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Important Key Facts

Please read before considering your debt options!!!!

This document has been designed by Money Advice Direct Debt Advice Service to be read and understood by consumers considering certain financial options such as Individual Voluntary Arrangements, Protected Trust Deeds or Debt Management Plans.

Please note that it is a policy of Money Advice Direct Debt Advice Service to provide consumers with required warnings and caveats which must be accorded similar prominence to the material when explaining debt solutions.

You must read this important document as it explain the services you are being offered and the implications of those options:-

1. Please note that for consumers considering an Individual Voluntary Arrangement (IVA); that the licensed insolvency practitioner’s clients are referred or forwarded to by Money Advice Direct for an IVA to process, charge a nominee, supervisor and initial administration fee. This fee structure covers  the payments consumers make as well as the Licensed Insolvency Practitioner's fee for preparing, nominating and supervising the IVA. At the outset of the contract or service for an IVA the nominee fee is combined with the supervisory. Please note that there is also an initial administration fee. Please note that if the IVA fails then the client will be entitled to a refund of the initial administration fee. Please beware of other commercial debt advice providers being unclear on their charges.Please note that if a fee is payable at any stage (including nominee/upfront and supervisory/administration fees) this information should be stated prominently in the advertisement, on any website and in any promotional material.
2. IVA fees are highly regulated and are always subject to approval by banks and other creditors. If you are referred to do an IVA via this service all IVA fees, except the initial administration fee, will be included within the monthly IVA payment. This IVA fee structure ultimately means there are no extra fees requested apart from the initial administration fee, nominees fee and supervisors fee.

3. The IVA fees charged by the insolvency practitioner are illustrated clearly in the IVA proposal and are based on; the amount of unsecured debt owed and the amount that is repaid into the IVA The following is breakdown of typical payments and fees on an IVA for someone owing £30,000 in unsecured debts and paying £300 per month into an IVA; Initial administration fee: £300, Nominees Fee: £1,275, Supervisors Fee:(over 60 months): £45 per month, Expenses: £290 and IVA failure fees: If an IVA fails then the debtor has to pay back the rest of the debts and any IVA costs outstanding.
   

4. An IVA is a strict agreement and once in an IVA the IVA must be maintained or it is likely the IVA may fail. If the IVA fails you would be liable for the remaining balance and any costs already incurred. Please note that IVAs are flexible and if an expected situation arises leading to payment problems you should contact the IVA supervisor straight way The IVA supervisor will be able to contact the IVA creditors to make steps to vary the IVA proposal's payment structure.
5. Please note that for consumers considering a Debt Management Plan; whilst initial advice is free, fees may be payable to the debt management plan provider. Please beware of any commercial service that states or implies that the service is free and fails to explain that while there may be no charge for the initial advice, charges may be incurred at a later date. For debt management plans an initial fee equal to 2 months disposable income will be retained from your initial payment(s) to your plan. Thereafter a monthly fee equal to 17.625% of your monthly agreed disposable income will be charged, subject to a minimum fee of £35.00.
6. The workload to administer a debt management plan is very detailed and involves the following; Assessing your paperwork and income & expenditure, making sure you are budgeting correctly for your monthly payment, preparing a detailed living budget for you in line with creditor guidelines, contacting all the creditors on your behalf and agreeing a monthly payment, writing to your creditors and explaining your predicament, distributing the agreed monthly payment via transfer or cheque, regular reviews of your case every 3-6 month and preparing and sending out regular performance updates and statement to you ,proving ongoing help and assistance to you throughout the whole life of the debt management plan.
   
7. Please note that for consumers considering an Individual Voluntary Arrangement (IVA); please note that not all monies paid by the consumer are paid to the creditors. The IVA nominee and / or supervisory fees are deducted from the debtor’s payments.  Please beware of other debt advice providers that claim or imply that their fee is paid by the creditors when in fact the nominee and/or supervisory fees are deducted from the debtor’s IVA payments.
8. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD);  that, if the IVA/PTD fails the debtor / consumer “are not” responsible for the balance of the Licensed Insolvency Practitioners fees owed.
9. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD); that, if the IVA/PTD fails the debtor / consumer “are” responsible for the balance of their debts outstanding.
10. Money Advice Direct offers confidential and non-judgmental advice and will put you in touch with a licensed professional to arrange your debt solution. Please note that failure to adhere to a debt solution could result in further financial problems. Please note that whilst initial advice is free, fees may be payable depending on the solution provided. Please note for consumers wishing to enter into a debt management plan, Money Advice Direct refers consumers to commercial debt management companies to provide this service. Please note that commercial providers of debt management services charges fees for their services. Please beware of commercial debt advice providers that imply the service is unbiased and provided by a source of free and independent debt advice
11. Please note that Money Advice Direct would like to make it clear that the service provides, via its panel professional firms, a full range of debt management solutions. Please note that for consumers wanting Debt Relief Orders (DRO) they are requested to contact an approved intermediary that will be able to help them complete the online DRO application. The intermediary will be a further advisor trained to consider if a DRO is appropriate. A list of the competent authorities / DRO providers is available from The Insolvency Service (www.insolvency.gov.uk).
12. Please note that for consumers considering a Bankruptcy Order, Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD); that although the consumer may become debt free at the end of the Bankruptcy, IVA or PTD period, the effect on their credit rating is likely to remain on file for 6 years. In addition the consumers / debtors name, address and birth date will become public knowledge on the governments “Individual Insolvency Register”. The individual insolvency register (insolvency.gov.uk/eiir/) allows anyone to check, quickly and easily, if someone is bankrupt or has taken out an "individual voluntary arrangement" (IVA).
13. Please note that for consumers considering a Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD); if the consumer is a property owner and there is sufficient equity in their property the supervisor of the IVA or PTD may require the debtor, to revalue their home and realise the equity to pay off some or all of the debt at some point in the procedure. Please beware of debt advice firms who not state that with an IVA and in a PTD the supervisor may require the debtor, if they are a homeowner, to revalue their home and realise the equity to pay off some or all of the debt.
14. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD); that only unsecured debts are to be included e.g credit cards, unsecured loans and bank overdrafts. Please note that at the end of the period those debts that are not included such as secured debts, Government fines and child support payments will remain to be outstanding.
15. Please note that for consumers considering a Debt Management Plan (DMP), although the consumer may become debt free at the end of the DMP period, if a default notice has been issued the effect is likely to remain on the consumer's credit profile for a lengthy time.
16. Please note that for consumers considering a Debt Management Plan (DMP), if interest and charges continue to apply then there will be an increase in the total amount of debt to be repaid and that due to lower monthly payments it is very likely that the debt will have to be repaid over a longer period of time.
17. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD, do not be misled by claims that imply that an IVA or PTD is the only realistic option available to debtors. Please consider all other debt options available via the private, public or third sector.
18. Please note that for consumers considering a Debt Management Plan (DMP), although a debt management plan may be able to negotiate a lower monthly payment, this will usually lead to an increase in the size of the sum to be repaid and that a consumer's credit rating may be impaired.
19. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD); in most cases of an IVA/PTD creditors will be prepared to write off no more than 70% of a debt and in some cases 60%. Also, not all customers can achieve the stated 'write-off' because every case considered is different.
20. Please note that for consumers considering a Debt Management Plan (DMP), although debt management plan providers may be able to negotiate a lower monthly payment this will usually lead to an increase in the size of the sum to be repaid and that a consumer's credit rating will be impaired.
21. Please note that for consumers considering a Debt Management Plan (DMP), because a DMP is not legally binding the creditors are not obliged to freeze interest and/or charges.
22. Please note that for consumers considering an Individual Voluntary Arrangement (IVA), an IVA it needs to be accepted by 75% of the creditors (by value) for the interest and charges to be frozen. Please therefore note that a guaranteed outcome favourable to the consumer in negotiations with creditors is not always possible.
23. Please note that for consumers considering a Debt Management Plan (DMP), creditors are not obliged to accept the debt repayment plan and unless they do so, interest and other charges will continue to be added.
24. Please note that for consumers considering an Individual Voluntary Arrangement (IVA), for an IVA to be accepted at least 75% (by value) of creditors need to agree to the IVA for it to be approved.
25. Please note that for consumers considering any debt repayment solution; all procedures are not a simple low-risk processes and also that there is never a guaranteed outcome favourable to the consumer in negotiations with creditors. This particularly applies to a Debt Management Plan and also a Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD) until the procedure has been approved at the creditors meetings.
26. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD); do not be misled into thinking there are no risks involved with an IVA/PTD, because if it fails there is a risk of bankruptcy and if the debtor is a homeowner, the supervisor may require the consumer / debtor to revalue their home and realise the equity to pay off some or all of the debt.
27. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD); do not be misled into thinking that an IVA will improve the consumer's credit rating because the adverse credit rating will remain on file for 6 years, or until completion if later.
28. Please note that for consumers considering a Debt Management Plan (DMP), do not be misled into thinking that a DMP will improve the consumer's credit rating because the debtor is likely to have an adverse marker on their credit profile for longer due to an increase in the repayment period and, as the agreement is not legally binding the plan can be cancelled at any point meaning that the debtor could fall further into arrears.
29. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD) or Debt Management Plan (DMP); the likely impact on a consumer's credit rating on entering into an IVA/PTD/DMP or on the consumer's ability to obtain credit in the short and medium to long term.
30. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD) or Debt Management Plan (DMP); do not be misled into thinking an IVA/PTD/DMP is stress free, when in fact any debt remedy solution should be given serious thought beforehand.
31. Please note that for consumers considering a Debt Management Plan (DMP), the possibility of potential negative outcomes such as the effect on their credit rating, potential for bankruptcy and likelihood that interest and/or charges will continue to accrue therefore increasing the debt.
32. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD) do not be misled into thinking that an IVA/PTD is a quick solution to dealing with debt because in most cases it can take five years to complete an IVA and three years to complete a PTD.
33. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD) or Debt Management Plan (DMP); do not be misled by any claim that implies a guaranteed outcome favourable for the consumer in negotiations with creditors until the IVA / PTD / DMP has been successfully completed, subject to creditor’s approval.
34. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD) or Debt Management Plan (DMP); do not be misled by any claim that implies that when the consumer is on the plan, creditors will no longer contact them. Whilst the debt management company or Licenced Insolvency Practitioner can be appointed to act on behalf of the debtor, creditors are still entitled to contact them if they wish to do so.
35. Please note that for consumers considering a Debt Management Plan (DMP); a DMP is not legally binding creditors therefore may continue to request further payments or take enforcement action against them. A debt management company can not guarantee that there will be no further contact from the creditor.
36. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD), beware of any claim that implies that when the consumer is on an IVA/PTD creditors will no longer contact them. Whilst an IVA/PTD is legally binding and creditors are refrained from contacting the debtor regarding payment of the debt they may still contact the debtor in cases of promotional material and/or certain other circumstances.
37. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD), beware of any claim that implies creditors creditors will only stop contacting the debtor for payments of the debt and that they may still contact them to fulfil its contractual obligations of the IVA / PTD.
38. Please note that Money Advice Direct Debt Advice Service is not a Government service and is in no way connected the Government of the UK. Please beware of organisations masquerading that they have official government status.
39. Please note that Money Advice Direct has a Consumer Credit Licence as issued by The Office of Fair Trading. The service would never misuse the OFT name to mislead the public because such statements are therefore likely to lead the reader to falsely believe that the OFT has examined and approved all aspects of the business, when it has only issued a Consumer Credit Licence under the Act. The OFT is known to the public for its responsibilities under various consumer protection and competition statutes, of which the Act is but one.

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