Just reading the beginning of this thread - I owe nearly £136,000 after my business failed, my business partner went bankrupt and I had all the personal liabilities heaped on to me. That said I have an IVA and only pay £200 per month into it but do have approximately £160,000 equity in the house. Can someone explain why an IVA wasn't a good idea for scaredy cat - as it sounds very similar to my position. All interest has been frozen on all my debts.
ScaredyCat could have sold the property, paid off the debts in full, had money left for a deposit on another property and had a surplus left to live comfortably even with a big mortgage. Her credit rating would have been enhanced and not destroyed and for these reasons an IVA would not have been my recommendation.
Personally, I would not have recommended a DMP either for the reasons above and I do think there are times when it is better to sell up and start again. Had ScaredyCat done this at the beginning she would be debt free, no phone calls, money in the bank and effectively not have wasted tens of thousands of pounds.
Ultimately had she entered an IVA it is possible it may have been accepted but no IP could realistically recommend it creditors as best offer.
We've just reviewed some of our existing cases and can identify cases where American Express have chosen to freeze interest. I'm sure other experts on the site involved in debt management will have cases where this is the case as well.
We have also contacted RMA, who often act on behalf of American Express when repayments get behind. They state that six months after a default notice has been issued Amex will review a case with a view to stopping interest where they feel it to be appropriate.
You should continue to receive statements from time to time even if they are not sent to you monthly.
I do hope that you can use this information to your advantage during your upcoming debt management plan review.
Andrew Graveson
Bright Oak Ltd
UK Debt Management Company
Website: www.brightoak.co.uk
Hi
I can't see creditors agreeing to regulation in the DMP market that forces them to freeze interest.
Creditors will call the tunes in my view for a very long time and all we can do is to continue to highlight bad practice and unfair creditor charges.
If the DMP industry can tighten up the front end advice so that every debtor is given best advice and that creditors are confident that this is happening then hopefully we will see people paying more each month than they are getting charged in interest and fees. It is a strange situation where someone in genuine finacial difficulty is finding that there debt is increasing each month even though they are making regular payments.
One area that does need addressing is the approach from some organisations that seem to advise anybody expressing financial difficulty to make £1 paymentsd to creditors before looking at their income and expenditure in detail
Regards
Thank you all for your advice , opinions , etc - unfortunately it is making me feel worse and worse.
At the beginning - last April - when we decided to face facts and bite the bullet re our financial chaos - we approached the CAB. They advised to stop all payments to our creditors - this we did for 2 months - whilst we explored all avenues open to us - through the CAB and an appt with an IP. An IVA was dismissed because of the equity in the property . We looked long and hard at Remortgaging and took advice from a local Mortgage consultant recommended by both CAB and the IP - but because we had by then defaulted our credit rating was shot and the lending rate was through the roof. Also as we are both in our early 50's we felt time was against us for this option. Hence the DMP route - again recommended by the CAB.
We began our DMP with Payplan in July of last year and felt reassured that we were doing the right thing in repaying our creditors within the shortest period of time possible.Our payment to Payplan is regular, we have not missed any - yet despite several emails there are still creditors pending and interest being charged.
I will see what our annual review brins to light - the letters to our creditors have all now been posted - so now all we can do is hope and pray.
I think many creditors would see this quite differently.
Some feel that debt management plans, by default, have to be accepted. After all they cannot refuse to accept a payment made on a clients account by a third party. They might therefore perceive that much of the power resides with the debtor and the debt management company.
This situation is compounded by the fact that creditors are pretty much forced to deal with a minority of debt management companies that we all know to be shabby, greedy and dishonest.
I completely agree that better front-end and operational standards would reassure creditor organisations and encourage a greater degree of collaboration. After all, what's the point of charging interest that disincentivises continuing repayments, and incentives either going to ground or insolvency?
That's where the work of the DRF and DEMSA over the coming months will be very important alongside potential regulatory input or tightened OFT guidance.
Between creditors, our industry itself and the regulatory bodies, there is a real responsibility to try to ensure that more individuals get better outcomes from debt management plans where they are appropriate.
Andrew Graveson
Bright Oak Ltd
UK Debt Management Company
Website: www.brightoak.co.uk
I think thats disgusting advice from CAB to be frank to stop payments in the first instance. What if the best option had been a consolidation loan over a longer period for example or in your case release equity from your property you need your credit rating to go for those options. Stopping your payments to hastily restricts your future options. If an IVA is the best option and your credit rating will be shot anyway then stop paying or if you have not been paying anyone anyway and they feel your credit rating is gone already but if you are up to date with everything your credit rating will plummet by stopping all your payments too soon before deciding on a route of action
Very interesting thread, and I agree with Andy's comment re just paying a £1 per month payment without looking at the I&E in greater detail. I would also point out though, in fairness, that where it is appropriate, for example the new Token Payment Scheme that CCCS are running, then it can buy very valuable breathing space for a debtor.
The snag there though, is will creditors play ball with it? Hopefully they will, but that remains to be seen.
Regards.
Cert DR
23+ years in debt advice
I do not post for anyone other than myself
Hi
Dave.sr hits the nail on the head regarding Scaredycats experience. Having been advised by the CAB to stop paying all creditors before anyone had looked at their situation in detail [they had 2700 disposable income] resulted in their credit rating being damaged and thus preventing them from a remortgage, a solution that seems the most suitable on the info given.
The token payment scheme by the CCCs is welcome as long as creditors freeze interest and charges from day one. Whilst I don't want to be negative I have a gut feeling that this will be the exception rather than the rule
I was wandering are creditors in general being more open minded to people on a dmp and trying to help more or are they going the other way and possibly looking more towards bankrupcy.
We haven't noticed any particular change in recent months in connection to debt management plans.
I would say that lenders are probably showing a little more patience with borrowers when they initially contact them to explain that they are struggling to make full repayments.
This seems to be an acknowledgment of the increased issues many people are experiencing with the economy at the moment as well as the result of political pressure to give people a break when circumstances take a turn for the worse.
A friend is involved in the collection of mortgage arrears and mortgage shortfall debt via a major firm used by many lenders. The amount of cases they are handling has reduced significantly over the past twelve months as mortgage lenders exercise more patience as well.
I think that these are positive signs but acknowledge that the personal experience of many forum readers and contributors with their creditors will be very different.
Andrew Graveson
Bright Oak Ltd
UK Debt Management Company
Website: www.brightoak.co.uk
i can obviously only comment on my own personal experience which for 2 years as been great hopfully this will carry on. All my creditors froze inerest and charges from word go and i never hear anything from them. I still have about 5 years left but at the moment I am very happy with the soloution I have chosen to get me debt free. I have only about £5000 equity in my property if I am lucky so there isn't much the creditors can do other than accept it otherwise what else are they going to get nothing.
