The Debt Management Report
Once the Debt Management Plan has been set up does it mean that I will have to keep paying interest and bank charges?
Interest and charges usually get stopped even if they are not legally obliged to.
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.
Creditors are placed into 3 different categories:
- Conflict Creditors - Banks and lenders who do not like to negotiate at all
- Semi - Conflict creditors – Banks and lenders who will negotiate but insist on a minimum dividend
- Positive Protocol creditors - Banks and lenders who are always open to all negotiation.
Creditor Liaison Unit
The creditor liaison unit is aimed to work with the lender to understand the clients financial situation, how it had come about, and look at the clients daily lives (relating this to managing their debt).
Through relating their financial situation to what is familiar, the support unit is able to relate and thus respond to the advice and support.
The creditor liaison unit complements the traditional debt advice process by looking at the root cause of the clients’ situation. An understanding of this by the client is important to ensure the spiral of debt does not continue, and triggers are identified.
Clients were assisted with budgeting, cash flow and financial statements (required by all the creditors before they can consider any offer made). Going through this process with clients, allowed them to become knowledgeable in this area, grasp what they were committing to with repayments, and thus increase their skills in money management.
We also assisted clients in understanding financial jargon, services and products. This ensured that clients had a greater knowledge and understanding of financial terms (such as APR), which help to build confidence with financial institutions and products (such as credit) in the long run.
Ongoing assistance was provided to clients by arranging further visits or follow-up calls on a regular basis. This enabled the creditor liaison unit to gauge how clients were doing post crisis debt advice and initial support, to then provide on-going assistance on a needs-led basis. This helped ensure that clients received a holistic service and comprehensive support.
This extra support helped clients to keep up negotiated repayments both during and following debt advice.
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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- Association of Debt Management
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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...]