Information to help you deal with your CRF's

Moderators: TalbotWoods, JaneClack

#204002 Hi! I've reached the point where I realize I need to take action regarding the debt I've accrued. I owe about £54k to credit cards and am considering either bankruptcy or a DMP (I would not be able to afford the payments on an IVA...).

Right up to now, I have always managed to make the minimum payments on time (though this has often been through borrowing from another card...) and I still have a good credit score despite the amount I owe. I'm wondering: If I were to set up a DMP now and make the agreed payments religiously, given that I've never defaulted on a payment, what would happen to my credit score?

Thanks! :)
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By TalbotWoods
#204021 Yes it does, and quite significantly.

You will be paying a reduced amount for the originally and contractual payments, thus your account will go into default.

Many lenders will give you about three months to clear the arrears and then issue a default notice (which automatically happens after about 8 months anyway)

Also some of the more aggressive lenders will paas the debt to their legal arms and go for a CCJ.

In simple terms your CRFs will be shot to pieces.

By maccy68
#204032 yes your credit rating will be affected in the short to mid term.however if you want to get out of debt this is the least of your worries and your credit rating is only revelant if you intend to obtain more credit, in the future and the truth of the matter is no matter how bad your credit rating there is always someone who will give you credit ,all be at a higher rate.
#204045 Many thanks for the replies. :)

Eventually, I hope to get into property development (just a pie-in-the-sky dream at the moment!) so I'd like to do all I can to minimize damage to my credit rating.

My thinking is this: If a DMP would impact my credit score almost as much as BR, I may as well go bankrupt! But if BR is significently more detrimental to the credit score, then DMP would seem the way to go...

Am I right in assuming the long term effect of bankruptcy on my credit file will be much worse than a DMP?
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By TalbotWoods
#204420 In some wasy yes bankruptcy can have a much more damming effect .... but

With bankruptcy it has all gone after 6 years, incluidng all the old accounts that were included, so in effect six years after the bankrupcy date you have a clean file.

A DMP can show poor and bad payment records for as long as it takes to clear the debts and then a further 6 years, as to how long this will be, it pretty much the same answer as how long is a piece of string.