Isn't it great having an expert of the calibre of Storm on this site. I have no idea who he/she is - but your wise words are often a godsend to clear up a consumer credit line issue. Many thanks - I learn a lot from you too!
Hi
Yes many thanks to Storm who has been an absolute godsend to this form over the years.
Great to know exactly where we stand regarding defaults on credit files
I know that both myself and Melanie will be only to happy to buy you a drink, or two, if ever we are lucky enough to meet up with you one day.
Regards
The thread that was temporarily moved http://iva.co.uk/forum/topic.asp?whichp ... 067#202936
pending clarification has been returned to the new questions section now that the matter has been resolved.
Many thanks Storm [:)]
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Am I understanding this correctly, does the default and record of credit agreement get removed from the credit file even if an IVA has not been approved and/or a DMP is opted for instead (page 12 of Storm's linked document) :
"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."
Is the last sentence saying that the entire record of a credit agreement is removed 6 years after a default is registered, regardless of whether the debt has been settled? Obviously in an IVA the debt would then be settled after the 6 years so should be removed. But in a low level DMP sums would still be owed after 6 years so if the credit agreement record was removed then the credit file would also be clean in that case too? Of course creditors would expect you to continue to pay the DMP until it is settled long after the 6 years default removal but they could no longer tarnish your credit file after then. Is this what the legislation is intending?
If you are in a DMP then your record will remain poor throughout the time you are paying it as your records will normally show as being in an arrangement and or several months in arrears.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Are you sure about this? Can't you get a notice of correction added, to record the existence of the DMP, as the document said, and then 6 years later get it removed to get your credit rating back to an unimpaired level ?
or else what does it mean by :
"The record should be removed six years from the date of the default"
?
If you are still paying your DMP after 6 years, you won't be able to remove it as it will still be active.
Mine didn't default while in a DMP, just said 'Special Arrangement' and showed one or two payments in arrears.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Most of my creditors sent through default notices as soon as the DMP started as the repayment level was less than 1% per month. So presumably they have registered defaults on my credit file too but I haven't checked. I've been paying DMP for a year now so am hoping the defaults can be removed after another 5. I'll find out in 2014! IVA is not an option as rent is over 40% of income.
Arrears are pretty much as bad as defaults when applying for credit as far as I know i.e. you will get refused !
My mortgage and secured loan are over 50% of our income and we had no problem proposing an IVA.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Kallis, With interest rates at record lows, how can you be spending over 50% of your income on mortgage interest? How will you manage if interest rates go up as they must do some day ? Do you have a fixed rate for the entire term?
Melanie, I heard creditors frowned upon housing costs greater than 40% of income. Although the 50 year DMP which I have now is far from ideal, as I can only afford £200 per month currently, no IVA provider I spoke to would consider proposing an IVA of £200 per month on a £120,000 debt. I believe £500 would be the bare minimum for a £120,000 debt. This may be possible for us sometime in the near future if pay rises come along as hoped, but we'll likely still be spending more than 50% on rent so an IVA might still not be feasible until we can get this down to 40% which could be many years away.
I don't pay 50% on mortgage interest, I have a repayment mortgage and also a secured loan. My mortgage payments are altered once a year and I have never been on a fixed rate.
I totally agree with Melanie that bankruptcy seems to be a viable option for you.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
I did not go bankrupt at the time as I knew that if I did my career would be over. I don't believe I would lose my job under bankruptcy but I expect my pay would be frozen for several years. I'm part professionally qualified and as a bankrupt would no longer be able to be part of the profession.
I would also receive a BRU as 90k of my debt is due to gambling and the other 30k due to interest on it. I was pretty shocked when I realised how much I had lost with nothing to show for it.
If it wasn't for the BRU I might consider bankruptcy now as my career isn't going so well so perhaps do not have that much to lose. But I have no idea what the consequences of a BRU would be so do not want to go down that route for fear of the worst.
I've worked out that our rent is 49.8% of income (excluding bonuses), so seems it is less than your mortgage kallis! Although I realise that doesn't mean I have a better chance of being accepted for an IVA at all.
What sort of offer would I need to be able to propose an IVA ?
I'm thinking 500 or 600 might be considered, not sure how we can find that much, but would be better than paying the current plan until I'm 90 years old if I live that long!
