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Debt Management Plans FAQ
Listed below are some of the frequently asked questions on Debt Management Plans. Please call us on 0845 055 8152 if your query is not answered here.
What will my payment be in a Debt Management Plan?
This depends on your circumstances and is always in line with your personal level of affordability. When calculating payment into a debt management plan we will take into account details of your income, outgoings and total level of debt and work out a single affordable monthly payment on your behalf.
What will the term of the Debt Management Plan be?
We will guarantee you to become debt free by the end of the plan. As you will be making a lower payment than your original agreements the term of the debt management plan will be longer than your original credit agreements. The term of the plan is dramatically reduced once interest and charges have been frozen.
Advantages of a Debt Management Plan
- You pay one realistic and affordable monthly payment to Debt Plan Direct who distributes all of your payment on a pro-rata basis to your creditors.
- Interest and charges are often frozen, stopping the balance from increasing any further.
- Only pay what you can afford in line with your personal income and outgoings.
- We deal with all the paperwork so there is no need to negotiate with your creditors yourself.
- Statements are sent for you to track payments to your creditors.
- Know when you will be debt free.
- Flexibility- regular client reviews ensure any change in circumstance is reflected by the plan so repayments can increase or decrease in line with your circumstances.
In addition Debt Plan Direct will ensure all your creditors will contact us directly so reducing the stress of any threatening phone calls and letters you may receive.
Disadvantages of a Debt Management Plan
- This is an informal plan so creditors are can proceed with court action however we will always help you with any matters should they arise.
- If you can only afford to make a small monthly payment and you have a large amount of debt, it may take several years to clear the debt. Debt Plan Direct will always endeavour to help clients in this situation and offer all possible alternatives and solutions to help in such cases.
What support will I get from Debt Plan Direct?
At Debt Plan Direct we pride ourselves on giving excellent support to all our clients. Throughout your Debt Management Plan you will have a Personal Debt Caseworker who will give you a direct contact number and an email address for you to keep in contact. If your personal financial circumstances change you can talk to your Personal Debt Caseworker who will arrange a new Debt Management Plan for you. The staff is always there to give support and answer any questions you may have.
What if my circumstances change and I can no longer afford to make the repayments into my Debt Management Plan?
Debt Plan Direct carries out regular reviews with their clients to ensure that any changes in circumstances are accounted for in the debt management plan. For example if you was to lose overtime at work and you could no longer afford the monthly repayment into your debt management plan, your monthly repayment would be reduced to reflect this change in circumstances and we would then put the new proposal to your creditors. We also offer all types of debt solutions and are able to offer impartial advice as to the best course of action.
How will I know if my creditors are being paid?
Once we have received up to date balances from each of your creditors an up to date financial statement of affairs will be sent to you which will show how much is owing to each creditor as well as how much each creditor will be receiving. Once payments have started into your debt management plan you will be sent regular statements showing how much is being paid to each of your creditors. In addition to this, you will still receive statements from your creditors. The monthly repayment remains fixed unless your circumstances change.
How is my credit rating affected?
It is important to note a Debt Management Plan is not shown on your credit file and will not 'blacklist' you. There is the chance that your credit rating is likely to have already been affected if you are having financial difficulties. By entering into a debt management plan Debt Plan Direct will ensure that any impact on your credit file will be for the short term by ensuring interest and charges are stopped to help you become debt free as soon as possible.
Will my creditors accept lower payments on all the accounts?
We put together a formal proposal to your creditors in for a new offer of repayment on each of your accounts in line with what you can afford to pay. Whilst creditors are not obliged to accept lower payments they cannot legally refuse the payments. Debt Plan Direct is regulated by the Office of Fair Trading and licensed under the Data Protection Act and Consumer Credit Act. Our activities and all negotiations we undertake on your behalf meet strict legislated criteria and fully comply with the standards and provisions contained within the Acts.
Will I be borrowing more money in Debt Management Plan?
No. We do not lend you money or pay off your debts. Experience shows that if you are already in financial difficulty borrowing more money is never a good idea and normally has the adverse effect to resolving your problems. Your Debt Management Plan will allow you to repay your creditors at a level that you can afford. Remember if you are not making payments into your plan we cannot pay your creditors.
Can I enter into a Debt Management Plan if I have CCJs?
Yes. There is no restriction for individuals with CCJs. Depending on individual circumstances it is possible to include CCJ repayments into the Debt Management Plan.
What if I am not a homeowner?
It makes no difference whether you are a tenant or homeowner or even if you are still living with your parents.
Can I enter into a Debt Management Plan if I am out of work?
Yes it is possible. All you need to enter into the Debt Management Plan is surplus amount of money at the end of the month (or week) which you can afford to pay to your creditors once you have taken out your living expenses.
What debts can be included in a Debt Management Plan?
Any unsecured debt (not secured against an asset e.g. a secured loan on a property or a Hire Purchase agreement) can be included in a Debt Management Plan, this includes:
- Personal Loans
- Mail Order Catalogues
- Credit Cards
- Store Cards
- Overdrafts
- Solicitors Bills
If you have some other type of agreement which you are unsure about please call an adviser for further help on 0845 055 8152.
What happens to my secured debt?
Secured debts such as your mortgage or car Hire Purchase (HP) agreement cannot be included in a Debt Management Plan. If you are unable to make the full contractual payments to your secured debts you may risk losing the asset which the loan is secured against e.g. a car or house. The Debt Management Plan will ensure that any priority payments such as payments on a car and your mortgage are included as part of your living expenses to ensure these payments are met each month to prevent any repossession.
Will my creditor issue a Notice of Default?
By entering into a Debt Management Plan, the original agreement you had in place with your creditors is no longer binding as you will not be making your normal contractual payments. Your creditor may then issue a Default Notice to both protect their legal position and to advise you that you are in breach of the original agreement.
My creditors are still calling and sending letters?
Certainly in the short term whilst we negotiate reduced payments with your creditors, you will to a certain degree still receive phone calls and letters. Please do not ignore them. You must politely advise your creditors that you have entered into a Debt Management Plan and that Debt Plan Direct are now acting on your behalf. We also request that you forward any letters in the self address envelopes provided to us to deal with on your behalf.
What if my circumstances change during the Debt Management Plan?
As a Debt Management Plan is an informal arrangement, you will have the flexibility to change the plan as your personal circumstances change, and even to replace it with an alternative arrangement if that becomes more appropriate at a later date.
My bank is threatening to take me to court if I enter in a Debt Management Plan and will not accept payments from you?
Legally a creditor cannot refuse payments from a Debt Management Company and then attempt to take you to court for non-payment. Unfortunately some creditors may use this as a tactic to force you into dealing with them directly and paying more than you can afford. Remember you have a legal right to have anyone you wish deal with your finances.
My bank says you have not written to them, but you say you have. Why?
Employees of a creditor's collections unit have one job, to try to get you to pay money. Unfortunately, some will do this any way they can. Once they acknowledge we are dealing with the account, they know they have to negotiate through us. If they tell you they have not heard from us then they have more leverage. If they make you think we are not doing our job properly, they will convince you to cancel the agreement with us, and then they can use any tactics they like to get the money from you.
If this happens inform them that we are dealing with your affairs, contact us immediately and we will then issue a further copy of correspondence to them.
My bank has said they are going to send a bailiff round to collect their money, can they do this?
No. This is again another tactic used by the staff of banks and other lenders to get you to pay more money. However bailiff can only be instructed and sent by a County Court or Sheriffs office, this means a bailiff can only call if you default on a court order. A debt collector may try to trick you by saying “if you don’t pay this bill, we could send a bailiff round” this is not true unless you’ve defaulted on an earlier court order.
Can I cancel my plan at any time?
Yes. You will not be tied into any legal contract with Debt Plan Direct all you have to do is give us 2 weeks written notice of cancellation. |
