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Debt Management Questions

1 Is a Debt Management Plan suitable for me? 2 Is it a loan? 3 How long will my debt management plan last? 4 Will interest and charges be frozen? 5 Is my home at risk? 6 Which debts are included? 7 Can I enter into a debt management plan if I already have a CCJ? 8 How much do 123 charge for this service? 9 What happens to my first few payments and how long will it take to arrange the agreements? 10 I might not be able to pay on time this month, how will it affect the plan? 11 Is it possible to suspend my plan with 123 Debt Solutions Ltd for an undetermined period? 12 I am experiencing some temporary problems, and cannot make the full monthly payment towards my debt management plan. Can you still help? 13 How would I cancel my Debt Management plan? (cooling off period) 14 When and how can I contact you? 15 How can I keep up-to-date with my DMP 16 What debts cannot be included in a DMP 17 How regularly will you review my situation should I enter into a DMP? 18 Who regulates organisations that administer debt management plans? 19 What if my creditors refuse to accept a repayment offer through a DMP 20 Why will my credit rating be affected if I enter into a DMP?

Answers

1 Is a Debt Management Plan suitable for me?

A Debt Management plan (DMP) may be a suitable solution for an individual who cannot afford to meet the minimum monthly contractual payments to their unsecured debts, but does have some disposable income that they can contribute to their unsecured creditors.

A DMP may be suitable for those who have tried to consolidate their debts with additional unsecured borrowing but have been unsuccessful in their application.

To be considered for a debt management plan, you must have at least 2 creditors and a total debt level of £1500 or more.

Take the first step by completing an Online Assessment with us.

2 Is it a loan?

No. A DMP is an informal arrangement whereby a licensed and authorised third-party administers a repayment plan on behalf of a debtor. There are no fixed contracts, and if the debtor wishes to resume payments to the creditors directly, they are well within their rights to do so.

3 How long will my debt management plan last?

The length of your debt management plan depends on your individual situation, such as your amount of unsecured debt and monthly surplus income once you have covered all essential living cost and bills. It may also depend if how quickly your creditors agree to freeze interest and charges and accept the reduced repayment offer. A DMP is flexible as the amount that you pay is dependent on how much you can afford.

4 Will interest and charges be frozen?

In the vast majority of cases, yes. Creditors are under no obligation to freeze interest and; we cannot guarantee to freeze interest and charges for the duration of your plan. However, due to our experience in the industry, and the relationships that we have developed with the major creditors, we are able to freeze interest and charges on nearly all accounts within 8-10 weeks of the plan commencing and have a success rate of over 90% at doing this.

5 Is my home at risk?

No. We only administer plans with unsecured debts that have no security against assets or property. Therefore, your home is not at risk if you continue to make the agreed payments into your DMP.

In many cases, we can help to prevent creditors applying for a charging order, and, even if a charging order has been secured, we can try and negotiate with your creditors to stop any further action.

6 Which debts are included?

A DMP will help you to make reduced payments to your unsecured creditors, including:

Personal loans (HP agreements cannot be included), Credit cards, Store cards, Catalogues, Overdrafts, Personal debts to businesses, Previous utility suppliers (Gas and Electric).

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

A CCJ will not prevent you from entering into a DMP. In many cases, we will be able to stop the CCJ from escalating to bailiff action, an attachment of earnings or a charging order. We have a specialist team to assist you in the handling of such further action.

8 How much do 123 charge for this service?

For any client who started a debt management plan after 1st January 2015, the following fee structure applies.

We charge an arrangement fee of up to 45% of your first six monthly payments. This covers the cost of setting up the debt management plan, including a draft proposal, dedicated account management team, creditor communications and preparation of the financial statement.

A fee of 17.5% (or a minimum of £30 for plans under £100 and a minimum of £35 for plans over £100) is retained from each further payment to cover the cost of running the plan. Our maximum monthly fee is £95. All debt management plans may be subject to an annual plan reset fee of up to £50. If you are a potential/existing client it is advisable that you read your terms & conditions thoroughly, or you can call us free from a landline on 0808 22 22 123.

Clients who started their debt management plan prior to 1st January 2015 may be subject to a different fee structure. Please consult your terms and conditions for confirmations and further information, or alternatively contact our offices and we will be able to assist you.

9 What happens to my first few payments and how long will it take to arrange the agreements?

Upon receipt of your first payment, we ask the creditors to confirm the outstanding balances so we can set the pro-rata amounts that each of your creditors will be offered. We will also begin sending payments to them minus your arrangement fee.

It may take a couple of months to set arrangements with all your creditors, and they will all receive revised offers once we have received your first 6 full payments into your plan. During this time, you may receive communication from your creditors letting you know whether they have agreed to the proposed payment plans or not.

Until there are agreements in place, you may continue to receive contact from your creditors; this is completely normal, so please don't worry.

10 I might not be able to pay on time this month, how will it affect the plan?

The affect on the plan is determined by how long you are looking to delay the payment. If this is likely to be less than a few working days, the likelihood is that we will be able to retain the agreements that we have established, as long as the problem with paying on time is only a one month temporary issue.

If the delay in payment is likely to be over a longer period, then we may struggle to retain the agreements with your creditors. We will do everything within our powers to ensure that the creditors are aware of your circumstances, and the reasons for the delay, however, it is at their discretion whether to continue to freeze interest or charges. In the majority of cases, the creditors understand temporary problems and if the account is back on track by the following month, damage can be minimised.

In all cases, communication is vital to the success of your plan. The earlier that you inform us regarding any potential problems, the sooner we can relay this information to your creditors.

11 Is it possible to suspend my plan with 123 Debt Solutions Ltd for an undetermined period?

We understand that an individual's circumstances can change for the worse without prior warning. We aim to keep every plan active for as long as possible, however, we can only achieve this if you have some significant amount to contribute towards your debts.

There are a number of options available to every client to try to resolve short term payment problems.

Firstly, we can reduce the plan for a maximum of one month. You will still be responsible for paying a management fee for the month in question, and in return, we will contact each of the creditors to ensure that they are aware that the problem is a temporary one, and that regular payment will resume in the following month.

We cannot reduce a plan for more than one month, as agreements will break if creditors do not receive any funds. In cases such as this, rather than continue to pay us a management fee, we will cancel the account until you can afford to pay a regular monthly payment towards the debts.

If you feel you are no longer able to afford payments into your debt management plan, please make us aware and we will carry out a full review of your financial situation and make you aware of any other solutions that may be available to you.

12 I am experiencing some temporary problems, and cannot make the full monthly payment towards my debt management plan. Can you still help?

For all active clients, we offer the possibility of entering into an "Emergency Plan" for a maximum period of one month. The purpose of an emergency plan is to ensure that each creditor in the plan receives at least a token payment from the client. The minimum payment that we can accept as part of an emergency plan needs to be sufficient to cover the regular monthly management fee, plus at least £1 per creditor. For example, if a client has five creditors in their debt management plan, and was previously paying £100 per month, with a management fee of £35. The minimum payment that we can accept as part of an emergency plan in this case would be £35.

It is worth bearing in mind that it is always beneficial to the plan to pay as much as possible, even if the full payment is unaffordable. We will always try to retain agreements that were previously set in the event that the client enters into an emergency plan, however, it is at the discretion of the creditors whether or not they are prepared to accept a reduced payment. It is possible that the creditors may start to add interest and/or charges onto the balance of the debt, however, we will try to ensure that any problems are minimised.

13 How would I cancel my Debt Management plan? (cooling off period)

You can cancel your debt management plan at any time as it is an informal arrangement. To do so, you need to send a written letter of cancellation to the organisation that is administering your plan. You may cancel your agreement without obligation any time within 14 days from the date we receive your signed documents. If you wish to cancel at any other point, please be aware that the fee due in the month of cancellation will still apply.

14 When and how can I contact you?

We are open seven days a week, from 9am to 9pm Monday to Thursday, 9am-8pm on a Friday and 10.30am to 5.00pm on a Saturday and Sunday. You can call us free from a landline on 0808 22 22 123, request a callback or write to us at 123 Debt Solutions Ltd, Liverpool, L7 9PG.

15 How can I keep up-to-date with my DMP

We will provide you with your own unique online portal allowing you to view all updates on your plan as well as creditor payments, balance updates and when creditors agree to the payment arrangements. In addition, you can request a call, ask us a question, and also review your own financial situation. We will also provide you with annual statements for your Debt Management plan.

16 What debts cannot be included in a DMP

The following debts cannot be included in a debt management plan: Council tax arrears, mortgage arrears, rent arrears, current utility usage, secured loans, secured finance, HMRC, High court fines, Magistrates fines, parking tickets, charging orders, personal debts, non-UK debts, TV license. Please note, this list is not exhaustive.

17 How regularly will you review my situation should I enter into a DMP?

We will review your financial situation at least once a year; however should we feel it necessary to review it more regularly, we will do so. Equally, we will review your situation whenever you make us aware that your circumstances have changed.

18 Who regulates organisations that administer debt management plans?

The Financial Conduct Authority (FCA) regulates organisations that administer debt management plans.

19 What if my creditors refuse to accept a repayment offer through a DMP

If a creditor refuses to accept a repayment offer, we will work with you to come to an agreed solution for the creditor, however they may still look to take further action. Should this be the case, have a fully trained team that can assist you.

20 Why will my credit rating be affected if I enter into a DMP?

Creditors will look to register defaults on your credit file as you are no longer making the contractually agreed payments.

Creditors may also record the fact that you are making repayments through a debt management plan on your credit file.