A reader asked:
I have a Debt Management Plan where I still owe 17k to 10 creditors. I have been paying for ten years at £150 a month, so it will end in about 8 years. Most of the debts have gone from my credit record but a few are marked as “on a DMP”.
I want to pay off the debts and improve my credit rating. I have been offered about 7k by a relative, so I could offer all my DMP creditors around 40%. How would settlements affect my credit rating? Is it worth me finding out if the debts are actually enforceable?
It’s a great idea to try to end a long-running Debt Management Plan (DMP).
I have already looked at offering settlements where the DMP had only been running a few years. And this Guide to F&Fs looks at the how to make a good full and final settlement offer to a creditor.
But this reader’s case is different:
- older debts have different options as it may be that the debts are unenforceable;
- there is the added complication of the different way his DMP is showing on his credit record.
Are the debts enforceable?
It’s best to do this before you offer a settlement.
For credit cards, catalogues and most loans, the debt collector has to be able to supply you with a copy of your Consumer Credit Act agreement if you ask for it. See How to ask for a CCA agreement, which looks at how to do this and when you should do it. It doesn’t apply to overdrafts, utility or mobile bills.
How likely is this to work?
This reader’s accounts are at least ten years old. It is likely that at least some of his current creditors may be unable to produce the CCA agreement:
- the older a debt is the less likely it is that it can be found;
- it is also harder to find if the debt has been sold to a debt collector, who usually has to ask the original creditor for it.
If it can’t be found
If the creditor can’t produce the CCA agreement for your debt, it is unenforceable. The debt is still legal, it stays on your credit record and the creditor can ask you to pay it … but they can’t make you by taking you to court. The regulator says they have to explain this to you – they aren’t allowed to pretend you do have to pay it.
In this case you can simply stop paying the debt – or tell your DMP firm to stop paying it, explaining why.
There is a small chance that the CCA agreement could be found later. To prevent that being a problem, and to stop the odd polite letter, you may decide to offer them a really low settlement amount, say 5%.
This is why it’s worth asking for the CCA agreement before making a good settlement offer. By clearing out of the way any unenforceable debts you will have more money left to settle the others.
When the CCA agreement is produced
If the creditor produces the CCA agreement, then the reader can just make the full and final settlement offer of 40% that was planned. That is a very good offer for a debt that old if only low payments are being made. He can help ensure the offer is accepted by:
- explaining that the money is coming from a relative if it will help to settle the debt; and
- enclosing an income and expenditure statement showing that he can’t afford to increase his monthly payment.
The only downside to asking for a CCA agreement is that if the creditor finds it, they may then decide to go to court for a CCJ. But that would be pretty unusual if you are making them a good settlement offer!
Effect on your credit score
Settling debts doesn’t improve your credit rating. People often don’t believe that, it sounds so odd. In practice settling the debts makes some lenders much more likely to give you more credit and it’s vital if you want a mortgage in the next few years. But that headline credit score number will not change.
Where a debt already has a default date, it is going to disappear 6 years after that date and making a full and final settlement offer won’t change that. In this readers case the debts have already gone – they will not reappear.
For debts with an arrangement to pay marker and no default date, settling the debts will mean they drop off 6 years after the settlement.
It is a pity all the debts weren’t defaulted originally – the reader should ask the original creditor (not the current debt collector that owns the debt) to add a default to the record back before it was sold.
If that is done – and some creditors do agree easily – that will remove the debt sooner and improve the credit rating. But do this after asking for the CCA agreement and sorting out the F&Fs – it’s too complicated to try to do this all at once.
Do F&Fs make it harder to get a mortgage?
How does a DMP affect your credit score?
Do I have to pay a debt not on my credit file?
ron johnson says
can i ask for cca even though i own my own property.and then not have to pay my crediortior if they cannot prouduce cca.thank you
Sara (Debt Camel) says
Yes. The CCA has nothing to do with whether you CAN afford to pay the debt at all. The law takes the view that if a creditor can’t prove you owe the debts – and that includes producing the details of the agreement which shows the terms when you opened the account – then they can’t enforce it in court.
BUT whether you should ask for the CCA depends a lot on how likely it is they can produce it. Because if you make a debt collector locate the CCA agreement and they suspect you should be paying more to them each month they could then go for a CCJ and then a charge over your house. So you need to think:
– how old is the debt? what sort of debt? who is the original creditor? Has it been sold to a debt collector? and how much are you paying them every month?
ron johnson says
many thanks,very good answer ,and very helpful,RON
Jay says
Hi Sara
Looking for some guidance.
Entered in a DMP in 2009. have 7 debts, 5 have dropped off credit file, 2 remain. All have been sold on from original debtors some numerous times. I have approached the original lender (MBNA) of one that still shows to ask for a default to be recorded. They have advised they are unable to as they sold it over 6 years ago so they no longer report the debt. The current holder (Idem) will not doing anything as MBNA hadn’t placed a default when they bought it. I haven’t tried the same approach with the other debt which is Barclaycard>link financial.
My question is should i approach all current holders of the debts (except one relating to an O/D) and ask for copies of the CCA agreements?
If they find them is that detrimental? If they don’t provide them, do i make very low settlement offers? I assume those debts that have dropped off will be unaffected either way? what about the two that remain? if they cant supply the CCA and i settle for a lower amount how is the credit file affected?
As it stands the plan would end in Aug 2022 and I’m not struggling with the current monthly payment.
TIA
Jay
Sara (Debt Camel) says
With 7 debts from 2009 which have all been sold on more than once there is a very good chance that at some of them will be unable to produce the CCA agreement.
“If they find them is that detrimental?” in theory with the CCA agreement they could go to court for a CCJ. But if you can settle some of your debts this way, then you can increase the payments to the others. A creditor who is going to be repaid in 12 or 18 months isn’t likely to bother going to court (although it is theoretically possible).
“If they don’t provide them, do i make very low settlement offers?” yes, or just stop paying.
“I assume those debts that have dropped off will be unaffected either way?” yes, they will never re-appear on your credit record
“what about the two that remain? if they cant supply the CCA and i settle for a lower amount how is the credit file affected?” your credit record would be marked with a partial settlement marker and the record would drop off after 6 years.
Jay says
Thanks for your comments very helpful.
If I ask for the CCA and they provide. Why would they go to court if I’m paying an agree amount anyway?
Sara (Debt Camel) says
I didn’t say it was likely they would, I just said it was possible. Perhaps they might think you would repay them more quickly – that is less likely as you are actually paying a reasonable amount, not just a token £1 a month to each debt.
Jay says
Understood. Appears no harm in asking for CCAS if only for my records. Cheers
Sara (Debt Camel) says
if you do. come back and say what results you get! People would love to know which debt collectors/original creditors this works with.
Clive says
Hi Sara
I have two debts with Lloyd’s Bank
One for credit card the other for a loan
Credit card pre 2005 with debt of £5185
Loan with outstanding debt £5078 taken out 2009
Each debt has been placed with 5 different DMC’s
Each time they have changed DMC I have requested the original agreements but never had a response
Lloyd’s have now sold the credit card debt to Intrum
How do I stand in challenging these debts when Lloyd’s will not respond to the cca requests
Clive
Sara (Debt Camel) says
When did you last make payments to these debts?
You send the two CCA requests to Intrum – see https://debtcamel.co.uk/ask-cca-agreement-for-debt/. Send these as two separate requests, each with a £1 fee.
Let us know how you get on!
Clive says
Hi Sara
Thank you for your reply
I will send a cca request to Intrum for the credit card debt. The last payment for this account was paid on 10/12/2018 this payment was paid to Lloyd’s Bank the original owner of the debt before they sold it on to Intrum. Before Lloyd’s sold this debt to Intrum I requested a cca on five depart occasions with out a reply
As for the Lloyd’s Bank loan debt this is still owned by Lloyd’s Bank
Again I have requested the original agreements under s77of the cca without a reply
This loan was taken out in 2009
Last payment on this account was made on 09/12/2018
I don’t know if this question has come up before but if Lloyd’s can’t produce the original agreements or a reconstituted one before they sold the debt to Intrum would they have to inform Intrum I have requested the original agreements and that they could not produce them
Sara (Debt Camel) says
Did Lloyd’s ignore your requests or did they say they couldn’t find it? Did you send £1 with the requests?
Clive says
Hi Sara
Lloyd’s Bank have ignored any request for the credit agreements. The last time of asking for these agreement was 22/10/2018
Each request have been sent with the £1.00 cost
Several debt companies have been dealing with these debts for Lloyd’s
When asking for the agreements through them they all said the would contact Lloyd’s for the agreements only to come back with the answer they are no longer dealing with the debts and the debts have been sent back to the original owner
As I have mentioned Lloyd’s sold one of these debts to Intrum on 28/12/2018
And I have received a notice of assignment from Lloyd’s Bank and a letter from Intrum confirming this
I will send a letter requesting a copy of the agreement to Intrum but don’t know where I stand with the other debt still owned by Lloyd’s Bank as they continue to ignore my request for the agreements
I much appreciate your replies
Kindest regards
Clive
Sara (Debt Camel) says
Credit card debt with Intrum. If Lloyds had previously said they cannot locate the CCA agreement, then you could have just sent Intrum a copy of that, rather than a new request for the CCA agreement. But as they haven’t, it’s going to be simpler to send Intrum a new request than complicate it with failures to reply to old ones. I suggest you don’t set up any arrangement to pay them until you get an answer to the new request – normally I suggest leaving arrangements to pay in place, but in this case you don’t have one with Intrum.
Loan debt still with Lloyds.
If the cheque you sent on 22/10/18 was cashed:
Send them a complaint that you have not had a reply to your request for a copy of your CCA dated 22/10/18 and that the £1 cheque has been cashed. Point out the CCA act says the debt is currently unenforceable. Say you will be stopping making any payments to this debt after 30 days if they do not provide you with a copy of the agreement.
If the cheque you sent on 22/10/18 was NOT cashed:
Send them a complaint that you have not had a reply to your request for a copy of your CCA dated 22/10/18. Repeat your request and enclose a new cheque for £1. Say you will be stopping making any payments to this debt after 30 days if they do not provide you with a copy of the agreement.
Send a copy of this letter to any debt collector you are currently paying but make it clear this is a cc copy and it is addressed to Lloyds.
Clive says
Hello Sara
Thank you for the advice and I will follow this up with the letters of complaint.
On one other note I did receive a letter from Wescot Credit Services stating they had been assigned the debt from the original creditor (Lloyd’s Bank). For collection and as they had been assigned the debt the debt was enforceable.
They have not sent me a credit agreement that I requested from them
What they seem to be saying because they had been assigned the debt they don’t need the original agreement to enforce the debt
Wescot at present return the debt back to Lloyd’s Bank but would like your advice on this question in case it crops up in the near future
Clive
Clive says
Hi Sara
Just a quick up date
At present I still have had no response from Lloyd’s on the CCA Request or for the letter of complaint
Also still not heard anything from Intrum
Thank you for your continuing advice
Clive
Janet says
Hi.. So, arrow global have sent me this morning replies for requests of CCA’s ..but its just statements of how much I’ve paid and total still owing, they’ve profusely apologised as they should of sent this information yearly, but they’ve sent nothing in the space of 7 years. They go on to say ‘ this remediation exercise in no way affects the balance, your repayment or obligation to pay..get in touch with Moorcroft who is managing your account’…..
They’ve just sent statements but no proof of CCA’s .. does this mean they haven’t located them yet? Thank you in advance for advice, Janet
Sara (Debt Camel) says
I think you have just received these statements as Arrow are doing a general tidy-up about accounts where they haven’t sent an annual Notice of Statement In Arrears. If that is right, it has nothing to do with your request for your CCAs. When did you ask for the CCAs?
Janet says
I Sara, Just quite recently- mid to end December 18. Guess they are still within the time frame of 12 working days to reply with the CCA’s. These go back from 2003.. I’ve been paying minimum of pounds, until a few months ago when another debt company yet again, took it over, that’s when I’ve decided to go for copies of CCA’s. 2 are credit card debts, one is an large overdraft ( joint names of my ex , which I believe they have not traced)
Not sure how I stand with overdraft either.
Thank you again for your help, Jan
Sara (Debt Camel) says
ok well you have to give them at least 40 days, better a couple of months, to think it is reasonably likely that they can’t find the CCAs for the cards.
There is no CCA agreement for an overdraft. But Arrow should produce a detailed statement of account showing how the current balance has arisen. If they can’t do that, you could ask them to write it off but they may not agree.
Janet Smithies says
Hi Sara, I have now had 2 same replies of the 3 letters so far. They ( Moorcroft) have sent the one pound cheques back, one that they never cashed and returned, the other that they wrote themselves to me as had banked the original. The reason they are returning the £1 fee they say is their client no longer require the fee for this service and go on to say once they receive further contact from their client, they will be in touch.
Is this normal practice to have the fee returned?
Obviously it has been more than 12 days now, and I will still act on your 2 month time frame as noted above. Thank you again for your advice. Janet
Sara (Debt Camel) says
It’s common for creditors to return the £1.
Janet Smithies says
Hi Sara, I’ve finally received the 3 letters back from Arrow, ( 3 separate debts from HSBC from 2003, 2 xc/c’s and 1 overdraft)
Same letters, basically saying that ‘they are unable to revert back to the original creditor, Phoenix Recoveries to obtain the documents. They go on to state that it is unenforceable until they re cover the documents, etc etc..and of course the added the debt still exists. They will write again if documents can be found.'”
So, a brilliant result! Thank you so much for your help and advice! X Janet
Sara (Debt Camel) says
excellent!
Miss D says
I’ve had Paypal credit for nearly a year and aside from the initial few uses, I haven’t been able to use it as the option doesn’t show on any websites. Having contacted Paypal several times I get the same unhelpful ‘clear cache, leave it 72hrs, only use your own internet connection’ response that I’ve tried multiple times to no effect.
Essentially I want to close the account AND have it removed from my credit report as I feel it has been mis sold. Is this ever an option and if so, will you advise how I may go about it?
Thanks in advance.
Sara (Debt Camel) says
Unless the account shows any problems such as late payments, it isn’t going to help your credit score to have it removed so there isn’t much point in this. Do you still owe any money?
Laura Hill says
Hi Sara
I have a quite a few debts defaulted 3 years ago, I was hoping to send a cca to all of the companies but just checking do I send it the original creditor or the company that bought the debt , and for the £ 1 fee do I send it to the debt collection agency or the original creditor . Sorry for the questions but just wanted to check , I was doing it right .
Thanks
Laura
Sara (Debt Camel) says
You ask the current creditor for the CCA agreement and send them the £1 – not the original creditor.
Laura hill says
Just wondering are debt collector agencies likely to add a ccj if they have the cca agreement, as I have only made token payments for the last year.
Thanks
Laura Hill
Sara (Debt Camel) says
It’s possible – it’s more likley if they think you could pay more than the token amount.
Dan says
Hi Sara
I’ve had Link confirm in writing after I logged a complaint that they are unable to comply with my section 77/78 request and that the debt is unenforceable. The request was made on 18th December and there responce letter dated 22nd January. I think this is good news !!
It just says please contact them as the debt is still collectable and to set up a fair repayment.
I have a default on my credit file that falls off in August this year so I would say I’m in a very strong position to settle this debt for a extremely low amount like a 5% offer ? Which is about £150
Any advice?
Thanks
Sara (Debt Camel) says
Yes, that sounds like good news! Would you like to say what the original debt is, as other people may be interested?
I think it’s good to settle this with a very low offer – make it clear that you are making an offer to resolve the debt finally and that you do not intend to make any payments to it if your offer is not accepted.
Dan says
ok thank you will do
Was a barclaycard that was opened in 2010 with the account being sold to link in 2014. The debt has been in a dmp since then. But with the CCA not being provided I have told step change to remove it from my plan.
Jay says
Further to my earlier posts, I sent off requesting CCAs to my 8 creditors. The first one (Cabot for on old Egg Loan taken out in 2006) has replied within a week to say they can’t locate it and agree the debt isn’t enforceable. The balance is 4300 and is not on my credit file as it is over six years since default. What would you recommend? ( I’ll have to wait to see what the other 7 say too)
On a side note Idem replied to say they are looking into my request but have returned my postal order as they don’t charge a fee anymore.
Sara (Debt Camel) says
You can just stop paying that one.
Quite a few debt collectors may return your £1s.
Jay says
Would I not be better to off a couple of hundred quid to write it off in full?
Sara (Debt Camel) says
I think the chance of an Egg CCA from 2006 reappearing is VERY VERY unlikely. Why don’t you wait and see what happens to the other debts – if the CCA is found for some of them, that £200 may be better put towards settling those debts.
SUECANWIN says
I have to buy out my ex in 2/3 months and need to remortgage.
I am in a DMP
A friend has offered me a chunk of money to do an early settlement.
The DMP started in 2011 and defaulted on all then so all off my Credit File.
The question is this.
Do I do CCA with them all and risk them defaulting again …Ive seen them do
this to others
and wreck their files .. or them getting aggressive again … I would still
pay them even if doing a CCA as I cant risk any muck ups at this stage.
Or
Do I go in with f f settlement offers.
Ive got 20% to offer and as the debt is 60k combined so thats a big chunk of
money offered to help me.
I wont get a remortgage with these debts.
Or should I get my solicitor (a friend) to do it and would
they be more prepared to listen top a solicitor regarding a low offer with an explanation of why?
Oh …Ive been ill for most of the time Ive been in the DMP so they
would mention this too.
What would you advise in my position bearing in mind I need to settle these
debts now otherwise I cant get a mortgage and will loose my house. Got a couple of months.
Sara (Debt Camel) says
“I won’t get a remortgage with these debts.” This may not seem a very helpful reply, but are you sure you will get a mortgage without them? How large is your mortgage now and how much extra equity do you need to release yo pay off the ex? What is your income? do you have any debts that are not in your DMP which you are still paying?
Suecanwin says
Hi there
Ive been to 3 independent Mortgage brokers who have all said the same thing. My income is there its the DMP thats going to prevent me from getting the mortgage.
I have no other debts outside the DMP and as they all defaulted years ago they have dropped off from my credit file which is clean a a whistle.
The equity is there to pay back my friend and to be able to pay off my ex. But I cant get to the equity at the moment. Ive looked at every way possible for the last 4 months and the DMP thwarts every solution. The bottom line is do I do CCA’s first and then very quickly go in with F &F offers – or will I get a black mark again on my clean credit file for going down the CCA route. (if I continue to pay the DMP till I succeed with FF offers would this prevent this)
Sara (Debt Camel) says
Do your mortgage brokers think you will get a mortgage if your DMP has only recently stopped? Because lenders normally ask for 3-6 months bank statements so they will be able to see the DMP for a while even after it has finished?
Sara (Debt Camel) says
Also how firm is this 2/3 month date?
How many debts are there in your DMP?
Are they all consumer credit type debts eg loans, credit cards, overdrafts?
Are any of them a very large part of the 60k?
Suecanwin says
‘The only downside to asking for a CCA agreement is that if the creditor finds it, they may then decide to go to court for a CCJ.’
….would this CCJ happen if you are still paying the monthly DMP payment after the CCA request …or is this statement above made if payment is stopped completely?
Sara (Debt Camel) says
It is a warning that it could happen even if DMP payments are continuing.
BUT that isn’t likely unless the lender thinks that the DMPs payments are too low so you should be paying more, eg if you have been asked to supply an income & expenditure statement and you have refused.
It is likely to happen if someone isn’t making any payments.
Chris says
I currently on a DMP since 2006. I wish I had found this page sooner.
My debts were taken out in 2003 – 2005 eventually defaulted in 2006. All debts are now off the credit file. I have sent a CCA request to Cabot Financial (waiting to hear back) it was an old Egg loan. I have 2 accounts with Westcot which was previous Lloyds. I have since made an offer (without CCA which i should of done 1st). They rejected. I based this on the amount of money paid on this plan since 2006 and minus this off the starting balance with the DMP.
Reason why Im not sure to CCA because I dont know how they made the balance up, I had a credit card, Loan and Overdraft with them. I know Overdrafts you cannot CCA request on them.
Im not denying what i owe them but want to end the DMP early somehow i have another 5 1/2 years left to pay.
What would you do in this situation?
Sara (Debt Camel) says
You could just send Westcot a letter saying you would like a copy of the CCA agreements for all of your debts and see what comes back.
Also have you checked to see if there was any PPI to reclaim on any of these debts? Egg loans, Lloyds loans and lloyds credit cards from that sort of date very often had PPI. That can be a LOT of money.
Chris says
Ive already done a PPI claim on those debts but was only 1750 that was reduced off the balances.
I did go back to Westcot and asked them to provide me with balances at date of 1st missed payment how much has been added as charges. I think I may of gone wrong direction for now but see what comes back.
If they wont be forthcoming could I go down the route of Subject Access Request considering that I no longer have to pay a fee for this service?
Sara (Debt Camel) says
No, go back to Westcot now and ask for the CCA agreements. This is in addition to what you have asked before for the balances.
Asking for a SAR won’t help and just wastes time. They don’t have to get the CCA agreement if you just ask for a SAR, you will get a stack of paperwork but not be any further forward.
Baz says
I have limited chance to offer Cabot settlement on 2 very old debts. One originally was unsecured but later secured on house as 2nd charge by a subsequent owner of the debt (Equidebt). Other is old CCJ (also Equidebt). About 12k, and 6k. I feel sure original agreement cannot be found. When Equidebt in admin they offered me settlement @ 10%, I can find proof of this offer, duo’s only proof of earlier 20% offer on secured debt. Cabot then took over Equidebt in 2013. My questions are: reasonably could I expected 10% offers to be accepted now, which represent my potential capability? Ref secured debt, if no settlement done, could I transfer house to disabled adult children that need accommodation either before my death or by provision afterwards without them having a forced sale by Cabot? My aim is to settle with Cabot, but I feel it’s useful to know all-round legal stance on future house position prior to starting debate with them.
Sara (Debt Camel) says
“I have limited chance to offer Cabot settlement on 2 very old debts.” do you mean someone has offered you some money? or that Cabot have made you an offer?
“I feel sure original agreement cannot be found.” that won’t help you. Once there is a CCJ, it doesn’t matter if the CCA agreement can’t be found.
“could I expected 10% offers to be accepted now, which represent my potential capability? ” it’s pretty low for a secured debt, I wouldn’t say it’s impossible but I am not sure it is likely.
“Ref secured debt, if no settlement done, could I transfer house to disabled adult children that need accommodation either before my death or by provision afterwards without them having a forced sale by Cabot?” No you can’t. Talk to National Debtline on 0808 808 4000 about this and about your options – they will explain.
Baz says
Thank you Sara. Family member has offered monetary help – they can manage to help if offer is similar to the old one. Is there a bottom-line percentage for a secured debt you might kindly suggest?
should I only approach them initially about the secured debt including pledging all that I can capably raise to that and that alone?
Sara (Debt Camel) says
I’m not saying 10% is impossible. If that is all the family member can manage, then that is all you can offer. There are no rules about minimum acceptable amounts.
the CCJ that has not been secured – how old is this CCJ? Are you making any payments to it? If no, when did you last make a payment to it?
Baz says
CCJ is very old, probably at least ten, no payments made in prob 15 yrs.
Sara (Debt Camel) says
In that case the creditor may not be able to enforce the CCJ without permission of the court, which would rarely be granted. I suggest you talk to National Debtline about this on 0808 898 4000. If they think that the CCJ is very unlikely to be enforceable, then you could offer all the available money to settle the secured CCJ – talk to ND about this too.
Baz says
Thank you Sara, I feel you have given me crucially helpful advice.
The secured debt was probably time-barred when it was applied as I think was very old CCJ with 7/8 of no creditor contact and I know for certain original paperwork could not be found.
Which I hasten to say I only mention to provide background that I had chances to avoid but was advised against my instinct not to persue those routes – I of course realise it’s too late by miles now!
But you have given me hope to try and sort it, thank you so much.
Sara (Debt Camel) says
Yes it is way too late. I know it must be always there like a sore that never heals, but you need to try to forget it and do your best with the current situation. Do talk to national debtline – take good advice at the moment!
Baz says
Thank you! Presume not advisable to telephone with settlement offer, or is that ok?
Sara (Debt Camel) says
No, put it in writing and be clear where the money is coming from and that it is only available if it is accepted to settle the debt.