Debt management company telling me not to pay off mortgage arrears - advice please

[sailingman321]

Normally I woul not touch debt managamne t companies with a barge pole but I was being threatened with repossession as I am behind on my mortgage due to a sticky mess with paydayloans (what an idiot I am).

Crux of this is that my mortgage company put me in touch with a debt management company saying they would pay the fees for me - this is within the last few weeks. My mortgage company is telling me to pay some extra on top of my normal payment to pay off some the arrears as agreed before the debt management company came online. I am being told if I don't pay this they will start proceedings.

 

However the debt management company is saying they have an agreement in place with the mortgage company as this was arranged through them and not to pay anuything other than the normal payment. The arrears are part of the plan and they will be writing to the mortgage company with a payment. I am not to pay anything to anyone without their say so. They see no need to contact the mortgage company.

 

Crunch day for payment is tomorrow - I am not sure what to do... or if I trust either companies at the moment. The DM company is one of the larger better known ones.

 

I think I should ring up DM company and insist they ring the mortgage company as they will have their first payment towards my debts by then. If they refuse tell them I will pay the extra to the mortgage comapny then and see what they say?

 

Any thoughts - I know the obvious one is do this myself - but I want to keep the mortgage company happy.

[caro]

I'm a bit surprised to hear that your mortgage company put you in touch with the debt management company. You say you are being threatened with repossession. Have any proceedings started yet, and if so, what stage are you at?

 

Your mortgage has to be your priority, so if you can afford to pay something off the arrears on top of your normal payment then I think it would be wise as it will work in your favour if you have to go to court, but they can't have what you haven't got.

 

Which companies are you dealing with?

[sailingman321]

Thanks

The Mortgage is with GE and the DMP is Gregory Pennington - they have also set up a bank account.

It was put to me that the mortgage company would rather me keep maing them payments and not have to go through repossesion and the DMP is something they offer customers for this to happen.

At least the payday loans wont be able to empty my pay traight out of the account tomorrow and I can pay the mortgage company.

I am not sure what is happenning as when I spoke to the mrotgage company they were not really aware fo any agreement with Gregory Penningtons.

I am very confused by it all....

[sailingman321]

Sorry I should have said I was sent a default notice stating they intend to proceed if I do not pay arreas in full.

I rang them to say that I couldnt pay in full but that would pay normal payment plus some extra to clear, and explained about the payday loans.

That the reason I had not paid installments since november was because of the payday loans taking money befor eI could pay the mortgage

I then explained I was planning to open a new bank account so I could pay them first and would then see if I could come to an arrangement with the payday loans.

It was then they offered the free DMP with Think Money (Gregory Penningtons)

[caro]

I'll try and get someone to help you as I don't know enough about these companies, but I'm somewhat dubious.

[MARTIN3030]

Someone will know about this.

I remember a few CAG members reporting on Halifax referring people to a DMC which turned out to be associated although it was not spelled out.

This could well be construed as unfair business practices-lets see what others think.

Meantime will see if theres anything in archive from similar cases.

[sailingman321]

Thanks folks!

[sailingman321]

Interesting - I think I was told they had arrangements with several companies and I think (but I am not sure) they said Halifax was one of them.

[caro]

I can't help wondering about them paying for your DMP. Seems odd. I can't help thinking that if you want a DMP you might be better with one of the genuinely free ones.

 

You might like a look at sequenci's blog on DMPs. http://www.consumeractiongroup.co.uk/forum/entry.php?265-A-quick-guide-to-successful-Debt-Management-Plans

[MARTIN3030]

Yes agreed this does not sound good,and begs lots of questions.

[sailingman321]

I plan to ring the mortgage company tomorrow and pay them the standard payemnt, try to get them to confirm the debt plan was agreed with them as I am confused by it all. I think if I can't get a straight answer from either companies I will have to pay the mortgage company the extra that was agreed originally.

 

This might leave me a bit short but it is better than giving them an excuse to start proceedings.

 

Off to try and get some sleep now as I have work tomorrow and will need to try and get this sorted out before work. I will check in here in the morning first thing.

 

Thanks for your help everyone and good night!

[caro]

Might be worth ringing National Debtline too so you can talk it all through. http://www.nationaldebtline.co.uk/

[MARTIN3030]

Lets get an opinion from sequenci-he is THE man for this.

[dx100uk]

GE money too.....

 

they have been battered for unfair charges on mortgage defaulters

 

i'd also look at gettting the charges reclaimed

 

as for payday loans etc

etc

 

they can swing dixie, forget about them, get the house back under control first.

 

they'll go nowhere near a court.

 

dx

[sequenci]

Hi there.

 

First things first, the mortgage is the priority debt here. To prevent further action being taken it is always important to set up an arrangement to pay your regular monthly instalment PLUS a little extra on top, so that you reduce your arrears over an affordable period of time.

 

NEVER EVER pay a fee-charger for a DMP, consider switching it to one of the free providers as a) you'll save a lot of money b) your creditors are more likely to agree to the terms AND to freeze interest and charges. You can also consider your own 'personal' DMP by following the advice within my blog.

 

GE Money should not be referring you to a commercial firm, I bet they are getting some sort of kick back from doing so, this is pretty naughty if it's the case.

[Ell-enn]

Absolutely right Sequenci - you should make your own arrangement with the mortgage company - write them a letter stating your proposal for clearing the arrears (only offer what you can reasonably afford, not what you think they want to hear) and send by recorded delivery - if you need help with the letter let me know.

 

This Gregory Pennington isn't doing this out of the goodness of his heart, nor is the company a charity - so where are they getting their fees from ??

[caro]

Absolutely right Sequenci - you should make your own arrangement with the mortgage company - write them a letter stating your proposal for clearing the arrears (only offer what you can reasonably afford, not what you think they want to hear) and send by recorded delivery - if you need help with thine letter let me know.

 

This Gregory Pennington isn't doing this out of the goodness of his heart, nor is the company a charity - so where are they getting their fees from ??

 

Can't help thinking that at some point in the future they'd appear, and you'll be paying. GE won't be paying out of the goodness of their hearts.

[Nick Pearson]

A number of mortgage lenders make direct referrals to reputable debt solutions providers (obviously as long as the customer gives consent to this) and there is no regulatory or other reason why they shouldn't. In many cases the mortgage lender will agree to either very low or indeed no repayments to the mortgage arrears and freze any additional charges and further enforcement action as long as the debt solutions firm is involved. Most debt solutions firms who get these lender referrals have an agreement with the lender that they will not charge any DMP set up fee and will charge the customer much reduced monthly managment fees or indeed even waive them altogther. I doubt there is any "kickback" except that the debt solutions provider will also get some lender referrals where an IVA is the most suitable product.

 

Given the above, I think it it is diffcult to justify the suggestion that someone should switch go to a free provider as the DMP is being provided free of charge.

 

The suggestion that lenders are more likely to freeze interest and charges and accept offers made via a free provider is incorrect, in fact the opposite is true. Leaving aside that many unsecured lenders referr customers to commercial debt solutions providers, for the reputable debt solutions providers most lenders automatically accept the repayment offer and freeze interest and charges. The reason? They audit the providers to ensure that repayment offers are fairly calculated and the they trust the advice process is carried out correctly.

 

on c93% plus of all debt handled by reputable debt solutions providers all interest, charges and further action are suspended, a figure which is in excess of most free providers ( it is hard to be sure as they won't diclose this figure). Based on calculations I have done the average person with average debt levels is actually better off paying a 2 months DI set up fee and monthly management fee as this is cheaper than the interest they will be charged if they go to a typical free debt advice provider who gets interest and charges frozen on c70% of debts.

[sequenci]

in fact the opposite is true.

 

I'm going to have to disagree with you there.

 

Would you be able to explain the recent OFT findings in relation to the entire fee-charging DMP sector?

 

If I had a pound for every poorly administrated commercial DMP I've come across I would be very well off.

 

on c93% plus of all debt handled by reputable debt solutions providers all interest, charges and further action are suspended, a figure which is in excess of most free providers ( it is hard to be sure as they won't diclose this figure).

 

Can you evidence this?

[Nick Pearson]

I'm going to have to disagree with you there.

 

Would you be able to explain the recent OFT findings in relation to the entire fee-charging DMP sector?

 

If I had a pound for every poorly administrated commercial DMP I've come across I would be very well off.

 

 

 

Can you evidence this?

 

It is a discussion I would very much like to have and indeed have had on a number of different occasions on public platforms. For the advocates of "all fee charging is bad" brigade what I have said will come as a shock, I understand that but is is undoutedly true. I am perhaps the only person who can definitetly say that as I have worked in both the free and fee charging sectors at a senior level and have seen the data from lenders etc which is not in the public domain. Why not ask free providers what % of debts they handle have all interest and charges frozen? I know what it is for us (see above) and I know what lenders tell me about other providers.

 

The OFT report found 129 firms guilty of varying levels of bad practice. This is not the entire sector; I am talking about reputable debt solutions providers eg members of DEMSA, no member of which was in the 129 firms The OFT report although interesting in itself is not relevant to this discussion (I am as keen as anyone to see bad firms closed down asap and more power to the OFT to do it asap) as I stress I am talking about reputable providers.

 

The information that needs to be in the public domain (I will and have shared our data but free providers can be more secretive) is not only the % of accounts where interest abnd charges are fozen but includes also the durability of the DMP and the amount repaid to the creditors over the life of the DMP. Its only when lenders and other providers make this information available as we have that people will be able to compare. I have seen this data as I mentioned earlier but you should be asking those questions of the free providers.

 

I am a massive advocate of free debt advice but I worked in it too long not to understand its limitations. We pick up a sizeable percentage of customers who have tried free advice and found it was not what they wanted. As I don't know what you do for the day job I can't comment on the number you've seen but I know how many complaints about fee chargers I saw when I worked in the free sector.

[sequenci]

Thanks for a fair and balanced reply. Much of my work is quite close to the creditors and the free advice sector, especially around policy matters. I'm 100% in agreement that a lot of the free advice sector are unable to provide the most suitable service for many folks in debts. There are limitations on boyh sides, this isn't something that will ever change as there can never be, and will never be, a one size fits all debt solution. You only have to search this forum to find discussions in relation to the poor service our forum users have had via the likes of Payplan and CCCS. I think my real main concern with many of the free providers that I've 'mystery shopped' is that as soon as there is a more serious priority issue (e.g. mortgage/rent arrears, bailiffs, court claims etc) they don't want to know. For the record I've not called any of the Paymex firms yet. I'm sure there will be a point in time where only the good fee-chargers are left, we've seen this pretty much happen with IVA's and I'm sure it'll be the case with DMP's over the next few years.

[Wintry]

A number of mortgage lenders make direct referrals to reputable debt solutions providers (obviously as long as the customer gives consent to this) and there is no regulatory or other reason why they shouldn't. In many cases the mortgage lender will agree to either very low or indeed no repayments to the mortgage arrears and freze any additional charges and further enforcement action as long as the debt solutions firm is involved. Most debt solutions firms who get these lender referrals have an agreement with the lender that they will not charge any DMP set up fee and will charge the customer much reduced monthly managment fees or indeed even waive them altogther. I doubt there is any "kickback" except that the debt solutions provider will also get some lender referrals where an IVA is the most suitable product.

 

Given the above, I think it it is diffcult to justify the suggestion that someone should switch go to a free provider as the DMP is being provided free of charge.

 

The suggestion that lenders are more likely to freeze interest and charges and accept offers made via a free provider is incorrect, in fact the opposite is true. Leaving aside that many unsecured lenders referr customers to commercial debt solutions providers, for the reputable debt solutions providers most lenders automatically accept the repayment offer and freeze interest and charges. The reason? They audit the providers to ensure that repayment offers are fairly calculated and the they trust the advice process is carried out correctly.

 

on c93% plus of all debt handled by reputable debt solutions providers all interest, charges and further action are suspended, a figure which is in excess of most free providers ( it is hard to be sure as they won't diclose this figure). Based on calculations I have done the average person with average debt levels is actually better off paying a 2 months DI set up fee and monthly management fee as this is cheaper than the interest they will be charged if they go to a typical free debt advice provider who gets interest and charges frozen on c70% of debts.

 

Hello there Nick

 

I have read your posts and claims on this thread with interest and a little bit of a pinch of salt to be honest and I have many points to raise in response.

 

But.....before we go any further, can you remember this ? -

 

Wintry

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Re: Iva Help?

Originally Posted by

Wintry

Hi Nick

 

Thank you for a very steady reply.

 

I can definitely see the logic in what you are saying if all the payments and monies went towards reducing a persons debt while they were awaiting their IVA(S) to be decided, agreed, confirmed or maybe rejected.

 

Is this how it usually works Nick ?

 

If it does not, then would it not be better for someone to use an IVA provider who do not charge up front fees ?

 

I ask this with respect and that it is everyones personal choice at the end of the day.

 

 

 

Are you still looking in Nick

 

Come on Nick play the game, give us an answer on this first (your calculations on the 2 months DI set up fee and that comes to mind a little not to mention OFT investigations)

 

Also, if you would be so kind, please elaborate further, but think very carefully before you do Nick (thats if you ever do

)

 

This is an interesting report from the BBC

 

http://www.bbc.co.uk/news/business-11900874

 

Wintry

 

 

 

 

Edited February 24, 2011 by Wintry

[Nick Pearson]

Hi Wintry

 

If I appear a bit vague in responding please forgive me but I'm not really sure the points you want me to address. I think I have already been pretty clear about DMP's and as for IVA's the situation is also clear re fee's (see the ... website and if thats no clear enough about our fee structure let me know).

 

Finally re the BBC link - the appeal is still with FOS so I can't comment specifically but as we said to the BBC, we do not believe that the website domain names .......imply either a free service or a Govt backed service esp as on both site we made it clear on the landing page the nature of the service.

Edited February 24, 2011 by dx100uk
indications to website removed

[Wintry]

Hi Nick

 

Thank you for your reply

 

With regard to the BBC article I can appreciate that you cannot comment.

 

As for the recent OFT reports in general... well I think they speak for themselves and in my opinion they are pretty damning and not easily dismissed as some appear to have attempted to do.

 

The matter of mortgage lenders making direct refferals to debt solutions providers does not sit easy with me as it seems like a wheels within wheels type situation and in the interests of independent & impartial advice hardly inspiring. Surely it would be in the interests of the client / customer to obtain a second opinion at least, be it with a fee charger or the free sector.

 

"I doubt whether there is any 'kickback' except that the debt solutions provider will also get some lender referrals where an IVA is the most suitable product"

 

The above is also a little worrying given that I understand between 30 & 40% of IVAs fail or do not run their course often leaving the debtor paying fees only to end up back where they started.

 

Just how many recognised High Street Mortgage lenders involve themselves in this type of practice or is it mainly the sub prime outfits?

 

How 'excactly' do you arrive at your claims and figures of 93% ? I have heard and read this kind of figure quoted on many occasions over the years including at conferences and meetings but I have never seen a proper breakdown of how they are actually arrived at.

 

Can you also elaborate further on your 'calculations' regarding the 2 months set up fee etc and how the average person with average debt levels is actually better off.

 

Also where do you get your 70% figure from in relation to a typical free debt advice provider given that I think you previously mentioned that it is hard to be sure as they (most free providers) wont disclose this figure.

 

I ask these type of questions as regrettably I continue to come across many people who have not in my opinion received full appropriate independent advice and have also been somewhat mislead in the process (again in my opinion)

Edited February 24, 2011 by Wintry

[Nick Pearson]

Hi Wintry,

 

I agree with you entirely re the OFT investigation into DMC's. I think I must report c 3 firms a week to the OFT for various misdemeanors re advertising etc and thats leaving aside the firms I take (or threaten) legal action against because of the way they have pinched our name and/or logo.

 

Turning to mortgage lenders and referrals. Its a mix of all sorts of prime and sub-prime lenders who refer over cases to DMC's. Why? speed and quality of service to the customer and realistic and sustained repayments by customers to them; thats whats in it for them.

 

93%?: difficult to prove to you but simply I asked our MI people to look at every debt on a DMP and see if interest and charges were frozen and in 93% of cases they are. 70%? Based on figures provided by lenders and what we find when we take over customers from free providers (one of the main reasons people leave them and come to us is the fact that % and charges are still accruing).

 

I don't think I can be much clearer re the cost saving but if you accept the 93% figure and know the average total unsecured debt is just under £19,000 with average total annual interest and charges etc of c£2850 (min) you can see for yourself how the set up fee can be saved compared with other providers who get a lower % of debts with interest and charges frozen. Its not just about the interest and charges - people pay a fee for the convenience and ease of access amongst other things. Many people don't like the idea of using a charity, or face to face advice, and many report they don't like the idea of using a creditor funded service. Many people report to us that they are suspicious of lender funded services; this may be unfair but it is an understandable concern.

 

Finally we have the same experience as you re the advice from some providers (esp fee charging but also free) re idependent advice. As the OFT say - if you're going to pay for debt advice go to a DEMSA member (preferably us!).

 

One final observation: I welcome the chance to talk about these issues on the forum. I only wish other consumer forums were so open minded!