Debt Management FAQ
These are questions frequently asked about Debt Management services.
How is your service free?
- How does debt management
affect my credit rating?
- What happens initially when
I contact you?
- How much will my
creditors get each month?
- How can I pay into my Plan?
- My reduced payments are
less than my interest charges, does this mean I'll be paying forever?
- How do I know I'll be
able to maintain the reduced monthly payments?
- How long does the Plan last?
- What happens if my
- 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
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.
How does debt management affect my
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.
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
How much will my creditors get
This will depend on how much disposable income you have (i.e. the
money left over after paying all your living expenses) and how much
is owed to each creditor.
For example, lets say you owe £8,250:
And that your disposable income is £142 per month.
Each of your creditors would receive a pro-rata payment:
Creditor A would receive £42.17 each month
Creditor B would receive £27.88 each month
Creditor C would receive £71.95 each month
Total paid to creditors is the full £142 per month because there
are no management fees or deductions made for "administration fees".
How can I pay into my Plan?
Payments can be made either weekly or monthly. There are three
methods you can use:
- 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.
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.
Youll 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.
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.
Is my home at risk?
If youve 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.