Credit Report data while in a Debt Management Programme (DMP)

[stait]

I entered into a Debt Management Programme (DMP) in January this year with StepChange to repay my debts.

Since January 2013, via the DMP, I have regularly paid a large amount (more than the minimum payment would have been) to each of the 3 creditors to reduce my debt, with the aim to clear all the debts by March 2014. Therefore each creditior would have been repayed within 15 months!

However when I view my credit report, I am getting two different sets of information.

One of the creditors is showing my account as 'Up to Date', which makes sense as I have been paying back the debt monthly. However I am being told that the two other creditors are marking my accounts as defaulting, despite also receiving regular payments each month.

Are the creditors allowed to mark my account as defaulting each month despite me paying them well over the minimum payment amount? Am I able to get this changed legally to show that my balance is beng repaid and therefore 'up to date'?

Its strange how one creditor are happy to show an 'up-to-date' account (common sense), yet two others still mark me as defaulting despite reducing each debt by over 50% this year alone.

Any advise would be great.

Thanks

Steve

[FlamingParrot]

Re: Credit Report data while in a Debt Management Programme (DMP)

I entered into a Debt Management Programme (DMP) in January this year with StepChange to repay my debts.

Since January 2013, via the DMP, I have regularly paid a large amount (more than the minimum payment would have been) to each of the 3 creditors to reduce my debt, with the aim to clear all the debts by March 2014. Therefore each creditior would have been repayed within 15 months!

Hi and welcome to LB
If you are able to pay more than the minimum payments, why did you enter into a DMP in the first place?

Normally you'd do that when you can't afford to keep up contractual payments.

However when I view my credit report, I am getting two different sets of information.

One of the creditors is showing my account as 'Up to Date', which makes sense as I have been paying back the debt monthly. However I am being told that the two other creditors are marking my accounts as defaulting, despite also receiving regular payments each month.

Could it be that you previously defaulted on your contractual payments, in which case a default should have been recorded at the time you did (within 3 to 6 months of your first missed payment). Once an account is defaulted, it can't normally be "undefaulted". The default stays on your credit file for the full 6 years, even if you do settle the debt in full later on.

Are the creditors allowed to mark my account as defaulting each month despite me paying them well over the minimum payment amount? Am I able to get this changed legally to show that my balance is beng repaid and therefore 'up to date'?

Its strange how one creditor are happy to show an 'up-to-date' account (common sense), yet two others still mark me as defaulting despite reducing each debt by over 50% this year alone.

Being up to date with DMP payments is not the same as being up to date with contractual payments. Being on a DMP implies you previously broke the agreement and defaulted.

You may want to look at the Data Protection Technical Guidance for filing defaults with credit reference agencies: http://www.ico.org.uk/~/media/docume...%20%20doc.ashx

Debt management programmes

22. A debt management programme (DMP) is when a customer enters a programme of repayment of all or a number of their credit agreements that has been negotiated by a third party, ‘not for profit’, debt adviser. By entering the programme the customer shows that he is acting more responsibly than someone who makes no effort whatsoever to pay what is due. However, in financial terms, DMPs include markedly different situations. Repayments vary from a level acceptable to a lender to those where the sums repaid are only nominal amounts which a socially responsible lender agrees to accept because it recognises that in entering a debt management programme the customer is trying to act responsibly but cannot afford to pay more, and this is the only way to recoup any of the debt. Consequently the record filed on a credit reference file should discriminate between these situations so that an adequate reflection of the financial standing of these customers can be shared with other lenders.

23. Moderate to high levels of repayment If the payment set out in the DMP is at a level of repayment that a lender considers at least adequate, the agreement should be marked as included in a DMP. A lender may be willing to reschedule the agreement at a later stage at which point the record should be changed to reflect the agreed rescheduling.

24. Low repayment levels
If the payment set out in the DMP is at a level that represents only a token sum in repayment, because that is all the customer can afford, the account should be recorded as a default. A notice of correction can be added to the credit agency files by the customer, or the third party not for profit debt adviser acting on their behalf, to record the existence of the DMP. Lenders should bring the notice of correction facility to the attention of customers and their debt advisers. The notice will distinguish the customer from those who have acted less responsibly. The record should be removed six years from the date of the default so that the customer is not disadvantaged over those who have made no effort to pay whatsoever.

25. Where a customer does not make the repayments agreed under the DMP, a default can be recorded and the DMP marker should be removed when the total value of the arrears is equivalent to three monthly payments under the original terms. However, this should not result in the customer being placed in a worse position than someone who has made no effort to pay whatsoever, as in the example at paragraph 21.

26. In both cases the lender should update the balance regularly to reflect payments that have been made.

[stait]

Re: Credit Report data while in a Debt Management Programme (DMP)

Hi

Thanks for your reply. Much appreciated.

I originally entered into a DMP as I could not manage my debts and could not afford to pay them myself. I felt it was a suitable solution to help me with my debt issues.

I still use my DMP as it is a convenient way of managing and paying these debts and does not affect my credit score (from my research). However over time I am now in a better financial position and can pay the minimum payments myself, so getting out of the DMP is something I might consider.

I had originally defaulted on previous payments, so as per your response that will be why my account still shows me as defaulting. Thanks for clarifying.

I will read through guidance now!

Many thanks

Steve

[FlamingParrot]

Re: Credit Report data while in a Debt Management Programme (DMP)

Hi

Thanks for your reply. Much appreciated.

I originally entered into a DMP as I could not manage my debts and could not afford to pay them myself. I felt it was a suitable solution to help me with my debt issues.

I still use my DMP as it is a convenient way of managing and paying these debts and does not affect my credit score (from my research).

Did all your creditors default you on your credit file when you stopped making your contractual payments?

There's been numerous cases where people on DMPs have been defaulted very late, sometimes YEARS late :mad meaning your credit record is trashed for 10 years instead of 6! :mad2: :sad:

However over time I am now in a better financial position and can pay the minimum payments myself, so getting out of the DMP is something I might consider.

I had originally defaulted on previous payments, so as per your response that will be why my account still shows me as defaulting. Thanks for clarifying.

Once you've been defaulted, you can't really go back to 'minimum payments' as such, those are made on live accounts you are still able to use. You can, of course, pay as much as you want towards your debts on a monthly basis, however, that may not be the best idea.

Are your debts still with the original lender or have they been sold? :confused2:

When they get sold, the new owner would have paid in the region of 10% of the outstanding balance, meaning they would be more inclined to accept a low amount in Full & Final settlement. This is more likely to be the case when people are making low payments for some time, they'd rather have a lump sum now than £5/month for the next 20 years. If you are making substantial payments, they may not be so inclined to accept a low F&F so it's one thing to consider :thumb: bearing in mind that settling the debt won't make the defaults go away :bolt: till their time comes (6 years after they were recorded).