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Mortgages & Debt

Being in debt is scary enough, but when you have a property there can be added pressure on you. Today I want to talk about mortgages, and debt and how they come together.

Your Mortgage

Your mortgage will most probably be the biggest debt you will ever have. You will have your repayments set out for you at the beginning and you will know what interest you will pay towards this. Depending on the type of mortgage, your interest will either be fixed at a set rate for a certain length of time or will be variable but linked more or less to Bank base rates.

As well as being the biggest debt, it will often also involve the largest single, regular outgoing in your household budget and should always be paid as there are serious consequences.

Getting Your Priorities Right

In order to manage your debt you need to start by prioritising what needs to be paid. If you have a mortgage then your monthly payment will always the first thing that you need to pay. After that you need to pay any secured loans or hire purchase agreements. Any other debts will then come after.

I know that this might seem like I am stating the obvious but from my past experience when it comes to paying your debts it is usually “whoever shouts the loudest” gets your money. For example, if you have a credit card or a loan and you miss a payment they will always contact you straight away and demand money from you. They will also add interest and charges on straight away for missing a payment of sending a late payment. Whereas, if you miss a mortgage payment it can take them a couple of months to process the missed payment and to take the necessary action.

By doing this you may avoid the initial hassle of not missing a credit card payment but by missing a mortgage payment you face more serious consequences.  You may think that you can make up the missed mortgage payment, but in reality it is often harder to catch up once you are in arrears with payments than you might at first think, this is because you will not only have your usual monthly expenditure to pay, including your usual mortgage payments, you will also have your creditor payments that you need to keep making as well as extra to your mortgage to cover the arrears

What Do I Do If I Am In Arrears?

If you are in arrears with your mortgage then the best thing for you to do is contact your mortgage company straight away and reach an early, workable agreement with your lender. If you have fallen into arrears because you are struggling with your debts then seek free impartial advice to help with setting up a plan with your creditors.
If you are still unsure about anything call one of our specialists who will always be happy to help

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Full & Final IVA

If for whatever reason you have received a sum of money, no matter how small or large, you may be able to use that to pay your creditors in a Full & Final IVA.

Today I am going to explain what a Full & Final IVA is and discuss the criteria of it.

What is a Full & Final IVA?

In brief, with an IVA you make an offer to repay your creditors a percentage of the debt that you owe. For example if you owe £50,000 you would need approximately £10,500 to offer a dividend that creditors may accept.

With a Full & Final IVA, everything is done exactly the same; instead of making an offer for 60 monthly payments you will offer one payment, however your creditors may put forward modifications depending on your surplus.

You would have to submit proof of the funds that you are using for your IVA and you would need to do this on top of the other documentation that is also needed for your IVA proposals.

I have been made redundant & received a pay out.

If you have received a windfall such as a redundancy pay out then you may be able to keep a certain amount of the funds before putting the rest of them in an offer to your creditors. If you have been made redundant and have received a pay out and are still seeking new employment then it may be a possibility for you to keep some of the money that you receive in order to pay your bills and other expenses. In these circumstances, you need to make sure that you are offering a realistic amount to your creditors otherwise they could ask for the full amount.
The equity clause that is in standard IVAs does not apply to a Full & Final IVA. You will make one payment only and then your IVA will be complete. However if you have substantial equity in your property then your creditors may decide to ask for this to be included.

Although you only make one payment, IVA will stay on your credit file for six years and as with all IVA’s you will still need to be regarded as insolvent.

If you are struggling with debts then please call Payplan on 0800 2802816.

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Fee vs Free


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For a long time now there has been a debate about free debt advice and fee charging debt advice. I think that it is safe to say that this debate will go on for a very long time. I wanted to just go through what the differences are between the two different types of debt advice providers.

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Free Debt Advice & Free Debt Solutions.

There is an old saying “nothing in life comes for free.” Because of this many people believe there is a ‘catch’ to free debt advice. But, in the case of Payplan, this is a complete myth. It is also common misconceptions that because advice is free it will not be as good or accurate as the advice that a fee charging company would give. These are just a couple of examples of misconceptions we come across on a weekly basis. To clarify on both of these queries Payplan are a free and impartial place for people to come to for debt advice and we would always offer the very best advice for each individual client to help with their specific needs.

The reason why we do not charge our clients for the help that we give them is because we receive donations from the credit industry instead. 100% of the money that each client pays in to their debt management plan is distributed to their creditors. The donations that we receive are completely separate to the payments that we receive from our clients. The reason why creditors send in their voluntary donations to us is because they recognise and understand the work that we do and therefore support us.

Fee Charging Debt Advice & Debt Solutions.

Fee charging debt advice companies are an option when looking for help dealing with your debts. They work in much the same ways as Payplan and other free agents do. They should also provide accurate and impartial advice to clients except they charge a fee for the advice they give and also for the plans they set up. Some fee charging debt management companies offer initial advice for free, but will then charge a fee for maintaining the plan.

Who Do I Go With?

This is a very easy question to answer; you go with the company who you feel comfortable with. Whether that is a company that offers free debt advice or one that charges a fee, it is important that you feel comfortable with the people that are dealing with your finances. You also need to be with a company that you can trust. If you are unsure about the company that you have chosen or want to see other companies that provide debt advice then visit the OFT website for details.
If you are struggling with debts then please call Payplan on 0800 2802816.

Don’t forget you can also follow me on Facebook and Twitter.

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