debt was a loan with Lloyd’s around 8 years ago , after 2 years she made an arrangement with Lloyd’s to just pay off £100 a month but Lloyd’s decided to hand the debt on to Wescot services , so the actual debt itself has dropped off the credit report as it’s been over 6 years but she’s still paying the £100 a month to Wescot . We have a little bit saved for a deposit but it’s a slow burner , we’re at around 3000 , I know any debt is bad in the eyes of a mortgage lender , im just wandering what would be the less of two evils , having one debt between two of us paying interest or having a range of different debts but only paying interest on the car finance ( and having a DMP!)
Russell says
The other debts are about 5000 , her defaulted debt was a loan with Lloyd’s around 8 years ago , after 2 years she made an arrangement with Lloyd’s to just pay off £100 a month but Lloyd’s decided to hand the debt on to Wescot services , so the actual debt itself has dropped off the credit report as it’s been over 6 years but she’s still paying the £100 a month to Wescot . We have a little bit saved for a deposit but it’s a slow burner , we’re at around 3000 , I know any debt is bad in the eyes of a mortgage lender , im just wandering what would be the less of two evils , having one debt between two of us paying interest or having a range of different debts but only paying interest on the car finance ( and having a DMP!)
Joe says
Hi,
Me and partner have been on our DMP for 7 years and debts no longer show on our credit reports which are both now excellent. I have been paying our DMP through my daughters bank account so it doesn’t show on any bank statements. I’m currently selling our property and will pay the remaining debts off still leaving 40k for a deposit. Question is will a mortgage lender find these debts if I don’t disclose them potentially increasing my deposit and leaving 7-8k debt Or would it best to seek a mortgage disclosing them with the condition they will be paid off when I sell our current property? Cheers
Sara (Debt Camel) says
Doesn’t a payment to your daughter’s bank account show on your bank statement? It is never sensible to lie on a mortgage application and you will usually be asked to list your debts.
Joe says
Hi, I take the money out in cash in various amounts to pay to her. My mortgage broker has come back today with a mortgage that doesn’t mind the DMP at a rate of 4% fixed for 2 – 5 years at which point I can remortgage to a high street lender with no debts and a better interest rate. On this basis I have no problem now with paying the majority of my DMP off and leaving 7k as planned to pay off in 2 – 5 years. Just goes to show there is mortgages out there that will accept people on DMPs that have got there act together and become responsible borrowers again. Cheers
Jennifer says
Hi,
I got into a bit of financial trouble in 2013 and I got stuck in a cycle of payday loans to pay off the previous loans until I could no longer manage what I owed. I then took out a DMP to repay all of my debts but in 2015 the DMP company I was with stopped trading. I had paid off most of my debts by then (was not more than £2000).
I lost track of what I owed and who I owed it to until I got my credit report from noddle in 2016 when to rebuild my credit score and found that I had a few outstanding payments and obviously some defaults on these debts (3). I have paid them all off bar 2 (£350 and £390), I am currently in dispute with these companies as I do not think I should have been lent the money as this was in the height of my money troubles and if they had done proper checks they would have seen that I had a number of debts with other companies and I could not afford the repayments.
Me and my partner went to a mortgage broker last month to see about our chances of getting a mortgage and he said that one of these debts is still showing as being in a DMP even though the plan was ended in 2015 and it would make it very hard to get a mortgage with that still showing on my file. I have contacted the company to remove it but they said they will look into it and I have heard nothing since.
Would paying off these debts help with us getting a mortgage or shall we just wait to see what the loan companies come back with?
Thank you
Sara (Debt Camel) says
Disputing the payday loan affordability is the best move to get rid of those defaults.
“one of these debts is still showing as being in a DMP even though the plan was ended in 2015” what sort of debt is this? is there a balance showing?
Jennifer says
Thank you for your reply. The dmp is one of the payday loans that I am disputing the balance says £350.
Sara (Debt Camel) says
OK, so you already have an affordabilty complaint sent to the original lender. Is the balance owing being showed by the original lender or a debt collector?
Do you have confirmation from your DMP firm that the debt was cleared? that could help your complaint.
The lender has 8 weeks to reply to your affordabilty complaint. And 8 weeks for the complaint about the balance.
Jennifer says
The balance is shown by the original lender.
The debt was not cleared by the dmp the company stopped trading so all of the debts that I had were then just left and not paid. I have cleared everything else myself over the past few years but the last two are with the payday loans that I am in dispute with but only one of them is still showing as being in a dmp. The company wrote to all of my debters to say they would no longer be trading and no other debt has showed as a dmp apart from this one.
David says
Hi Sara.
Me and my partner that I met recently want to buy a place of together in the next 12 months we both currently have properties with a mortgage. Her credit file is excellent and plans to keep her current property (rent) and still have a 60,000 deposit for a new property I will need to sell mine and contribute the 20,000 equity to the new property. We have a combined income of £92000 however this is where the good news stops, I had to enter a DMP 4 years ago with the associated defaults due to rising personal debts they hit 19000 i have since got them down to 6000 as of this month whilst keeping on top of my other Bills and mortgage I am paying it off aggressively so hope to be debt free by next summer. I know defaults stay on my credit file for 6 years, what do you think we should do ? She wants me to buy with her but is my partner better going in on her own with her deposit and income of 58000. If so when can i realistically add my name to the mortgage and contribute my 20000 without effecting the interest rate I would have ?
thanks
Sara (Debt Camel) says
I think you two need to talk to a good mortgage broker about your options.
– I have no idea if she would pass the affordability test for buying on her own, and is she factoring in the need to tell her current mortgage lender that she will be renting it out?
– Are all the debts on your credit record defaulted?
– Most people would want to get a mortgage fix for 5 years (or more!) at the moment , but that may then be expensive to unravel to put you on the mortgage later.
David says
Thanks for the quick reply, I have six accounts paying off at the moment all but one defaulted 4 years ago. This was a barclaycard debt thats transferred to another company but says the account is open and recording the payments on my credit file? Whilst the other five show as closed and defaulted with the balance left that i pay monthly through step change.
My partner has 110k home with 60k equity that she plans not to take out and just use a the cash she has saved for a deposit 50k, her wage at 58,000 pa with no other debts or cars to pay etc does not suggest to me she would fail the affordability test ….i know it depends on what you look to buy we are looking at around 250k to 275k so LTV at circa 80% with her on her own.
any advice you can give will be gratefully received
thanks again
Dean says
You can write to Barclaycard and ask them to add a default back to when you stopped paying your contractual minimum payment – I did and they have defaulted me to march 2013 so will drop off my credit file totally next March. I guess they have passed the debt to link financial or similar so they have to mirror the default date as it’s the same debt. Then you should have a clear file 6 years from the most recent default instead of 6 years from when you have paid the debt in full !! Remember you have to continue to pay your debts after they have dropped off your credit file or you may get a ccj. Good luck
David says
Thanks Dean I just quote my orginal account number then ? Is there any specific dept you need to write to ?
Another thing i noticed my defaults are dated many months after I started my DMP i.e. started sept 2013 defaulted march 2014 is that right?
Cheers
Dean says
Yeah original Barclaycard long number – just get the address from their website. I think you can find an example letter on here somewhere. As for default dates there’s also an article on here about that. I wouldn’t worry about defaults 3 or 6 months after entering your dmp as it could be worse. Important part is a default is much better than an arrangement to pay or debt management marker in the long run
Sara (Debt Camel) says
Here is the article on what the default date should be https://debtcamel.co.uk/debt-default-date/
Dean says
Hi Sara, I need your advise. I wrote to Creation to ask for them to add a default to my account back to 2013 when i entered into my DMP. They have written to me to say that because i continued to pay (reduced payments through Payplan) that it did not warrant a default. I am looking at it as I am being disadvantaged compared to someone who just did not bother to pay for 6 months after the DMP. Also my 7 other creditors have defaulted me with the same arrangement.
The debt was passed to Lowell in Feb 2016 and they will mark the account as satisfied once paid off, but i am concerned that there will now be a record of my dmp on my credit file after all debts have been cleared.
Do you think i have a case for the ombusmen?
Sara (Debt Camel) says
Yes you are disadvantaged. It’s worth sending the case to the Ombudsman and explaining how unfairly you have been treated. It may not be easy to win, but why not try?
Dean says
i have written to the ombusmen so will see what happens. I have also spoken to Lowell who said that as my account is not defaulted they will mark the account as “settled” not satisfied. I would never not disclose to a mortgage lender that i was a DMP if asked but do you think the lowell account being marked as settled will help?
Sara (Debt Camel) says
“do you think the lowell account being marked as settled will help?” No.
And this isn’t a generous offer by Lowell, any debt that is defaulted is marked as satisfied, and debt that isn’t is marked as settled.
I hope you are complaining about Creation to the ombudsman, not Lowell.
Dean says
yes i am complaining about Creation to the omsbusmen. lowell seem to be marking my credit file as up to date but even the name lowell indicates debt recovery. So i will fight this. :-)
Dan says
Dean
I’m having the same complaint about Creation with FOS. Did you have any luck?
Dean says
Hi Dan, complaint is just being finalised – but yes default added back to 2014, 2 years of interest being refunded and £150 compo. So better than i thought. :-) all my dmp accounts have been defaulted now and will all drop off this year and next – so should have a clear record and debt free in about 18 months – Good luck Dan
Thomas Prosser says
Hi Sara
Wanted to drop a quick message to say thanks really. stumbled across this website a few years ago, was in a terrible mess with a dmp and defaults. Ended up using your methods and having two unfair defaults removed. these otherwise would have been with me until 2019. Ive also been awarded compensation etc for these. Ended up closing my DMP last years and negotiating directly with the remaining creditors. Ive approx £5k left to pay. Well today because of your help ive had a mortgage offer through from a high street lender, meaning ill be in a new house by chrsitmas (new build) Thanks Again!
Sara (Debt Camel) says
well done!
Lou says
Hi Sara!
We (myself and my partner) are looking to buy next year. And after doing some digging with some mortgage advice we feel a bit deflated. We should have £25k deposit by this time/November next year (when we would have started looking to buy).
We were on a DMP (started April 2013), and paid in full this May (2018), last default falls away November next year (hence why that is when we would look). We have no debts. After calling a few advice agencies, it looks as though a question on mortgage application might bring up our past. We thought once our defaults fell away (after six years) that ‘all would be forgotten.’ But it looks as though they ask ‘have you ever been in debt or had arranged payments with lenders’. I was advised that some high street banks want to see them settled over three years ago! So even though it won’t be on our file, we will have to declare the facts, and by November will only be 1.5yrs since we settled. The reason this is so frustrating is because lenders like Nationwide are more generous, we live in an expensive area and were hoping for a lender like them. Sigh. Feel unfair that a DMP off your credit file can still cause issues. Any advice on what we can do to appeal to these lenders despite our DMP from over six years ago?
Thank you!
Sara (Debt Camel) says
“I was advised that some high street banks want to see them settled over three years ago! ” who said this?
Lou says
Hi Sara,
This was advice given by London and Country fee free mortgage advisers. She explained that the default dates weren’t so relevant to the lenders as the settlement date… and it looks like you have to disclose this on the application (very irritating!) on the way the word questions. Sigh. Very frustrating. The good thing is we can get a mortgage, and have come a long way financially, not so good news is we may end up without the lenders we were hoping for for a history that isn’t even on our credit record.
Lou says
Also likely not to be lent as much and it came across like despite being past the default dates that we would ‘look to other lenders’ (ahem -adverse credit history). Seems mad!
Sara (Debt Camel) says
Well it does seem odd. I suggest you wait until after November next year and talk to a different mortgage broker.
Lou says
Perhaps it is a case of approaching it with an ‘as is’ situation at the time we will be looking? Thank you for your help!
Feres Feres says
I’m on my last 6 months of my DMP which started in 2008. So far I couldn’t see my old creditors on my credit report. My credit score is between 750-920 on Experian. 2 questions, First, is it wise to pay off my DMP early? Secondly, what are my chances of getting a mortgage? I have full time job, earning around 33K pa.
We’re planning to buy our first house next summer, I’m 45 years old and I can save up to 10k in July 2019.
Many thanks in advance
Sara (Debt Camel) says
You have checked Experian, but have you also looked at your Equifax and CallCredit records? They may have different information so you should do this now if you haven’t already. See https://debtcamel.co.uk/best-way-to-check-credit-score/ for how to check these for free.
The sooner you pay off the DMP the better! Mortgage lenders ask to see your bank statements, so you want 6 months where there are no DMP payments showing on your credit record before you apply.
Do make sure you don’t apply to a lender who you had a debt owing to in your DMP – they will see be able to see that in their own internal records even when it has gone from your credit records. Some won’t care, but some might, so why take the risk?
PS reclaiming PPI can be a great way to increase your deposit!
Jason says
Hi Sara
Great site, great info!
I have been paying off my debt for years, most of them are very old(about 10k). I have never had CCJs. There is a lot of talk about DMP’s on here, I have not gone into one of these, I am paying directly to lenders or people Like Moorcroft, Lowell, Robinson. I only have one left on my credit file now. The rest must have dropped off. Since graduating my wages have increased and I have managed to get two credit cards upto 4k credit by paying them religiously every month. Everything else is paid on time and has been for 3+ years. We have a 20K deposit at the moment, and have had a decision in principle agreed with Halifax for 190k Mortgage, and are about to make a full application. My question is do I count as having a DMPs? Will we get the mortgage?!? Thanks in advance.
Sara (Debt Camel) says
Most mortgage lenders view payment arrangements as just the same as DMPs.
Did you go to Halifax on the recommendation of a broker? Or direct?
Are they aware of your payment arrangements? Because the payments will show on your bank statements.
Jason says
Hi
We went through a mortgage advisor yes. I’m not sure how much info they shared with the bank? They have only done a soft search on me upto now? But I bank with them anyway. Do you know what they can see when they do a soft search??
Sara (Debt Camel) says
Did you tell your mortgage adviser about the payment arrangements? I suggest you talk to them again urgently and explain what you are worried about.
David Leeming says
Hi,
I’ve just finished my 12 year DMP, five accounts all settled, with no missed payments, no defaults all green. I want to get a mortgage but am concerned that these closed debts will not look good. Is there a way I can get them removed or do they have to stay there for ever. Also how many months bank statements without DMP payments will I need before applying.
Regards,
David
Sara (Debt Camel) says
The accounts stay there for 6 years from the date they were defaulted – which did not happen – or were closed, which has only just happened.
What is your current credit score and which report are you looking at?
Sarah says
Hi, I got myself into some financial difficulty in 2015/2016, due to loss of job etc and I was using credit cards for everyday items and ended up with over £20,000 debt and opted for a DMP as I could no longer pay the £1200 month in credit card charges. I have a property that is on a buy to let mortgage with over £200,000 equity in the property and I would like to remortgage this property to a residential mortgage now and live in the property, and potentially use it as a base for my business in the future. I have been self-employed for the last 3 years, but I have recently become full-time employed with a company and work on my business part time. I am struggling to get a mortgage due to the DMP, is there any chance that I am going to be able to get a mortgage?.
Sara (Debt Camel) says
Well there are bad credit mortgage providers but these can turn out to be an expensive mistake if you are not able to remortgage to a normal rate in a few years. How long until your DMP finishes? How much do you want to borrow? What is your income from employment?
Nicola says
Hi Sara,
We are wondering what our chances would be of securing a mortgage. We live in a council property which is worth approx £120,000 market value. With our discount we would be entitled to buy for approximately £65,000. We currently have a DMP in place debts total approx £7000 having paid back approx £3000 I am currently the only person working in our household earning 18,800 a year. My Husband is either going to become self-employed again or commence full-time employment soon. We both have debts on this DMP currently.
Kind Regards
Nicola.
Sara (Debt Camel) says
I think you need to talk to a broker – it may well be that you will struggle with the DMP in place and the fact that your husband isn’t working may well mean you have to postpone this for a while.
Hanna says
Hello Sara,
My husband and I are looking to get a first mortgage with a 5% deposit but I am concerned that his old DMP will affect our application. He finished all DMP payments etc and closed it all in July 2014 but I have read that the DMP will mark bad credit for 6 years from the closed date. One of the mortgage brokers that I started an online application with immediately told me to not proceed due to his old DMP, it was Habito who apparently use whole of market, so as you can imagine, this has frightened me some what. On top of this he is self employed, he has 4 years worth of books which all increase in profit every year and I am employed on a decent salary, starting to feel that we either won’t get a mortgage or we will end up with a terrible offer or interest rate.
What would your advice be about this scenario?
Kind regards,
Hanna
Sara (Debt Camel) says
Are any of the DMP debts still showing on his credit reports? You need to check reports with all three credit reference agencies.
Hanna says
One account still shows on his report as a closed credit card which is settled but there is no mention of any DMP on any of his reports.
Many thanks,
Hanna
Sara (Debt Camel) says
so the account that still shows – is that marked as having a payment arrangement? or late payments?
What are his credit scores with each of the 3 CRAs?
Hanna says
No it’s marked as a settled closed account but the final payment is shown as 6 months late in 2014. No mention of payment arrangements anywhere.
One says soaring high (clear score), one says good (Credit Karma) but they’ve not got him down on the electoral roll for some reason so we’ve disputed that and one says excellent (Experian). He’s showing as above average on all 3 compared the the UK average.
Sara (Debt Camel) says
It’s the 6 months late that will have shown it was a DMP.
When did the DMP start?
Hanna says
The DMP started in August 2012. The 6 months late payment on Barclays shows as May 2014 and was settled June 2014.
David says
Hi
I appreciate this thread is a few years old but if you could respond that would be great.
My wife has had a DMP since 2010 and has maintained payments throughout. The last default dropped off her credit file about 3 years ago.
She is about to receive a gift of money from her parents which she will use to pay off the DMP. We will then save towards a deposit for a mortgage. I have been advised that you should wait at least 2 years after the DMP has been settled before making a mortgage application and, even then, there are very few lenders that will consider someone who has had a DMP in the past.
All that said, I’m still not sure what impact a partial settlement would have when we apply for a mortgage. I expect the creditors will accept a lower figure to settle the respective debts and obviously this would help a great deal; however, would this be another negative factor that a mortgage lender will take into account and should we just pay do whatever it takes to pay the full amount off?
I would be very grateful for any advice!
Sara (Debt Camel) says
If the debts aren’t on her credit record, then the mortgage lender will have no idea that they were settled with a partial settlement.
“I have been advised that you should wait at least 2 years after the DMP has been settled before making a mortgage application and, even then, there are very few lenders that will consider someone who has had a DMP in the past.”
And how are the mortgage lenders going to know about her DMP? Assuming she isn’t applying to a lender who was in her DMP, they can’t see the debts on her credit record and after 6 months there will be no sign from her bank statements that she was even in a DMP. See https://debtcamel.co.uk/mortgage-debts-not-on-credit-record/
You might also want to read https://debtcamel.co.uk/settlements-old-debts-cca/
Kevin says
Thank you for the quick reply, that’s very helpful. With regards to your comment:
“And how are the mortgage lenders going to know about her DMP?”
I had hoped that we wouldn’t need to mention it given there would be no record of it on her report, but I’ve since been told that most lenders will specifically ask if you’ve ever had a DMP. If that’s true, we would need to disclose it and it’s then that I worry the partial settlement would be seen as another negative once they start looking into it further.
If the DMP question isn’t asked that’s great but I would welcome your thoughts on whether that is likely, based on your experience?
Thanks
Adele says
hello,
myself and my husband are both on DMP’s with stepchange. We have just been given a £20,000 house deposit, my family are unaware of the dmp so cannot use those funds to clear the debts – our dmp debts are almost 6 years old so are almost off our credit file, we have rented for 20 years never missed a payment.
what is the best way forward of hopefully getting on the property ladder? at the moment the money is in a joint account with a family member as I am scared to move it in case this is used and taken to repay my debts. my dmp has a long way to go however my husbands is almost at the end and cleared and has contacted his creditors to ask for settlement figures.
are we wishful thinking that we will eventually own our own home?
can I move the money in to a savings account in my name without it been used for debts?
if I move the money I could use some of it to repay my husbands dmp and he could be the main applicant for a mortgage with a £15,000 deposit?
do not know what to do for the best or where to go for the best advice
Sara (Debt Camel) says
Savings basically aren’t a problem in a DMP. Of course you should tell your DMP firm and use them to clear some debt. But who is going to know they are there? Your creditors are happy to take the easy life and have the payments roll in without any effort/cost of investigating you in depth and then going to court for a CCJ and then going for a third party debt order to get at your savings. I don’t expect you have ever heard of a third part debt order – that’s because they are very very very rare.
You have to sort your DMP before getting a mortgage. How large is your DMP now? How much are you paying a month? What sort of debts in your DMP? Do you have any debt outside?
How much is your husband paying to his DMP as that will soon be extra money that can go to yours?
You may do better to make settlement offers (not full! These debts are going off your credit record and settling them partially is fine! See https://debtcamel.co.uk/dmp-partial-settlement/.) to your debts not his. With little time to go, he probably won’t get much off his, but you could.
Emma Smith says
Hi,
My husband and I will have completed our DMP on the 10th November after paying it for 7 years. We owed 37k. I’ve checked my credit score on Equifax but the default dates are confusing. It seems as though they’ve added the default when the money owed had been paid in full (minus interest). The debts had been sold on to other debt companies over the years but I was under the impression that the default date was added 3 to 6 months after we had originally fallen behind with the original agreed payments? Can you help to clear out confusion up. Thanks
Sara (Debt Camel) says
Well done on getting to the end!
See https://debtcamel.co.uk/debt-default-date/ for default dates and what you can do to challenge them. Are there actually default dates? Or have the debts been marked as in an arrangement to pay? Also check your Experian and TransUnion credit records.
Dean says
Hi Sara, hopefully just a quick one. I have a Tesco loan debt – managed by Hoist Finance. This is part of my DMP with Payplan that i’ve been in since 2013 – current balance is around £1100 and im paying approx £60 per month through the DMP.
The default date is 25 March 2014 (after i complained) and will drop off my file March 2020.
Yesterday I checked my Totally Money & Credit Karma Reports (Transunion) and Hoist have weirdly marked the account as Partially Satisfied backdated to September 2018.
Equifax is still marked as a default and I have not had an updated report from Experian yet.
Why would they do this? I have not partially settled the account.
Will this still fall off my file in March 2020?
From what I have learnt from you :-) this is now a partially settled default which will still drop off in 2020 and will not have any additional negative impact on my credit score.
Hopefully this is the case. Look forward to hearing from you.
Thanks Dean
David F says
Hi Sara
I have recently finished a dmp I cleared 19000 of debt over a 5 year period starting towards end of 2014 so it’s still on my credit file. My score is now probably best described as fair around 778 out 999 on experian 302 out of 700 on clear score. My partner has had to get a mortgage on her own as my credit history is just not good enough at the moment especially as she was able to secure a 1.98 interest rate. Now we want to open a joint bank account for Bill’s will my poor credit history drag hers down when we go to remortgage in two years time …..? What do you recommed we do are they any other viable options as we dont want to be stuck on SVR as we both want access to the new account? Thanks
Sara (Debt Camel) says
Until your credit score is good, you should avoid getting a joint bank account.
“we both want access to the new account?”
what sort of access?
why can’t she open a new account for the bills and you both pay money into there? She can give you the security details so you can look at the account ans see what is happening.
See the section The three alternatives to joint accounts in this article: https://debtcamel.co.uk/joint-account/#The_three_alternatives_to_joint_accounts.
David F says
Thanks Sara ….yes it was just the access you have detailed above mainly and we had thought about doing that. Having my own card would have been handy as we were going to use for food shopping but it is what it is. I cant believe they penalise you for so long I paid my debt and have no debt.
Stan Dawson says
HI
I have a mortgage which i have had for over 9 years, i have never been late or missed a payment. However, due to a breakdown of a relationship i got in to financial difficulty which resulted in me starting a DMP with Stepchange 2 years ago and i still have 3 years left. My Mortgage is on a fixed term but this expires at the end of next month and i am wondering what my options will be then. Am i likely to have to to on a higher rate mortgage or do you think by lender (Halifax) will offer me another fixed rate?
Thanks
Stan
Sara (Debt Camel) says
You should get offered another fixed rate by Halifax. See https://debtcamel.co.uk/fixed-rate-remortgage/
Penny says
Hi Sarah
I have £50,000 debts in a debt management plan . I have been paying approx £50 a month for last 10 years . I have £200,000 equity in my property. I was thinking if I sold would I be able to offer f and f and how much do you think reasonable. I have £60,000 lump sum from a pension due if I take early retirement. I will have small pension £500 monthly to live on until 67 when I get my state pension. I was hoping to move out of London as I can buy a small flat for about £200,000. Just wanted to check I’m not missing anything. I am 54 and in very poor health and wanted to take early retirement and maybe see if I can do a part time job once I have sorted all this out. Do you see any problems with my plan . Appreciate your advice in this matter . My mortgage advisor did say I could get another mortgage and retain £30,000 which I could use for dmp but that would mean me working on and I’m really struggling as it it. Plus he does not know about dmp as it does not show on any credit file ( so old) but it will show on my bank statements !
Mohamad Behery says
Hi,
I am currently in talks with PayPlan to sort out my long standing debts of over £50k and looking to get this closed down.
Having issues paying these off as even the minimum payment just covers interest and very little towards the balance.
Recently applied for the 3 month payment break with the creditors I have and so far most have accepted which helped me to think of the next steps to take over the next months before the 3 month break expires.
Recently got divorced and took the family debt as my ex wife is looking after our 2 kids so I didn’t want to be too harsh towards my ex and their financial well being.
Looking at the DMP route as the option to go forward with the aim to get rid of these debts to help get debt free and re-gain control of my finances.
Could be looking into buying next year and wanted to know a few things:
1) Would it be wise to look into this option or would it be too early? Would large deposit help?
2) Others people’s experience with DMP both current and previously used?
Sara (Debt Camel) says
Can you actually afford to make payments at the moment or has coronavirus meant your income has temporarily dropped?
How large a deposit would you be looking at?
KP says
Hi I have paid off my DMP in full over1 year a go and my only debt is my HP on my car. My credit score on Equifax is Excellent yet I am still unable to secure a mortgage. I have no defaults showing for over a year and don’t understand why when I have shown my financial circumstances have changed since by debt problem over 4 years ago that I cannot get a mortgage. Because of my age I want the mortgage to be over 15 years and can provide a guarantor but I am still being refused a mortgage because of the DMP. I am no better off having paid my debts off as I would have been if I had just ignored them ! Surely if you prove your financial situation no longer reflects where you were then companies should look at cases as individuals and not just a credit score??
Sara (Debt Camel) says
Have you checked your Experian and TransUnion credit scores ?
How large a deposit do you have? When does the HP on your car end?
A lot of the mortgage market has seized up now unless people have got very large deposits
KP says
Hi my Experian score says poor ? How can I be excellent on Equifax but poor on Experian…it doesn’t make sense ?? I have a substantial deposit, I’m in permanent full time employment. I can pay my HP off in August as I will have the funds so then I will have no debt .
There seems no incentive to pay debts off if you are then held to ransom for 6 years until they fall off your credit report ? Why are our lives allowed to be dictated by scores …why did people stop being treat as individuals! My debts were incurred when my marriage fell apart …not because I intentionally chose not to pay my debts and I proved this by paying all my debts off in the best way I was advised. Looking back I might as well just ignored them and they would no longer be in my credit file ??? Makes no sense ??
Sara (Debt Camel) says
How can I be excellent on Equifax but poor on Experian
You need to look at the details of the reports – it is likely that there are problems reported on Experian which don’t show on Equifax. You need to check in detail – is there anything there which looks wrong? which hasn’t been repaid?
Looking back I might as well just ignored them and they would no longer be in my credit file
but interest may have been added and you may have got CCJs. Ignoring debts isn’t a great plan for someone that wants a mortgage!
if you have a large deposit and all the defaults were over 3 years ago and all repaid more than a year ago, then when the housing market gets back to normal talk to a good broker about a mortgage.
KP says
I know what your saying but I am no better off having had a DMP to help solve my debts than I would have been if I hadn’t paid any of my debts back …I’m in exactly the same position where no one will touch me!
Sara (Debt Camel) says
You aren’t better off right now in the sense you have got that mortgage.
But actually your position is a lot better than if your debts had gone on up and you had CCJs.
So check your Experian record and make sure there isn’t anything surprising on there. If it’s just defaulted debts in your DMP, then look again at getting a mortgage through a broker when the housing market gets back to normal.
andrew dean says
Hi Sara,
Was looking for some advice , I’ve read through everyone else’s questions and can see you’re recommendations on paying off your dmp even if the debts have now gone from you’re credit file
What is the situation if it’s a joint mortgage application and one of you has an excellent credit file and one if you is paying a dmp (but with no debts on the file) , I know the payments will still show on my bank account , is there any chance of getting a mortgage still ?
Thanks Andrew
Sara (Debt Camel) says
I would expect it to be the same situation.
Zoe says
Hi Sara,
Apologies this post is years old!
Me and my partner will be looking to buy a house later this year. We will have 10% deposit. I have checked my credit report which is 444 on Equifax and 969 on Experian. On Equifax, it states that my last ‘serious’ missed payment was 47 months ago.
This was a Vodafone contract. I had cancelled the contract and they didn’t send me the final bill until 3 months later! As soon as I received it, i paid it, but it does show a ‘1’ ‘2’ and ‘3’ in 2016!
In 2015, I had a Very account and I started an ‘AP’ but it was only a 2 month ‘AP’. It therefore says ‘AP’ then ‘1’ and another ‘1’ and then all green afterwards.
Are these likely to affect getting a mortgage? I have had no AP’s or late payments since.
Thanks
Maria says
Hi, my husband took a credit for car in 2014, the creditor suggested to him to make and insurance and not to pay the interest, the credit was 9000 pouds. In 2020 we receive a letter from intrum, the sum is 7444 pouds. First, he didn’t understand from where is. Now, the credit score is low and is showing in the credit score. We want to take an morgage … I don’t understand why in all this years he didn’t receive anything, the adress was clear..
Sara (Debt Camel) says
the creditor suggested to him to make and insurance and not to pay the interest,
that sounds very unusual.
I suggest he phones National Debtline on 0808 808 4000 to talk about this.
ram says
I have 3 cjjs and will be dropped off in 3 years, i have a hire purchase 0f 7500 pounds, original agreement with raphael finance , now the sold the debt to paragon finance, i came up with a payment arrangement and it shows now payment arrangement on credit report , how will the AP flag on credit report affect on future mortgage application ,when will i be able to secure a mortgage, please advise me the best option i can do
Sara (Debt Camel) says
So before the debt was sold, you were not making any payments? For how long? And how long ago was this?
Ram says
Thank you for your reply, I was up to date with the payment from 2015 until 2017, but I lost control of my life for some reason since then, I was not motivated about financial status, now I started to deal with those problems, trying to get my life back,
*Starting loan was 8500
*I paid some
*Now amount is 7500 ( debt is increased by interest and charges,)
Sara (Debt Camel) says
You won’t be able to gte a mortgage until the CCJs are gone.
The APs date from 2017? It is unlikely you will be able to get a mortgage unless you can settle this debt. That could be a partial settlement if the debt collector will accept that.
Once you have settled it, the debt will stay on your credit record for 6 more years.
Ideally you would like this debt to drop off your file in 3 years when the CCJs go.
Thats why I asked if there was a period when you paid nothing to the debt… if there is, you could ask the original creditor to add a default during that period – then the debt would rop off your records 6 years after the default date.
Ram says
Thank you very much for advice, I am going to ask the original lender to default my account , lets see what they say and I will update that here
Louise says
Hi
Hope you can help! I’ve been reading so much conflicting information on the internet.
I have had a debt management plan for the past 13 years, and still have another 15k to pay off (I took the debt from a bad relationship, everything was in my name)
I pay every month, but missed 2 payments a couple of years ago when I changed jobs.
I want to look at the possibility of getting a mortgage with my partner (He has no debt issues). We are being gifted from family almost 1/3 of the house price, of a house we are interested in. Is there any chance at all we can get a joint mortgage? ….we were hoping to act quite soon on this.
Thanks
Sara (Debt Camel) says
Does any of the debt still show on your credit record?
Louise says
Thanks for the reply. No, nothing is showing on my credit record. My credit rating is great- 995, which is the only reason I considered that I may be able to get a mortgage. I’m realising now that it’s not as straight forward as that!
K A says
Good afternoon!
I have recently paid off all my creditors in full after a DMP. My total borrowing was about £4000 and I’d goNe through stepchange. I was only in the plan for approximately 8 months and my defaults lasted about 5 for 4 of the accounts.
I still have a credit card (£0 balance full payments every month) and part of an overdraft (£300 not in use) and a good job. Now that I have no debts but 4 settled defaults is it likely that I could look at successfully applying for a new car in the next 6 months or so? I was in my defaults for such a short period and settled relatively quickly that it seems so mad that I have to hold on to that for 6 years!
Some direction would be very appreciated!
Ka
Sara (Debt Camel) says
How much were you paying a month to your DMP? Was it expected to end so soon?
K A says
I was paying £60 for the first few then got a new job and increased to £200. Then I was able to pay them off in full and set up an arrangement to pay on the largest loan (to avoid default). So the whole DMP was looking at a long time to pay off originally but I got it cleared quickly. I just had a 7-8 month period where I struggled. But now my credit score is ‘very poor’ on my profile. I have just ended my Arrangement to pay, so unsure how my profile might improve from here in the short and medium term?
Sara (Debt Camel) says
Your headline credit score will improve a bit a couple of years after the defaults. But it won’t get to good until they drop off your credit record after 6 years.
In 6 months you will probably only be able to get car finance at a very high rate. Best avoided! Your better option is to save up monthly what you would have expected to pay and buy a car later without any finance.
Ronald says
Hi I was in a dmp which I completed in November 2016 – two of the accounts were payday loans. Some of the accounts are still showing on my credit file – all now settled. Experian I am excellent at 999 and Equifax and TransUnion are both good. I have no missed payments for 4 years and have no debts outstanding and have 15% deposit. Myself and my wife have had aips from hsbc, nationwide and Halifax. We have a combined income of £52,000 and hope to lend £122,500.
We have made an application with Halifax and have just been asked to pay valuation fee and that income would be verified by underwriters tomorrow? Does this mean if the valuation checks out ok we should receive an offer?
Sara (Debt Camel) says
It should do, fingers crossed the valuation is OK.
Keith says
Hi Sara,
I have 2 Arrangement to Pay markers on my credit report. Both were for the same period of 3-4 months from Nov 18 – Mar 19 for 2 credit cards. I thought I was doing the right thing during a period of unemployment by notifying them and not burying my head in the sand!
1 of the credit cards has been paid off and closed, not long after the arrangement finished. The other one is paid off but still open – I got back on track with payments and have managed the account well since.
My question is how much will these AP’s affect my chances of getting a mortgage? Is it best to way 2/3 years from it ending – similar to payday loans/defaults etc? I am considering complaining as the consequences of the arrangements weren’t explained to me at the time and no alternatives were presented. I don’t even think I was told it would be recorded on my credit file!
Any advice, as always, would be greatly appreciated.
Cheers
K
Sara (Debt Camel) says
If you hadn’t notified them, you would have had two missed payments recorded.
If the lenders had notified you of an AP being recorded, what difference would it have made? You couldn’t have got the money up to pay them in full surely?
How large a % deposit do you expect to have?
Keith says
Thank you for your reply.
My report still shows missed payments as well as the AP for that period?! So I fail to see what the AP has achieved other than perhaps frozen interest. I would have been better off leaving it and the missed payments alone would have less of a negative impact.
I was simply looking for a way of reducing my bills at a time when funds were limited. The minimum payments were not much but I wanted to focus on my priority bills as I did not know how long the unemployment period would be. If I had known the full consequences of an AP then I could have considered these when making my decision.
I already have a 10% deposit for the properties we are looking at, potentially more if we go for a cheaper property. We have also considered the Help to Buy equity loan but I imagine a squeaky clean credit file is needed for the lenders which provide HTB mortgages.
Cheers
Keith
Sara (Debt Camel) says
I would have been better off leaving it and the missed payments alone would have less of a negative impact.
That would be a very strange view for a mortgage lender to take. I can’t see that an AP is worse at all than missed payments.
At the moment there are almost no 10% mortgages available. I think you would need a squeaky clean credit record for any of them Which would mean no recent missed payments.
You should talk to a broker about your options. It may be there is no sensible alternative to waiting and saving up a larger deposit in the meanwhile.
Keith says
I’m not saying that’s what view the mortgage lender would take. I just get the impression from your articles that they are far worse than a missed payment in terms of credit score impact – they have been compared to defaults etc.
I’m asking your advice on whether the AP will affect my mortgage chances and to what extent? If you say it is no worse than a missed payment then surely due to the age it would have negligible impact given the rest of my report is clean. (In previous years the odd missed payment seems to seriously dilute after 24 months)
What size deposit do you think I would need?
Sara (Debt Camel) says
I just get the impression from your articles that they are far worse than a missed payment in terms of credit score impact – they have been compared to defaults etc.
So far as I know a payment arrangement is not worse than a missed payment.
And your calculated credit score is not used by creditors anyway – they use different metrics and in the case of mortgage advisers the underwriters will look not at a metric but your file in detail.
At the moment there are VERY few 10% mortgages. But this is a fluid situation and I am not close to it. Sorry but a good broker is your best sort of info.
Dougie says
Hi Sara
I would be grateful if you can advise on this.
Please I have been on the dmp since 2007, and currently paying £35 a month to my creditors through Stepchange, which I have never missed a payment. The balance owed is about £12000 from loans, credit card, overdraft, and out of this £10300 to Wescot Credit (original lender; Abbey National), and the rest is PRA Group, Cabot, Moorcroft and Capital one. I am bit tired of having this burden on me for long time, and wondering about the best options of coming out of this. I called Wescot to see if they would accept a partial settlement of 10%, which they advised to channel that through my stepchange. My cousin has also promised to financially assist me with about 10% of total debt. I have checked with Equifax and Experian and there is no history of this debt on credit file. I am thinking of inquiring about mortgage in future, but I am worried about the effect of dmp on my chances of securing a mortgage. Do you have to declare old debt? Please any advice on the best way out of this situation.
Sara (Debt Camel) says
First it is always a good idea to check the third CRA as well-TransUnion. Get a Credit Karma report.
Those are very old debts!
Do you know if Westcot owns the debt or are they collecting on behalf of the original lender?