Frequently Asked Questions

  1. How is your service free?
  2. How does debt management affect my credit rating?
  3. What happens initially when I contact you?
  4. How much will my creditors get each month?
  5. How can I pay into my Plan?
  6. My reduced payments are less than my interest charges, does this mean I'll be paying forever?
  7. How do I know I'll be able to maintain the reduced monthly payments?
  8. How long does the Plan last?
  9. What happens if my circumstances change?
  10. Is my home at risk?

How is your service free?
Our service is funded in part through sponsorship and donations and by working with other agencies to ensure the service remains free at all times.

Included in this list are FreePay and PayPlan, who in turn receive funding directly and indirectly from those parts of the credit industry who believe that everyone should have access to free and impartial debt advice.

Additionally, everyone who provides advice is a volunteer. Unlike other advice sector "charities" there are no company cars, pension plans or business trips to fund. And by offering a remote service (i.e. by phone, post and email), and allowing advisers to telecommute where possible, we keep our overheads to an absolute minimum.

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How does debt management affect my credit rating?
If you already have a debt problem, it is likely that your credit rating has already been affected. If you are unable to meet the original contracted terms of your credit agreement your creditors will register that you are in default. This will be recorded on your credit file and will normally be retained on your file for 6 years.

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What happens initially when I contact you?
Once you have completed the online contact form, an adviser will contact you and talk to you about your situation and answer any queries that you may have about the No Fees Debt Management service and to arrange with you a convenient time for us to call you to go through your financial details.

The time can be arranged whenever it is convenient for you, including weekends or in the evenings if you are unable to do this during the day. The call usually takes no more than 30 minutes and you will be under no obligation to go further should you choose not to.

If at all possible we will ask you to have the following information available:

  • Details of ALL of your creditors, including account numbers and recent balances
  • Your income and expenditure details
  • Details of any county court judgements
  • Mortgages and secured loans
  • Hire Purchase Agreements and Leases
  • Maintenance and CSA payments

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How much will my creditors get each month?
This will depend on how much money you have after paying all your living expenses and secured debt payments, called your surplus disposable income, and how much is owed to each creditor.

For example, let’s say you owe £8,250:

Creditor A
£2,450
Creditor B
£1,620
Creditor C
£4,180
Total
£8,250

And that your surplus disposable income is £142 per month.

Each of your creditors would receive a pro-rata payment:

Creditor A gets
(£2,450 / £8,250) of £142
£42.17
Creditor B gets
(£1,620 / £8,250) of £142
£27.88
Creditor C gets
(£4,180 / £8,250) of £142
£71.95

Total paid to creditors is the full £142 per month because there are no management fees or deductions made for "administration fees".

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How can I pay into my Plan?
Payments can be made either weekly or monthly. There are three methods you can use:

  • Cheque
  • Standing Order
  • PayPoint – This is a service for those who are unable to pay by cheque or standing order but can pay by cash. You will be provided with a swipe card which you can take to your local Spar or petrol station along with your cash payment. There are more than 7,000 PayPoint outlets nationally and we can supply you with a list of those in your area should you elect you use this method of payment.

Remember, until your no fees debt management plan is established you MUST keep paying your creditors what you can afford each month.

It is IMPORTANT that you do not increase your debts at this stage by obtaining further credit or borrowing more money through existing facilities.

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My reduced payments are less than my interest charges, does this mean I'll be paying forever?
Many lenders will freeze interest charges when dealing with fee-free debt managers. This they do for two reasons:

  1. Because they can see that you are making a genuine effort to pay your debts and are doing so with the assistance of a profesional organisation, and;
  2. Because there is no fees being sliced off the top by some debt manager in it purely for the fees. After all, why should they freeze interest charges if someone else is making a profit as a result?

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How do I know I'll be able to maintain the reduced monthly payments?
Any repayment proposal is agreed between you and your debt manager in advance. It is based on the information you have supplied and takes into account all your finances. That is why it is imperative that you include all the information asked for.

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How long does the Plan last?
That will be determined by how much is owed and the amount you can realistically afford to pay your creditors each month.

You'll be given an indication of the likely length of the plan at the outset, but it will always be dependent on your creditors freezing interest and other charges on your accounts and your circumstances not changing.

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What happens if my circumstances change?
If this should happen whilst the plan in place, please let us know immediately. Depending on your situation a revised repayment plan will be negotiated with your creditors.

As a matter of course, we will annually review your plan with you and amend your monthly payment if necessary.

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Is my home at risk?
If you've got a mortgage, allowance for this is made in determining how much you can afford to offer your unsecured creditors through the plan.

This should leave you with enough money to continue making your mortgage payments. Providing you do this, your home should be safe.

 

 

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