FAQs
What is a debt management plan?
Debt management plans are agreements between you and a debt management
company. Under the agreement, the company supervises your debt repayments,
and makes payments to all of the people you owe money to. Many people
find that a plan of this kind makes repayments more convenient and a major
advantage is that you don't have to sell your home. Note that you will
usually continue paying interest on your debts and there is usually a fee
for the services you are receiving.
What if my Debt Management Plan fails?
If your Debt Management Plan fails, your creditors will pursue you for the
full outstanding balances and your debt owing is likely to increase as a
result of fees charged.
Will creditors still write to me and call me?
A debt management plan is not a legally binding agreement, so you will
probably still received letters and calls. Having said that, contact
usually becomes less frequent once you have been making regular payments
for a while, as creditors realise that you are actively trying to resolve
your situation.
Are the payments fixed?
Payments can be changed if your circumstances change – this is an informal
arrangement and so you can talk to us about what makes most sense for you.
Do I have to have a credit check?
No, because this is not a new loan.
Can I stay with my existing bank?
If you owe money to your current bank then it is strongly advised that
you move to a different bank. This is because your bank could decide to
keep your wages when they are paid into your account (a new bank who you
don't owe money to cannot do this).
What if I change my mind?
You are under no obligation to proceed with any of the solutions we
advise on. Should you change your mind once a plan has been put into
place, you are provided with a cooling off period of 14 days under the
Consumer Protection (Distance Selling) Regulations 2000. Please see
the debt management terms of business for full details on your right to cancel.
Please note that an IVA is a legally binding arrangement and cannot
be cancelled once a meeting of creditors has been accepted. Failure
to maintain payments towards your IVA could result in Bankruptcy.
How will it affect my credit rating?
Yes, your credit rating will be effected. Credit reference agencies
such as Experian, Equifax and Call Credit maintain records of your
credit accounts. Failure to maintain contractual payments towards any
debts will result in a default notice being made on your credit file.
These notices will remain on your credit file for 6 years (unless the
creditor agrees to remove them prior to this) and may affect your ability
to obtain credit.
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