Debt deduction UK
If I have a change of circumstance can I stop the Debt Management Plan?
The attractive feature of a Debt Management Plan is that you can stop and start it at any time you want the debt reduction process is in your control.
Important points to note:
- get confidential and non-judgemental advice - call us now on 0800 074 6918
- don't panic or ignore the problem: unopened bills won't go away
- you can't ignore your debts. Better to pay a small amount than nothing at all - those you owe money to may be prepared to accept low repayments
- if struggling with store or credit cards stop using them
- work out a realistic budget that covers all your income and spending. Check whether there are any benefits or tax credits you are entitled to that you are not getting
- decide which debts take priority - like mortgage or rent - and which cost you most through penalties or higher interest rates
- only agree to pay off debts at a rate that you can keep up - don't offer more than you can afford
- contact those who you owe money to as soon as possible. Let them know that you are having problems. Many companies will be helpful if you talk to them
- if organisations won't accept your repayment offers, seek advice
- if you get a threatening letter get advice from your local Citizens Advice Bureau or trading standards service
- if a debt collector calls at your home you don't have to let them in. If you want time to get advice arrange a later appointment. If a debt collector or lender harasses you contact your local Citizens Advice Bureau or trading standards service
- check if a loan will be secured on your home. If it is and you do not keep up repayments you could lose your home. If you do not understand the terms of a loan get advice.
- if you're thinking of taking out a new loan to pay off debts make sure you find out the total cost of the loan, not just the monthly repayments
- think very carefully before borrowing more to pay off your debts. Get impartial advice and don't rush into signing anything you don't understand
- if you are thinking of using a fee-charging debt management company, then make sure you understand exactly what you are signing up to - check what fees you will be paying to a debt management company and how long it will take you to pay off your debts
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Debt management plan fees are as follows:
- 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.
- keep copies of all letters you send and get about your debts so you have proof of the debt reduction process
Listed below are some of the frequently asked questions on Debt Management Plans
- How do I know whether a Debt Management Plan is right for me?
- What are the advantages of a Debt Management Plan?
- What are the disadvantages of a Debt Management Plan?
- Is a Debt Management Plan a type of loan?
- How long will I have to pay a Debt Management Plan before I am debt free?
- How much does a Debt Management Plan cost?
- How much money will actually go to the companies I owe money to under a Debt Management Plan?
- How do I make the payments?
- If I have a change of circumstance can I stop the Debt Management Plan?
- Who tells the companies I owe money to that I am actually in a Debt Management Plan?
- Will the companies I owe money actually accept a a Debt Management Plan?
- How a will Debt Management Plan affect my credit status with Experian, Equifax and Callcredit, the three main credit reference agencies
- Will a Debt Management Plan stop all the companies that I owe money to constantly telephoning me and sending me letters?
- Will I receive a regular report to inform me that my debts are actually going down?
- After the Debt Management Plan is set will I receive be able to get any additional help and advice?
- After the Debt Management Plan is set up can I still use a credit card or apply for car finance if I budget for it?
- Once the Debt Management Plan has been set up does it mean that I will have to keep paying interest and bank charges?
- Can I include secured loans in a Debt Management Plan, such as car finance or mortgage?
- Can the companies that I owe money to threaten to take my house or flat once that I am in a Debt Management Plan?
- Can I include all my debts in a Debt Management Plan?
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IVA's
The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.
In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]
What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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DANGER
Due to the tremendous demand for debt consolidation services the United Kingdom is now overloaded with debt management companies that contain misleading information. [more...]