Debt Management Questions:

 

What is a debt management plan?

 

Debt management plans are for people who can no longer meet the full monthly repayments on their unsecured borrowing, due to financial difficulties. The debt management company will negotiate with the creditors so that a lower monthly repayment can be agreed. On Occasion the interest/charges will also be frozen, whilst the debt management plan is in force, so all the payments made to the creditor actually reduce the outstanding debt- not just pay the interest (This can not be guaranteed).

 

 

Is Debt Solutions 4U debt management plan suitable for me?

 

Our debt management plan is a debt Solutions for anyone who any type of debt that they can't afford to repay in full and is receiving an income that leaves a surplus after priority bills have been paid (eg: mortgage, groceries, utility bills etc).

 

 

What are the advantages of your debt management plan?

 

• You pay one monthly payment to Debt Solutions 4U who distribute all of your payments to your creditors.
• You will no longer need to deal with your creditors alone.
• As we will be dealing with your payments, correspondence to you (from your creditors) should be reduced.
• Interest and charges may be frozen, so the debt doesn't increase.
• You only pay what you can afford, based on your surplus income.
• With Debt Solutions 4U you can track your monthly payments using your online account (Planned for 2010).

 

How will it cost me to start a debt plan with Debt Solutions 4U?

 

Cost will vary between £35 & £45 per month depending on your circumstances. We also keep your first month's full payment for set up costs. Some other debt management companies charge the first two months payments, which easily runs into hundreds of pounds, plus a monthly management fee, which can be anything from 15%-17% of the monthly payment.

 

 

How do I make payments to my plan?

 

Your can pay monthly using 3 methods:

 

• Standing order
• Cheque
• Payment Book

 

Will I have to live on a tight budget while I am in the plan?

 

It is in your interest to show your creditors that you are prepared to make some sacrifices to help repay your debts while you are in a debt management plan. Debt Solutions 4U are required to submit your income and expenditure details to your creditors, so it would be unrealistic to expect your creditors to agree to a reduced monthly payment if you are spending lots of money on non essential items, such as entertainment.

 

 

How much will each creditor get?

 

We distribute your payments on a pro-rata basis to your creditors, how much each one will get is determined by how much your outstanding balance represents, in relation to your debts as a whole.  For example, if you owe £10,000 overall and one credit card has an outstanding balance of £2,000 , this represents 20% of your overall debt.  Therefore 20% of your monthly payment will be distributed to this creditor.  A full summary of how much each creditor will receive each month will be determined in the summary (at the end of your online application), provided the figures you provided us with are accurate. Also Debt Solutions 4U provide a Norminal Program upton where a clients outgoings exceed there income. In this circumstance we would negotiable a token payment of £1 per month to all creditors.

 

 

How do I pay my creditors the new amounts?

 

Debt Solutions 4U will deal with all your creditor payments for you.  After we have received payment from you, we distribute the agreed amounts each month to each of your creditors, on your behalf.

 

 

Who informs my creditors of the reduced payments?

 

Debt Solutions 4U will contact your creditors, explain your situation, show them your income and expenditure and make an offer of payment to them.  One of the advantages of our debt management plan is you will not have to contact your creditors regarding the payments- we do it all for you!

 

 

What if my creditor doesn’t accept a reduced payment?

 

This is unusual as Debt Solutions 4U has a great relationship with the credit industry and creditors know that we work to realistic guidelines, so normally when they see that their client has entered into a debt management plan with us and is serious about paying off their debts, the reduced payments are accepted.  However, creditors don’t have to accept a reduced offer; if we did encounter this problem we would of course do everything we could to ensure an agreement could be reached.

 

 

How will I know my creditors are being paid? (Planned for 2010)

 

Debt Solutions 4U will provide you with an online account.  From here you can view the payments we have received from you and how we have distributed them.  Once you enter into an Debt Solutions 4U arrangement you will receive login details for an online account so you are able to track your payments.

 

 

Will I still receive calls and letters?

 

Although your creditors are still entitled to contact you directly, letters to you should be reduced, as we will be dealing with all payments for you.  Any correspondence you receive from your creditors whilst in an Debt Solutions 4U debt management plan should be sent to us to deal with.

 

 

How long will it take me to become debt free?

 

This depends how much debt you have and how much you can afford to pay into your plan each month.  If creditors freeze interest and charges for the duration of your plan, your debts will be paid off quicker.  If, during your plan your circumstances improve and you may pay higher monthly payments to us, your debts will be paid off sooner. 

 

 

Am I allowed to take on more credit?

 

Our debt management plan will make sure you have enough money to live on, so you shouldn't need to take out any more credit.   It can be considered fraudulent to take out credit that you know can't be repaid, so we ask our clients not to apply for more credit whilst in a debt management plan with us.

 

 

Is my credit rating affected?

 

Your credit file would be affected due to any missed or late payments. If you enter into a Debt Management plan and your creditors agree to freeze the interest then your credit file should not be affected. If you enter into a nominal program then your credit file is than likely to be affected.

 

 

Can I still be issued county court judgements?

 

As a debt management plan isn't legally binding, creditors could still take action against you.  Although if you are in a debt management plan with Debt Solutions 4U, this is less likely to happen.  If any of your creditors applied to the court for a CCJ whilst you are in our plan, we would do everything we could to help. 

 

 

Can I enter into a debt management plan if I already have a CCJ?

 

Yes.  You will be required to provide details of your CCJ during your online application.  CCJ payments will be given priority when Debt Solutions 4U distributes your payments.

 

What support do I get?

 

Debt Solutions 4U pride's itself on giving excellent support to clients. Throughout your Debt Solutions 4U arrangement you will have an online account so you keep in contact.  If your financial situation changes, you can update your details online and we will try and arrange a new plan for you. Of course our staff are always there to give support and answer any questions you may have if you would prefer to give us a call.

 

 

What happens to my secured debt?

 

Debt Solutions 4U will ensure you include your secured debt repayments in your income and expenditure, so your surplus income is calculated after all your secured debts have been accounted for.  Provided you keep up to date with your payments on your secured debts, you should not have anything to worry about. 

 

 

Am I at risk of losing my home?

 

As we take account of your secured loan and mortgage payments when calculating the surplus income you have available for your debt management plan, you should be able to continue to make payments to these creditors as per your original credit agreements, without struggling.  Provided you keep up to date with these payments, your home is not at risk.

 

 

How can I pay off my debts quicker?

 

If at any time during your debt management plan your financial situation improves, you can notify us by phone, email or logging into your online account and updating your income details and new higher payments can be agreed.  Increasing your payment to us means we have more to distribute among your creditors, thus reducing your debt quicker!

 

 

What if I can no longer afford the agreed payments?

 

If you can no longer afford to make the payments agreed at the beginning of you debt management plan, you should inform us as soon as possible (either by phone/email/writing to us or via your online account- where you can amend your details, including you income).  We can then write to your creditors notifying them of your change in circumstances and offer a new lower monthly payment.

 

 

What if I want to cancel my plan?

 

You can cancel your plan at any time but we ask that your provide notice so we can inform your creditors.  If you want to cancel the plan because you are experiencing further financial difficulties and can no longer afford the payments to Debt Solutions 4U, please let us know- we may be able to restructure your plan for you.  If you do cancel your plan, your creditors may resume interest and charges on your account.

 

 

What happens if I miss a payment?

 

Debt Solutions 4U keeps its costs to its customers low as we have streamlined our admin processes so that our day to day running of the company is efficient and cost effective; we pass on the savings we make to our customers.  If you miss a payment and do not get in contact to explain why/make a payment within the missed month then your creditors may take further action.

 

 

Have a look at how a debt management plan works at our debt management process page

Debt management process >>

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