Frequently Asked Questions
- Q1. What is a debt management plan?
- Q2. How will I know my creditors are being paid?
- Q3. What are the DMP charges?
- Q4. Is it a loan?
- Q5. How much will my monthly payments be?
- Q6. What is Full & Final Settlement (FFS)?
- Q7. Is FFS guaranteed?
- Q8. What are the charges for FFS?
- Q9. What is an IVA?
- Q10. Does it mean that my debt is reduced?
- Q11. Will my employers be approached?
- Q12. What is an Administration Order?
- Q13. What is Joint and Several Liability?
- Q14. What is a Default Notice?
- Q15. What is a Liability Order?
- Q16. What are Priority Creditors?
- Q17. What are Non Priority Creditors?
- Q18. What is Secured Lending?
- Q19. What is a Time Order?
What is a debt management plan (DMP)?
It is a plan tailored to help your debt problems. It involves calculating clients income and expenditure to reach an agreement on how much they can afford to pay each month. You will make the monthly payments to us and we will work as a mediator with your creditors and negotiate sensible repayment terms to satisfy all parties.
How will I know my creditors are being paid?
We will send you monthly statements to confirm how much each creditor is receiving. As long as you meet the monthly payments to us, your creditors will be paid fairly on a pro-rata basis.
What are the DMP charges?
will vary according to the level of debt and repayment term. As per the industry standard, we will take the first months payment as our administration fee for the term of the plan, plus a monthly management fee of 16% of all subsequent payments to cover ongoing costs. All fees are included in your monthly payments and you will be informed of these charges when the arrangement is agreed.
Is it a loan?
No, it is an informal agreement between you and your creditors to repay your debt at an amount which is affordable to you.
How much will my monthly payments be?
Your monthly repayment is based on the amount you can afford to repay to your creditors after taking living expenses into account. One of our team will calculate your income and expenditure with you to achieve this figure.
What is Full & Final Settlement (FFS)?
Full & Final Settlement is a way of clearing your debts without paying the full amount you owe back to the creditors. We will use a lump sum payment to prorata between your creditors and negotiate reduced settlements on your behalf.
Is FFS guaranteed?
No. However, we have never failed to gain reduced settlements on cases which we have pursued.
What are the charges for FFS?
Our charges are based on performance. As per the industry standard, we charge 16% of the amount we save you, subject to a minimum fee of £495. Therefore, if we were to reduce your debts by £10,000, our fee would be £1,600.
What is an IVA?
It is the name given to a formal arrangement with creditors. It allows someone who is in financial difficulty to make a proposal to settle his/her debts within a reasonable and fixed period – normally five years.
Does it mean that my debt is reduced?
Yes in most cases, but it will depend on a high proportion of creditors agreeing to reduce the debt.
Will my employers be approached?
No – Only your creditors.
What is an Administration Order?
An administration order is a court order placing a company that is, or is likely to become, insolvent under the control of an administrator following a petition by the company, it's directors or a creditor. The purpose of the order is to preserve the companys business and assets to allow a reorganisation or ensure the most advantageous realisation of its assets whilst protecting it from action by it's creditors. The administration of the insolvent estate of a deceased debtor. County court process permitting an individual with modest debts to pay off installments. No insolvency practitioner is involved.
What is Joint and Several Liability?
If more than one person enters into a credit agreement then both are liable for the full amount. For example, after divorce or separation, both parties can be pursued for the outstanding amount. This also applies to rent arrears on joint tenancies, arrears on joint mortgages, Council Tax payment and water rates on properties that have been jointly occupied.
What is a Default Notice?
Must be issued by a creditor before he can start legal action to recover a debt. It states the amount of money owing and the amount required from the debtor to put things right. It asks for payment in full in seven days. If the seven days pass without payment, the creditor can take court action.
What is a Liability Order?
If you fail to pay your Council Tax, your local authority can apply to the Magistrate's Court for a Liability Order. The Order gives the Council extra powers to enforce collection of the money.
What are Priority Creditors?
Those where non–payment could result in loss of property, essential services or imprisonment, e.g. mortgage, rent, gas, water, electricity, Council Tax, court fines and maintenance.
What are Non Priority Creditors?
Non–payments to these creditors (sometimes known as secondary creditors) would incur less severe consequences than the non–payment of priority creditors.
What is Secured Lending?
A loan where security is given by the person borrowing (the security is usually property). If you fail to repay a secured loan the property maybe repossessed. These debts take priority over unsecured lending.
What is a Time Order?
Allows a County Court to make changes to the terms of a regulated agreement, if it appears to be just. The court can reduce the repayment rate and the interest rate. Time Orders are normally only made where there is a temporary financial difficulty and if you are likely to be able to return to making full contractual payments.
