Frequently Asked Questions
Listed Below are the most frequently asked questions concerning Debt management and IVA's.
If there isn't an answer to a question you have, please feel free to contact us.
Pre-Contract Information Guide to Debt Management & IVA's
How to contact us
It is easy to talk to a member of staff at Debt Stop Direct. Contained within the pack will be your personal debt management advisors details. This will include their full name, telephone number and email address. They will be happy to answer any queries you may have or explain any aspect of the plan you aren’t sure of. Alternatively you can simply call free phone 0800 634 3058.
What if circumstances change
A debt management plan is an informal arrangement, meaning any change of circumstance can easily be accommodated. At any point we can change the arrangements if a more suitable solution is available.
What happens to funds held if you cancel
If this happens within the initial cooling off period we will refund any money we are currently holding. If you cancel after this period we will refund any money we haven’t distributed to creditors minus our fees for working on your account. We will not charge any penalty fees or charges.
Will Creditors always accept reduced payment offers
Nothing can be guaranteed on a debt management plan as creditors are not currently legally obliged to accept any offer we put forward. However we do have vast experience in the negotiation process and also find our relationship with the various creditors means we can boast a success rate of agreeing a reduced monthly payment in over 90% of cases we take on. You can rely on our experience and creditor relationships to provide the best possible service for you.
Will creditors continue to pursue me for payment
Again there is nothing a debt management company can currently legally do to stop creditors contacting you regards your debts. However once we have an agreement in place you will find that communications between yourself and your creditors largely stop. Once we inform a creditor we are dealing on your behalf we request that communications are directed through ourselves, this takes the pressure off of you and allows us to deal directly with them. Any communications we have with them will be reported back to you on a regular basis. If creditors do keep chasing you directly we provide prepaid envelopes so that you can send any correspondence to us and we also provide the details of your client liaison manager for you to pass on to them. If you receive any unwanted contact please keep us informed and we will always endeavour to ensure this is minimised on your behalf.
Is a credit check required
As we are not lending you any money, we are not required to check your credit file.
Will my Credit Rating be affected by the plan
Unfortunately in the short to medium term your credit rating can be adversely affected. This is because by joining the plan you are breaking the contractual repayments on your unsecured debts. However you may already have a poor credit rating if you have arrears or a history of missed or late payments. Indeed should you continue to struggle and potentially miss payments through a lack of affordability the effect on your credit file could be equally severe if not worse, than the effect imposed by joining the plan.
Will joining the plan prevent creditors taking further action
As a company no guarantees can be made that further action will not be taken. This may include court action to recover outstanding debts. However if this does happen we will immediately respond on your behalf to help make repayments affordable for you.
Can I take out a plan if I am a homeowner or tenant
It makes no difference at all whether you are a homeowner, tenant or even living with parents. You can take out a debt management plan under any circumstances.
Do I need to be in Full Time Employment
In respect to employment all we require is that you have additional income above your basic living costs.
Is this a loan
We are not money lenders and we won’t pay off your debts. Our plan allows you to repay your creditors at a rate that is affordable to you. If you fail to keep up plan repayments we can’t make payments to your creditors.
Will I receive a Default Notice
By starting a debt management plan you will be in default on your original credit agreement therefore allowing your creditor to issue a Default Notice. Different creditors react differently to this situation and therefore no guarantees can be made as to whether a default notice will or wont be issued.
Will CCJs affect being on a plan
This will have no effect at all. You can even use the plan to make payments against any CCJs that currently exist against you. All we ask is you are honest from the beginning and make us aware of any judgments against you.
Will other family members find out about my debts
Although we feel it is best to be open with partners, legally we only need them to know if the debts are shared or you need to take into account your partners income to support the plan.
What is the difference between Secured and Unsecured Loans
Simply put a secured loan is secured against assets that you own. (e.g. car or property) An unsecured loan is not secured on your assets (e.g. personal loan, credit card).
Will the payment plan cover all my debts
Unfortunately a debt management plan can only cover unsecured debts and arrears.
It is important that you give priority to other debts that will have more serious consequences if regular payments are not maintained. This type of payment must be made directly from you. Examples include rent or mortgage, loans secured against the property, utility bills and HP agreements.
When we start assessing your finances we will take into account these priority debts and an allowance for day to day living. From this assessment we can calculate what you can realistically afford to pay each month.
How is my money collected and distributed to my creditors
You can make payments to us in any of the following ways:
• Card Payments
• Cash
• Postal Order
• Bank Transfer
• Giro
• Standing Order
• Cheque
Once the payment reaches our account we will distribute your monthly payments to your creditors for you, along with deducting our monthly management fee. If we are unable to collect your payment we will not be able to pay your creditors.
How long will it take before I am debt free
This obviously depends on individual circumstances, but because you are making reduced payments to creditors the time period will be extended. By repaying the debt over a longer period you may have to pay an increased total amount. During the initial consultation this will be explained to you along with an estimate of how long the plan will need to run for. What we must stress is that a debt management plan is not an overnight solution and will require commitment from you to keep up the lower repayments. We would also stress although we do review your finances on a regular basis if you find your affordability changing, either through increased or decreased affordability let us know, as by altering your payment amount, you will also see a change in the estimated plan duration.
How much will debt management cost me
We charge an initial fee equivalent to the first two months payments. This is used as our set-up fee and covers our administration costs. If you continue to make your payments and see the plan through to completion, a sum equal to the first two months payments will be used as the final installment as a gesture of goodwill from ourselves. This may result in a delay of up to two months before your creditors receive payment. However it can take four to six weeks to put in place agreements with your creditors. This may cause your account to move into arrears or further into arrears. Each month we will take a monthly management fee for working on your account. This is 17.5% of your monthly payment but subject to a minimum fee of £30.00 per month. All costs will be notified to you before you start the plan. We have no extra charges. Our set-up fee covers the following:
• Drafting of your payment plan
• Liaising with your creditors
• Calculating and proposing your reduced payments
• Preparation of your personalized financial statement
How much will an IVA cost me
An IVA attracts professional fees chargeable by the Insolvency Practitioner for the work carried out on your case. These costs form part of the IVA arrangement and are built into your payments.
An IVA involves costs chargeable by the Insolvency Practitioner and these are detailed in your IVA proposal. The Practitioner has the role of Nominee when he is initially proposing your Arrangement and the Nominee fee is usually the equivalent of the first 4 to 5 payments made into the Arrangement, dependant on creditor voting. He can take these payments each month for the work done in preparing your case and holding the meeting of creditors.
Once approved by the creditors, the Practitioner’s role is then changed to Supervisor which basically means he oversees the management of the Arrangement, reports to creditors and carries out income and expenditure reviews. He is permitted to charge a fee for his work as Supervisor which usually equates to 15% of any future payments into the Arrangement. This is an example of how the IVA fees work but it can differ from case to case, therefore when signing an IVA proposal you will see listed in detail the specific fees proposed on each individual case.
How would a change in circumstances effect an IVA
If your circumstances change for the better through inheritance, lottery win etc then you may be required to pay back the full amount owed before the IVA proceeded.
Listed Below are the most frequently asked questions concerning Debt management and IVA's.
If there isn't an answer to a question you have, please feel free to contact us.
Pre-Contract Information Guide to Debt Management & IVA's
How to contact us
It is easy to talk to a member of staff at Debt Stop Direct. Contained within the pack will be your personal debt management advisors details. This will include their full name, telephone number and email address. They will be happy to answer any queries you may have or explain any aspect of the plan you aren’t sure of. Alternatively you can simply call free phone 0800 634 3058.
What if circumstances change
A debt management plan is an informal arrangement, meaning any change of circumstance can easily be accommodated. At any point we can change the arrangements if a more suitable solution is available.
What happens to funds held if you cancel
If this happens within the initial cooling off period we will refund any money we are currently holding. If you cancel after this period we will refund any money we haven’t distributed to creditors minus our fees for working on your account. We will not charge any penalty fees or charges.
Will Creditors always accept reduced payment offers
Nothing can be guaranteed on a debt management plan as creditors are not currently legally obliged to accept any offer we put forward. However we do have vast experience in the negotiation process and also find our relationship with the various creditors means we can boast a success rate of agreeing a reduced monthly payment in over 90% of cases we take on. You can rely on our experience and creditor relationships to provide the best possible service for you.
Will creditors continue to pursue me for payment
Again there is nothing a debt management company can currently legally do to stop creditors contacting you regards your debts. However once we have an agreement in place you will find that communications between yourself and your creditors largely stop. Once we inform a creditor we are dealing on your behalf we request that communications are directed through ourselves, this takes the pressure off of you and allows us to deal directly with them. Any communications we have with them will be reported back to you on a regular basis. If creditors do keep chasing you directly we provide prepaid envelopes so that you can send any correspondence to us and we also provide the details of your client liaison manager for you to pass on to them. If you receive any unwanted contact please keep us informed and we will always endeavour to ensure this is minimised on your behalf.
Is a credit check required
As we are not lending you any money, we are not required to check your credit file.
Will my Credit Rating be affected by the plan
Unfortunately in the short to medium term your credit rating can be adversely affected. This is because by joining the plan you are breaking the contractual repayments on your unsecured debts. However you may already have a poor credit rating if you have arrears or a history of missed or late payments. Indeed should you continue to struggle and potentially miss payments through a lack of affordability the effect on your credit file could be equally severe if not worse, than the effect imposed by joining the plan.
Will joining the plan prevent creditors taking further action
As a company no guarantees can be made that further action will not be taken. This may include court action to recover outstanding debts. However if this does happen we will immediately respond on your behalf to help make repayments affordable for you.
Can I take out a plan if I am a homeowner or tenant
It makes no difference at all whether you are a homeowner, tenant or even living with parents. You can take out a debt management plan under any circumstances.
Do I need to be in Full Time Employment
In respect to employment all we require is that you have additional income above your basic living costs.
Is this a loan
We are not money lenders and we won’t pay off your debts. Our plan allows you to repay your creditors at a rate that is affordable to you. If you fail to keep up plan repayments we can’t make payments to your creditors.
Will I receive a Default Notice
By starting a debt management plan you will be in default on your original credit agreement therefore allowing your creditor to issue a Default Notice. Different creditors react differently to this situation and therefore no guarantees can be made as to whether a default notice will or wont be issued.
Will CCJs affect being on a plan
This will have no effect at all. You can even use the plan to make payments against any CCJs that currently exist against you. All we ask is you are honest from the beginning and make us aware of any judgments against you.
Will other family members find out about my debts
Although we feel it is best to be open with partners, legally we only need them to know if the debts are shared or you need to take into account your partners income to support the plan.
What is the difference between Secured and Unsecured Loans
Simply put a secured loan is secured against assets that you own. (e.g. car or property) An unsecured loan is not secured on your assets (e.g. personal loan, credit card).
Will the payment plan cover all my debts
Unfortunately a debt management plan can only cover unsecured debts and arrears.
It is important that you give priority to other debts that will have more serious consequences if regular payments are not maintained. This type of payment must be made directly from you. Examples include rent or mortgage, loans secured against the property, utility bills and HP agreements.
When we start assessing your finances we will take into account these priority debts and an allowance for day to day living. From this assessment we can calculate what you can realistically afford to pay each month.
How is my money collected and distributed to my creditors
You can make payments to us in any of the following ways:
• Card Payments
• Cash
• Postal Order
• Bank Transfer
• Giro
• Standing Order
• Cheque
Once the payment reaches our account we will distribute your monthly payments to your creditors for you, along with deducting our monthly management fee. If we are unable to collect your payment we will not be able to pay your creditors.
How long will it take before I am debt free
This obviously depends on individual circumstances, but because you are making reduced payments to creditors the time period will be extended. By repaying the debt over a longer period you may have to pay an increased total amount. During the initial consultation this will be explained to you along with an estimate of how long the plan will need to run for. What we must stress is that a debt management plan is not an overnight solution and will require commitment from you to keep up the lower repayments. We would also stress although we do review your finances on a regular basis if you find your affordability changing, either through increased or decreased affordability let us know, as by altering your payment amount, you will also see a change in the estimated plan duration.
How much will debt management cost me
We charge an initial fee equivalent to the first two months payments. This is used as our set-up fee and covers our administration costs. If you continue to make your payments and see the plan through to completion, a sum equal to the first two months payments will be used as the final installment as a gesture of goodwill from ourselves. This may result in a delay of up to two months before your creditors receive payment. However it can take four to six weeks to put in place agreements with your creditors. This may cause your account to move into arrears or further into arrears. Each month we will take a monthly management fee for working on your account. This is 17.5% of your monthly payment but subject to a minimum fee of £30.00 per month. All costs will be notified to you before you start the plan. We have no extra charges. Our set-up fee covers the following:
• Drafting of your payment plan
• Liaising with your creditors
• Calculating and proposing your reduced payments
• Preparation of your personalized financial statement
How much will an IVA cost me
An IVA attracts professional fees chargeable by the Insolvency Practitioner for the work carried out on your case. These costs form part of the IVA arrangement and are built into your payments.
An IVA involves costs chargeable by the Insolvency Practitioner and these are detailed in your IVA proposal. The Practitioner has the role of Nominee when he is initially proposing your Arrangement and the Nominee fee is usually the equivalent of the first 4 to 5 payments made into the Arrangement, dependant on creditor voting. He can take these payments each month for the work done in preparing your case and holding the meeting of creditors.
Once approved by the creditors, the Practitioner’s role is then changed to Supervisor which basically means he oversees the management of the Arrangement, reports to creditors and carries out income and expenditure reviews. He is permitted to charge a fee for his work as Supervisor which usually equates to 15% of any future payments into the Arrangement. This is an example of how the IVA fees work but it can differ from case to case, therefore when signing an IVA proposal you will see listed in detail the specific fees proposed on each individual case.
How would a change in circumstances effect an IVA
If your circumstances change for the better through inheritance, lottery win etc then you may be required to pay back the full amount owed before the IVA proceeded.
