The Financial Conduct Authority “FCA” who now regulates a range of financial services, considers that it is essential to review your debt management plan each year.
Many thousands of customers have had debt management plans ticking along over the years and although they have been asked to go through a review, they have ignored these requests.
Why do the review?
Some simple reasons:-
- It makes sense to check creditors are freezing interest and charges and your debts are going down
- What has changed in your income and expenses
- How long will it take to clear your debts
- Is there a better plan to clear your debts quicker.
The FCA take the view that people just left on debt management plans without a review are being neglected and they could suffer as a result. This is because they could benefit from other debt solutions including bankruptcy, debt relief orders, Individual Voluntary Arrangements, partial settlements or dealing direct with their creditors.
The annual reviews must happen and customers who do not engage are likely to find their plans terminated. Some of the larger debt management companies have already terminated thousands of plans where despite their best efforts, they could not get their customer to engage.
What happens if your plan is terminated?
The FCA has asked creditors to be patient and try to encourage these customers to seek alternative help. If you choose not to do anything, your debts will go to collection and you could find yourself having to deal with debt collectors. You could find your debts increase due to collection charges or interest that was previously frozen being reapplied to your debt.
With the New Year approaching, it’s a time to start getting your finances in order. If you are currently on a DMP with any company including The Debt Advisor, please understand that the review is for your benefit. The review cannot be done however, without you supplying updated information including evidence of earnings, bank statements, etc.
If you do find yourself with a terminated DMP, you will need to either contact your creditors directly or a debt solutions provider who can help you to either set up a new plan or advise you of your options. You should only speak to debt solution provider that are regulated by the FCA.
It is worth bearing in mind that if you should wish to set up a new plan either with the same company or a new company, you will be asked to supply the same documents as requested for your annual DMP review.
If you find yourself in financial difficulty and you are unable to maintain contractual payments to creditors, don’t bury your head – contact our team of advisors. There is always someone here that you can speak to.
There a range of solutions depending on whether you are salaried or self employed or you are a director or shareholder of a limited company. Our advisors can speak with you about all available debt solutions such as Debt management, IVAs, Bankruptcy and Debt Consolidation. Should you enter into a debt solution with us, fees will apply. If you would like our team to call you, please use our contact form.
All debt solutions need to be carefully considered. IVA’s are formal solutions and failure to keep to the terms can result in your IVA failing and you could end up bankrupt.
There is also free debt help and advice available through a variety of debt charities. For more information, we recommend you visit www.moneyadviceservice.org.uk.
The Debt Advisor is Authorised and regulated by The Financial Conduct Authority (reg no: 606669).