wifes DMP-advice needed

[karenanne23]

I used the CCCS and found them very helpful. Most my creditors did freeze the interest but with my Lloyds Credit Card it was initially frozen then after 2 years they started adding interest again. The same happened with my Sainsbury Credit Card. I think what a lot of these compnaies do is freeze interest for about 6 months and then add it back over say another year or so before selling the debt on to maximise their interest.

[MelanieGiles]

Given that the CCCS are actually funded by the creditors, and therefore work very closely with them with regard to DMP's I would be interested to hear what they actually did to confront the creditors about this change of tack, Karen.

[David Mond]

So it appears that some lenders will freeze for short or medium periods the interest. Some lenders will then start adding interest back on.
It is therefore appropriate to know who you owe money too and what that particular lender's attitude to a DMP or an IVA. It depends on amount of debt, length that you have been owing and the mix of creditors - thereafter after analysing your DI appropriate advice can be given.

[Andrew Graveson]

I think there's some misunderstanding here about how creditors will typically deal with DMP proposals and the freezing of interest.

Interest is frozen because a creditor interprets their responsibility under the BBA Code of Conduct to treat cases of financial hardship sympathetically in this way.

The freeze of interest is almost always for a fixed period of 3, 6, or 12 months. At this point the creditor will want to review the situation; if circumstances have changed for the better then it would seem reasonable that the original contractual arrangement resumes. Therefore interest may start to accrue again.

Ideally just before the end of the fixed term arrangement a new arrangement needs to be made with the creditor whereby it is demonstrated that circumstances have not improved (if that is in fact the case). Where this is demonstrated a new interest free period will generally be agreed.

This is where good DMP companies earn their money by staying on top of the issues as they arise. A management plan is just that; it requires management. Other DMP companies are less focussed on commiting their resources to the ongoing management of cases choosing to focus their resources more intently of winning new cases (and the associated initial fees). This is where they, and sadly sometimes the industry, can pick up a bad name.

You pays your money (or not) and takes your choice.

David makes a great point about different lenders attitudes to DMP's and IVA's. Anyone calling a debt help company/organisation should ask the person with whom they're speaking questions specific to the creditors they have. If answers aren't readily forthcoming it's hard to know how you could possibly be getting best advice.

[David Mond]

Thank you Andrew - The Debt Resolution Forum could use people like you - why don't you contact me on this?