Posts Tagged ‘ Debt Advice ’
Beware of Debt Management Companies that charge a fee.
As someone who is in debt and struggling to meet the repayments, you will probably want to speak to someone who can provide you with practical and impartial advice. Doing a simple search online can provide you with dozens of options who offer this service, but beware of companies that do this but charge you fees.
There is an old saying “the best things in life are free” and this applies to debt advice as companies like Payplan and charities like Citizens Advice Bureau and National Debtline , who provide the very best in debt advice and debt solutions to you for free. However, there are some companies that feel they need to charge a fee to their clients for the same service that we at Payplan will do for free.
A reputable fee charging Debt Management Company will advise you of the fees that they charge from the beginning; however, some companies may not be that clear about their fees. It is therefore extremely important that when you are searching for debt advice, you follow these simple steps:
- Do your research – use online review sites such as Review Centre or Trust Pilot to see what other clients of your chosen company have to say about their service.
- Speak to several companies – find three companies and speak to them all and see what solutions they recommend and whether you like them. Speaking to several companies will allow you to get several different options.
- Ask questions – when speaking to your chosen company, ask as many questions as you feel you need answering and make sure you fully understand the entire process, especially their fee structure.
Finding the right solution may seem like a daunting task, but getting advice from the right company will take a huge weight off your shoulders and give you the assistance that you need.
Top five questions about… Debt Management Plans.
A Debt Management Plan, or a DMP, is an informal agreement between you and your creditors. When looking for a suitable solution for your debts it can be a daunting experience and many people contacting us have lots of questions. Below we have put together five common questions that we get asked.
How long will my Debt Management Plan (DMP) last?
The length of your Debt Management Plan depends on your individual situation. It also depends on your level of debt and monthly surplus. If creditors freeze interest and charges, the length of the Debt Management Plan can be dramatically reduced.
For example: If you owe £25,000 and you can afford to pay £250 per calendar month the DMP will last for just over 8 years (100 months). This applies only if the payments are maintained each month and the creditors freeze interest for the duration of the plan. Your DMP can be completed sooner if your circumstances improve and your payments can be increased.
How much does it cost to set up a Debt Management Plan (DMP)?
Nothing if you choose Payplan, it’s completely free. As you may know there are many debt management companies that charge by either requiring a start-up fee or a monthly management fee, which can be anything from 15% – 17% of the monthly payment.
Payplan are funded by the credit industry, which allows us to offer completely free Debt Management Plans. This means whatever you can afford each month goes directly to your creditors to reduce your level of debt even quicker.
For example if you can afford to repay £250p/m all of that money will be distributed to your creditors pro rata, Payplan takes nothing out; the full £250 per month will go towards paying your creditors off.
Can I stop my Debt Management Plan (DMP) when I like?
A Debt Management Plan is an informal arrangement between you and your creditors, so you are free to stop the DMP at any time, but we ask that you provide as much notice as possible so we can inform all of your creditors.
If you are experiencing further financial problems and cannot afford the current DMP payments to Payplan, please let us know because we may be able to restructure the Debt Management Plan for you.
Please note: Bear in mind that once the DMP is cancelled, creditors may well resume interest and charges that had previously been frozen or reduced.
Is my credit rating affected if I enter into a Debt Management Plan (DMP)?
A DMP in itself will not show on your credit file, however, if you have recently been experiencing financial difficulty (missed repayments) then your credit rating is likely to have been affected already by this.
To explain this further; whenever the full contractual payment isn’t made, whether this is through a DMP or not and even if the payment is just a few pounds short, it will still affect your credit rating because, if your Debt Management Plan repayment is less than the required repayment as originally agreed, then you are not complying with the original credit agreement you made.
What support do I get during my Debt Management plan (DMP)?
Payplan prides itself on giving excellent support to all our clients. Throughout your Payplan Debt Management Plan arrangement you will have a DMP case officer who will give you a direct number and an email address so you can keep in contact.
If your financial situation changes, you can talk to your DMP case officer who will assess your circumstances and, where appropriate, try and rearrange your Debt Management Plan around your circumstances.
Our members of staff are always there to give support and answer any questions you may have about Debt Management Plans or any other more appropriate debt solutions.
Our website will also give you continuous support, with hundreds of pages of financial knowledge, money saving tips, up to date relevant news and PayplanPlus.
The best of #CABLive debt tweets
This week Citizens Advice Bureau’s across the country have been using Twitter to highlight the work that they do. Here are some examples of how they help people who are in debt.
A clients story…
Here a client explains how Payplan’s free debt advice helped her to overcome the loneliness and isolation caused by overwhelming debt, which started when she was student:
“I am 26 years old and just over £13,000 in debt. Every time I think about that figure my knees go weak.
My financial problems really started when I began university. Like most 18-year olds I did not have lessons on money management at school. Suddenly I was on my own in a big city with £6,000 to last me all year.
My boyfriend rang and asked me to lend him the deposit to move and I did it from my student loan. He never paid me back. So when my money ran out I had to pay for food and travel with bad cheques.
The stress I was under affected my grades and I was diagnosed with depression. I felt lonely and isolated.
Eventually I admitted defeat and asked my parents to take me home. I got a job almost straight away as a manager of a small clothing store. I sought treatment for depression and slowly got my life back on track.
I was contacted by a fee-charging debt management company who promised to help me. I was too ashamed to go to the CAB and I didn’t realise there were free companies like Payplan. So I ended up contracted to pay exorbitant management fees. At the time I didn’t mind, I was finally back in control of my life and money.
Not finishing my degree was eating away at me though. I started dreaming of being back in London. So I moved back to London and started studying Business and Law. I got a part-time job as a Student Ambassador ….I passed my second year at university with flying colours.
In the summer of my second year I had more success getting office work and I got my first ‘real’ job at the Ministry of Justice.
It seemed nothing could bring me down, but then the financial crisis hit. My contract was terminated without notice and I wasn’t entitled to redundancy pay.
I tried to remain upbeat. After all, I told myself, I had a little money saved and I had London work experience – all to no avail……I started getting hourly calls from my creditors. I found out the fee-charging debt management company had not made payments to any of my creditors or let them know about my change of circumstances or address. I was suddenly right back where I started with no income and a mountain of debt!
I was determined to solve this problem once and for all. It was through researching government recommended agencies that I found Payplan. After discussing my situation with advisors at Payplan I was able to make an informed decision that an Individual Voluntary Arrangement was the best option for me. I make affordable monthly payments and after six years whatever debt is left will be written off.
To anyone who finds themselves in my situation the best advice I can give is to face up to it. It is a small step to ask for help but it makes such a huge difference. Never be ashamed to ask for help.”
