If you have had problems with debt, you may have had a default added to your credit record. The date of this default matters, so you need to know it exactly on all three credit reference agencies, see How to check your credit record for details. The rule is: the debt and the default will then be deleted from your credit record six years later after the first default. For example, if you have … [Read more...]
You may prefer to look at Debt Camel's Guide to DMPs. That has links to the most important articles, covering DMP advantages and disadvantages, the different ways you can set one up, things that can happen in a DMP and how to decide if one is the right option for you.
DMPs can be useful if you have a temporary financial problem for a few months or a year or two, or as a long term way of clearing you debts, but you need to be wary of DMPs that will go on for too long.
A reader asked if it is OK to reduce your debt management payments when you need to? This is a common problem for people in Debt Management Plans (DMPs) in 2017: inflation is at a four year high, fueled by the weakness of the pound after the Brexit vote, which increased the price of imports; Britain is in the grip of a pay squeeze, heading for the worst decade of income growth for over … [Read more...]
What happens if you inherit money when you are in debt management or one of the three forms of insolvency: Debt Relief Order (DRO), bankruptcy or IVA? The answers are surprisingly different... Inheriting in a DMP This is the easiest case. Any money you inherit comes to you, not to your creditors or your DMP firm. It doesn't matter if the person dies before your DMP started or during your … [Read more...]
It is common where a couple both have debts for a interlocking IVAs to be proposed. The couple may think of this as being a joint IVA but legally it is two separate IVA agreements with a single budget - income and expenditure - and a single monthly payment being made. That may work well, but it's important to look at each person as an individual as well. There is no reason why both partners … [Read more...]
A reader has asked how Full & Final settlements (F&Fs) would affect her credit rating which is currently looking good as her debts were all defaulted and have dropped off her credit record. A full and final settlement happens when the creditors agrees to accept an amount which is less that the total owed to settle a debt, and agrees that the debtor will not be pursued for the remainder. … [Read more...]
Every debt adviser wants their clients to get out of debt and then stay out of debt. But there is very little evidence about how long people stay debt-free after clearing their debts, through debt management or insolvency. So CAP's Freedom Report, published this week, is very interesting reading. DMPs and DROs were the most frequently used debt solutions for CAP clients in 2015, who had an … [Read more...]
The FCA says that over a hundred debt management firms who applied for authorisation have been refused or have withdrawn their application. In September 2016, Debt Clever became one of these firms. Some firms that are closing are looking for ways to continue to make money from their clients. My previous article, Why the FCA should ban the Compass debt advice model, has some examples. This … [Read more...]
A few readers have asked recently about long term debt payment arrangements. What information do they have to give to a debt collector? Can they can be asked to pay more? etc. Let's look at three different cases: an arrangement with a creditor; what happens if you use a DMP firm; and what if the payment is to a CCJ. Arrangement with a creditor Mr A asks: I have had an arrangement … [Read more...]
Ms F asked: "I have been in debt management for five years after my marriage breakdown. After an inheritance, I want to pay off my DMP as it will carry on for years. I could pay in full but my house needs some urgent work and my car is on its last legs. I asked about my credit score if I offer a partial settlement and was told this would show as partially settled on credit score file. Will I … [Read more...]
A reader, let's call him Mr B, asked: If you can more or less repay the minimum payments on your debts, but the minimum payments are 75% interest and the debt level is sizeable, as a rule of thumb, should you be looking at a DMP (or other debt solution route) or keep those minimum payments going while looking to improve your pay/outgoings scenario so as to pay more to the debts each … [Read more...]