But what if you are already in a DMP? Here you can still make affordability complaints. This article looks at some of the questions people have about this.
Should my DMP carry on paying a lender if I complain?
Yes. It’s best to let these affordable payments continue while your complaint is going through. You don’t lose out by doing this – if you win your complaint, the extra payments mean you will get a larger refund; if you don’t win, then you will have paid more off.
(If you are having trouble paying your monthly DMP payment, you need to talk to your DMP firm about this – perhaps your expenses have gone up or your income has dropped. This will be reviewed at your annual review, but if life is difficult you don’t have to wait for this.)
Must I tell my DMP firm that I am making affordability complaints?
No. You don’t need to do this because your DMP payments should just carry on as normal. You can tell them if you want, but you don’t have to because they aren’t going to do anything.
Is it ok for me to write to a creditor as my DMP firm normally does this?
Yes it’s fine. This is a complaint like a PPI complaint. DMP firms know you make these direct.
Will my DMP be ended if I complain? StepChange have been a lifesaver and I don’t want to risk this
No, it won’t. StepChange – or any other DMP firm – won’t mind at all that you are complaining and asking for a refund. Lots of people in DMPs have claimed PPI refunds and this doesn’t cause a problem.
The lender has frozen interest, will they change their mind if I complain?
No. It’s natural to worry about this because many people have been treated very badly by payday lenders in the past, but the lender is not going to start adding interest again just because you are asking for a refund.
We have seen a lot of these cases by now and no-one has had a problem with this happening.
I’ve used payday loans after my DMP started
You aren’t supposed to borrow in a DMP. But if you did, and fell into the payday loan trap as you couldn’t pay the borrowing off the next month, the best thing you can do is talk to your DMP firm, explain what happened and ask for the payday loans to be added into your DMP. Then you can make an affordability complaint to the payday lender.
Does being in a DMP help an affordability complaint?
Being in debt management doesn’t directly help a complaint about payday loans before your DMP started. Although it does show that you ended up in a financial mess, what matters is if the lender should have known the loan was unaffordable when it was given.
If you took out payday loans when you were already in a DMP, this does help your complaint and the lender should probably have been able to see your DMP from your credit record. A lender such as SafetyNet Credit could also see your DMP payments on your bank statements.
If you are worried that your case for a refund isn’t very good, read Why are some payday loan refund complaints rejected? – by looking at a few that are, you will probably see that your complaint is actually very good!
How does a refund work if I still owe money?
The short answer is that the amount you owe is reduced, so that you are only repaying the amount you borrowed. And if you are getting refunds on previous loans, they are then used to pay off this reduced balance. See Payday loan refunds when a balance is owed for more details including some worked examples.
So this will pay off or reduce the debt in your DMP. Your DMP firm will then change your DMP so that the other lenders get paid more. If for example Quick Quid was being paid £24 a month and your refund from them pays that off, the £24 that was going to them will then be used to pay off your other debts more quickly.
Could you use any cash refund for a partial settlement?
If you get a cash refund from a payday lender your top priority should be to sort out any priority or problem debts: rent or mortgage arrears, council tax arrears, court fines, guarantor or logbook loans etc.
But if you don’t have any of those, then think about whether you could use the refund to make a partial settlement on one or more of the debts in your DMP. This is most likely to work if you have been in the DMP for a few years. You may already have been sent settlement offers by debt collectors, if not, you can make the offer yourself. Doing this can mean you pay off the DMP much faster!