Debt companies

How will a Debt Management Plan affect my credit status with Experian, Equifax and Callcredit, the three main credit reference agencies?

Please note that for consumers considering a Debt Management Plan (DMP), although the consumer may become debt free at the end of the DMP period, if a default notice has been issued the effect is likely to remain on the consumer's credit profile for a lengthy time.

Please note that for consumers considering a Bankruptcy Order, Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD); that although the consumer may become debt free at the end of the Bankruptcy, IVA or PTD period, the effect on their credit rating is likely to remain on file for 6 years. In addition the consumers / debtors name, address and birth date will become public knowledge on the governments “Individual Insolvency Register”. The individual insolvency register (insolvency.gov.uk/eiir/) allows anyone to check, quickly and easily, if someone is bankrupt or has taken out an "individual voluntary arrangement" (IVA).

One of the biggest confusion for consumers at present is the amount of debt companies. It is has been reported that around 5% of households in the UK are heavy credit users, around 20% are in financial difficulties and 24% of consumers have a personal loan of some description. In the situation of an economic downturn these individuals could have serious problems repaying existing agreements

While the latest indicators suggest that the economy in the UK continues to grow, a small downturn caused by an interest rates hike or a housing market crash could push many consumers into credit difficulties. The rise in UK indebtedness and the growing reliance and availability of credit means that lenders are now under increasing pressure to lend responsibly.

This being said if you are heavily in debt then this will be noted on your credit reference file. By entering in to a plan via The UK Insolvency Debt Advice Service your debts will be cleared based on agreement with the creditors. After the agreed payment period is over your credit will start to improve itself. Consumers should note that negative entries stay on your file for 6 years.

It is important to note the following points:

• Credit searches can only be made with your consent. This is usually given at the time you apply to a lender.

Your credit information is private. Only companies who are members of our account sharing scheme can access credit account information. They can only look at your credit account details if you have given them permission. They usually get your permission when you complete their credit application form.

The credit account sharing schemes are strictly regulated. Lenders can only:

• see the same level of information that they provide and must abide by strict rules that clearly list how information can be used.
• Credit reference agencies have a legal right to hold information about people. Credit reference agencies (Experian, Equifax, and Callcredit) help lenders quickly process credit applications. If we did not hold such information then it would be much harder for you to obtain credit. A good credit record makes it easier for you to get credit.
• Only the individual may order his or her your own credit report.
• The Freedom of Information Act 2000 gives you the right to ask for information from public bodies (such as your local council or a government agency). As we are a private company, and not a public body, the Freedom of Information Act 2000 does not directly affect us. The Data Protection Act 1998 regulates private companies.
• You can write to the Mailing Preference Service and register to have your name removed from mailing lists. You can also register to stop unwanted phone calls, faxes, and e-mails. This will stop your name and address being used by 95% of the UK companies that you have dealt with before. Unfortunately, it cannot stop mailings from overseas organisations
• In the UK, your human rights are protected by the Human Rights Act 1998. That act only directly affects public bodies. As we are not a public body, we are not directly affected by the act.

Whenever someone accesses or searches your information on the Experian database a search record, or 'footprint', is created. These records show which company has accessed/searched your personal information and when, and are kept on record for one year.

Search records are kept for your information and to assist lenders when processing credit applications. They also help prevent Fraud. Unrecorded Enquiries reflect that someone has looked at your report, but that fact will not be revealed to other lenders - the record is kept so you know who has accessed your credit report.

Listed below are some of the frequently asked questions on Debt Management Plans

• How do I know whether a Debt Management Plan is right for me?
• What are the advantages of a Debt Management Plan?
• What are the disadvantages of a Debt Management Plan?
• Is a Debt Management Plan a type of loan?
• How long will I have to pay a Debt Management Plan before I am debt free?
• How much does a Debt Management Plan cost?
• How much money will actually go to the companies I owe money to under a Debt Management Plan?
• How do I make the payments?
• If I have a change of circumstance can I stop the Debt Management Plan?
• Who tells the companies I owe money to that I am actually in a Debt Management Plan?
• Will the companies I owe money actually accept a a Debt Management Plan?
• How a will Debt Management Plan affect my credit status with Experian, Equifax and Callcredit, the three main credit reference agencies
• Will a Debt Management Plan stop all the companies that I owe money to constantly telephoning me and sending me letters?
• Will I receive a regular report to inform me that my debts are actually going down?
• After the Debt Management Plan is set will I receive be able to get any additional help and advice?
• After the Debt Management Plan is set up can I still use a credit card or apply for car finance if I budget for it?
• Once the Debt Management Plan has been set up does it mean that I will have to keep paying interest and bank charges?
• Can I include secured loans in a Debt Management Plan, such as car finance or mortgage?
• Can the companies that I owe money to threaten to take my house or flat once that I am in a Debt Management Plan?
• Can I include all my debts in  a Debt Management Plan?
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