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Debt Management

The Process

We realise that dealing with debt is a particularly difficult, stressful and confusing time. It makes sense to talk to family or a trusted friend but we know this is not always possible. If you are struggling with debt stress, we recommend you read helpful information which offers help and advice on dealing with debt stress.

A debt management plan “DMP” can help you get your finances back in control. If you have struggled to pay your minimum payments or perhaps have ended up in arrears with debt payments due to loss of income or change of circumstances, a DMP can help you set up affordable monthly payments with your creditors. Your DMP must aim to get your debt cleared in a reasonable period of time which is normally less than 10 years.

The budgeting process and initial consultation

When we speak to you, we will carry out a detailed review of your income and expenditure including your debts to assess whether a DMP is the most appropriate solution. The initial review will identify a monthly contribution that you appear to be able to afford. We will go through a consultation with you which will cover:-

  • How a DMP works
  • How long it will take to clear your debts
  • The costs we will charge for administering your plan
  • The benefits and risks of a DMP

If DMP is the most appropriate solution for you we will send you a Consent Pack. This will include a Key Fact Summary detailing why a DMP may be an appropriate solution for you. The pack also includes information you have given us, information you still need to supply,  documentation for you to sign and return, including the authority forms allowing us to speak to your creditors.

When we receive your signed and completed Consent Pack, we will ensure we have enough information to set up your plan efficiently. The vital information we need includes:-

  • Signed agreement terms, authority to act and consultation notes
  • Photo ID, proof of residence
  • Proof of income
  • Account numbers for all debts

We will also need information on your assets and we recommend you send us your latest credit report. This is available free of charge from www.noddle.co.uk

Setting up your plan

Your DMP will go “live” when we have the vital information and have set up your first payment to be received within 21 days. We are obliged to ensure your 1st payment goes to creditors within 30 days of your plan going “live”.

You will be allocated a debt management advisor who will ensure you understand the process.  From this point, you can then start referring any creditor calls or correspondence directly to us.

We will request updated balances from creditors and ask them to refrain from action. The updated balances are included in a Financial Statement which will be issued to your creditors, along with a proposal for a ‘pro-rata’ payment, in line with what you can reasonably afford.

We shall liaise with your creditors to negotiate your reduced payment, and request that further interest and charges are frozen where possible. We aim to respond to all creditor communications within 5 days of receipt. We scan copies of all communications with you and your creditors onto our system.

We will keep your payments in a separate non-interest bearing debt management client account. We will make pro-rata payments to your creditors within 5 days of receiving your funds into the account. You may occasionally still receive creditor statements, but these will be for your information purposes only.

At anytime, you can contact us if you find that your circumstances have changed and we will conduct a review and update your income and expenditure and information on your circumstances. Alternatively, a review will be completed every six months, to ensure that we are still providing you with the very best advice.

What happens if I cannot make a payment?

Delayed or missed payments can break arrangements with creditors we have set up for you.  This in turn could lead to your debts increasing and creditors taking action.

If you fall into difficulty, it’s vital you get in touch so we can assess your situation. We are obliged to let creditors know of missed payments within 30 days of non payment.

If you believe you will need several months to resolve your difficulties, we do have a “hardship” process which involves asking creditors to freeze action and charges for 3 months. They don’t have to do this but the more information we can provide of the circumstances for your hardship, the more likely it is that creditors will treat your case sympathetically.

The cost of your arrangement

During the first 6 months of your plan we will be retaining a set up fee out of your monthly payments. The fee covers the work we undertake to set up your plan, which includes drafting your debt management plan, sending this out to creditors, liaising with creditors to gain their acceptance to the plan and dealing with creditor’s queries. The fee we charge to cover these services is calculated at 3 times your monthly payment, which is paid equally over the first 6 months of the plan, subject to an upper limit of £1,000.00. Creditors will receive a reduced payment during this time, not less than 50% of your monthly payment. You may go in to arrears or further arrears during this time but these will be included in your plan.

Once the set up fee has been collected, from your 7th monthly payment our fees reduce and then charge a management fees.  Our management fee is 17.5% of your monthly payment, subject to a minimum of £30.00 and a maximum of £100.00. No extra charges will be added to your agreed monthly payments.  You will not be asked to pay any amount over and above the agreed monthly payment.

Is there anything else I should know?

You have the right to cancel your arrangement with us at any time, which should be made in writing.  If you cancel your arrangement within 14 days of agreeing to our Terms of Business, we will refund any payments we have received from you during this time, unless a distribution has already been made to your creditors.

If you cancel at any time after the first 14 days, no further charges will apply after the date of cancellation; however any set up and management fees already charged will be retained by The Debt Advisor. We will refund any monies (including management fees) that have not been distributed to creditors at the time your notice of cancellation is received and we will inform the creditors of your decision.

There are sources of free debt advice and services. You can find out more by contacting the Money Advice Service on https://www.moneyadviceservice.org.uk/en/articles/where-to-go-to-get-free-debt-advice or 0300 500 5000 (8-8 Monday to Friday, 9-1 on Saturday).

Advice on other Solutions

All debt solutions should be very carefully considered; we will always provide you with the most appropriate advice. This will include advice on all potential solutions which will include DMP, IVA, Bankruptcy, Debt Relief Orders, Debt Consolidation through raising Finance and setting up your own payment plan.

The Insolvency Service website has helpful information on https://www.gov.uk/options-for-paying-off-your-debts/overview to support those who find themselves in financial difficulty during the recession.

Frequently Asked Questions “FAQ’s

We have produced FAQ’s on all debt solutions including DMP’s.