When they find themselves with unmanageable debt, many UK residents get advice and assistance from a professional experienced with managing consumer debt. Free assistance is available from various UK agencies including Consumer Credit Counselling Service, commonly called CCCS, and the National Debtline. Debt management companies (DMCs) also help consumers in debt and may recommend a debt management plan.
Under this plan, the DMC negotiates with creditors on behalf of the debtor to reduce ongoing debt payments. The debtor then makes a single payment for all debts, submitting this to the DMC, which distributes the appropriate amount of money to each creditor. The regular payment is based on how much the debtor can afford to pay. Once the debtor repays all debts in full through the plan, the credit file is updated to confirm the new debt-free status.
In some situations, the credit file will not be updated in a timely manner. If the individual plans to apply for credit, this can be an issue, especially if the purchase is a car or home. Unfortunately, approaching the debt management plan provider about the issue will not help. Only creditors can make updates to credit information with CallCredit, Equifax, and Experian, the three UK credit reference agencies. Therefore, the individual must contact creditors directly to have the information updated.
Data kept in a credit file is important. Future lenders use it to assign a credit rating, which affects whether they will offer credit. Credit file data is regulated by the Data Protection Act, which is overseen by the Information Commissioner’s Office. Companies reporting to credit reference agencies are expected to ensure that information regarding their accounts is accurate and updated. However, this expectation is often not reality.
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Once debtors pay off all accounts in their debt management plans, default notices should be marked as satisfied. Balances for the credit accounts should be changed to zero to reflect repayment. After making a final payment for all debts included in their plans, individuals should allow a few weeks for creditors to receive the money and contact each credit reference agency. They should then review their credit report to verify that the relevant information has been updated.
If the credit file does not reflect completion of the debt management plan, the individual should call each creditor to request that it update the file. If the creditor is too slow or refuses to act, the individual may need to file a formal complaint with the creditor. If this does not resolve the issue, the individual may need to notify the Information Commissioner’s Office of a breach in the Data Protection Act. If the ICO determines that a breach has occurred, it will communicate with the creditor to resolve the issue.
The Data Protection Act also requires creditors to process personal information according to certain principles and take security measures to protect personal information. Consumers have rights in relation to organizations that share their personal information. They should take steps to manage their personal information, including ensuring that their credit file is updated.