What is a Debt Management Plan?

A Debt Management Plan is an agreement between you and your creditors, which is negotiated and maintained by your Debt Management Company.  Under the agreement, the Debt Management Company supervises all your debt repayments, and distributes these payments to your creditors. They will also act as an intermediary between you and the people you own money to over the course of the plan, providing relief to you from having to contact multiple creditors.

Will my creditors still chase me for payment when my plan has started?

Your creditors are allowed to contact you whilst you are in a Debt Management Plan, and you will still receive your regular statements. However, once your plan is set up and agreements in place, contact from creditors is usually greatly reduced.

How flexible is the Debt Management Plan?

A successful Debt Management Plan is dependent upon you making a regular payment. However, if your circumstances change during the plan, a review can be carried out free of charge, and new repayments negotiated with your creditors.

Will a Debt Management Plan affect my credit rating?

Yes, your credit rating can be affected. Credit ratings are recorded by agencies such as Equifax, Experian and Call Credit. Failure to maintain a contractual arrangement with any of your creditors will have an impact on these records, and lead to a default on your credit file. These defaults will remain on your account for a period of six years after it has been satisfied (i.e. after the debt is paid off), and may affect your ability to obtain credit.

Are there any alternatives to a Debt Management Plan?

You could arrange for all of your creditors to reschedule your debts, but this may be difficult if you have a lot of creditors. Some banks and building societies have debt counsellors and you could try speaking to them to find a suitable way forward.

If an Individual Voluntary Arrangement (IVA) is not suitable, then bankruptcy (which should be seen as the last resort) may be the most appropriate solution for you. Other solutions are available for particular circumstances including Debt Relief Orders (DRO) and Administration Orders.

Regardless of your situation specialist advice from Debt Free Direct is available to you find the most appropriate solution for you.

Can I make a payment online?

Yes, if you want to make an IVA payment to us online, you can do so here: Online IVA payment

You'll need your IVA reference number, which you can find on your documentation.

What is an Individual Voluntary Arrangement (IVA)?

An Individual Voluntary Arrangement is a legally binding contract between you and the people you owe money to (your creditors).

You pay an agreed, affordable monthly sum towards your unsecured debts over a set period, typically 5 or 6 years. This is divided up between your creditors, who accept the sum in settlement of the amount you owe them. For further information see What is an IVA?

I have an IVA. What changes do I need to tell you about?

If any changes to your circumstances might affect your ability to meet your obligations under the IVA, contact us immediately.

You should also tell us if you receive any unexpected large payments such as inheritances. These could affect your IVA and could be payable into the arrangement.

Please ensure that you notify us of any address or telephone number changes.

How will my IVA monthly contributions be taken?

You would normally use a standing order to make your monthly contributions to the IVA.

You can also make contributions by debit card by calling our Account Management Team on 0344 826 0625 and selecting Option 1.

You need to make sure that contributions are made on time and in accordance with the agreement. If you have any concerns regarding this please contact us immediately.

My IVA payment is due but my standing order hasn’t been set up. What should I do?

Only you can set up a standing order so it is important to act quickly. Please contact your bank to set up the standing order – we can provide a standing order mandate for this.

Above all, don’t spend the funds, you have committed to contributing to the IVA so it is vital to adhere to the terms and conditions. If time is against you don’t forget that you can make a debit card payment whilst your standing order is being processed.

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What is bankruptcy?

Bankruptcy is a legal process that can be started if you can’t afford to pay all of your debts. It can also be started by someone else if you owe them more than £750. Bankruptcy allows you to reduce overwhelming debt and make a fresh start. A “Trustee in Bankruptcy”, (the person appointed to deal with your assets) sells your assets and distributes the proceeds to people you owe money to, to recoup as much debt as possible.

After your bankruptcy ends, the people you owe money to can’t make further claims against you. However, bankruptcy brings with it certain implications. For example, if you rent your home your landlord is told and your employment may be at risk in some occupations and professions.

Do I lose everything in bankruptcy?

When you make yourself bankrupt, all of your assets automatically become the possession of your Trustee in Bankruptcy. He/she has the authority to dispose of them without your consent.

However, you are able to retain tools, books and vehicles that are considered essential for employment. You can also keep clothing, bedding, furniture and household equipment needed to satisfy the basic domestic needs of yourself and your family.

The assets which the Trustee in Bankruptcy can take are as follows:

  • Any interest you may have in property, even if it’s held in joint names with a spouse or partner
  • Any shares, bonds, endowments and savings policies
  • Any funds held in bank or building society accounts
  • High value assets such as motor vehicles and jewelry, although a suitable lower cost replacement can be provided instead
  • Lump sums from private and occupational pensions if they mature during the bankruptcy. The Trustee may also be entitled to subsequent pension payments for up to three years.

You can also face having to pay part of your monthly or weekly wage, either with your consent or through a court order. This order is based on you contributing any surplus income and will last for a maximum of three years from the date of bankruptcy.

If you acquire any asset during the term of your bankruptcy you have to advise your Trustee, who will release it for the benefit of people you owe money to. Example assets include:

  • Inheritances, including property, cash, investments and any other asset of value
  • A windfall from a win on the National lottery, football pools or bingo
  • Money received after the date of bankruptcy but before the date of discharge from your bankruptcy
Will other people know I’m bankrupt?

It is now unlikely that Bankruptcy Orders will be advertised in a newspaper in your local area. Details are placed on the Government’s publicly available Insolvency Service website.

Anyone who you have had a financial relationship with will be told of your bankruptcy, including banks and building societies, mortgage and secured loan companies, hire purchase companies, your landlord, people you owe money to and pension and insurance companies.

How does bankruptcy affect my bank account?

All of your bank accounts will be closed and any funds in them used by the Trustee to pay people you owe money to. If an account is in joint names with your spouse or partner then only half the funds can be taken. You’ll be allowed to open a new bank account with the authorisation of your Trustee.

Will my student loan be written off as part of bankruptcy?

If your student loan was taken out after 1st September 2004 then it can’t be written off. It will be treated as if the bankruptcy had never happened – if you are currently having payments taken directly from your salary then these will continue until the loan is repaid.

If you fall below the income threshold no payments will be made until your salary reaches the level where repayments automatically start. Note that interest will continue to accrue, as per your agreement with the Students Loan Company.

If your student loan was taken out before 1st September 2004, you can include the Student Loan Company as a creditor in your bankruptcy and your monthly payments to them should cease.

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Who are you regulated by?

The Institute of Chartered Accountants of England and Wales (ICAEW) regulate our Insolvency Practitioners.

What if I change my mind?

Please see our Terms of Business for full details on your right to cancel.

Please note that an IVA is a legally binding arrangement and cannot be cancelled once a meeting of creditors has been accepted. Failure to maintain payments towards your IVA could result in a termination of your IVA.

How will a Trust Deed affect my credit rating?

Your credit rating will be affected. Credit reference agencies such as Experian, Equifax and Call Credit maintain records of your credit accounts.

Failure to maintain contractual payments towards any debts will result in a default notice being made on your credit file. These notices will remain on your credit file for 6 years (unless the creditor agrees to remove them prior to this) and may affect your ability to obtain credit.

What if my Trust Deed fails?

If you fail to keep up repayments your Trust Deed may fail. As a result your assets may be at risk, and bankruptcy proceedings could start against you.

If your circumstances change you should contact your trustee immediately.

Is a secured loan or remortgage right for me?

This is down to individual choice, mortgage rates are usually lower and set up fees higher than those of loans because of the length of time involved and your home will be at risk with both a remortgage and secured loan if you cannot meet the repayments.

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Can I make a payment online?

Yes, if you want to make an IVA payment to us online, you can do so here: Online IVA payment

You'll need your IVA reference number, which you can find on your documentation.

Does PPI come off my IVA balance?

PPI is an asset of your Arrangement and must be paid into the IVA on top of the IVA contributions that have been agreed. You are obligated to pay back 100% of your debt and the IVA fees. So if the PPI that comes in means that you will pay back 100% of the debts plus fees (also includes EIF fees) then this may result in an early completion of the IVA. 

Does PPI come off my IVA balance?

PPI is an asset of your Arrangement and must be paid into the IVA on top of the IVA contributions that have been agreed. You are obligated to pay back 100% of your debt and the IVA fees. So if the PPI that comes in means that you will pay back 100% of the debts plus fees (also includes EIF fees) then this may result in an early completion of the IVA.

I need my certificate of completion

Until PPI has been completed (or the mass variation has been done) we cannot close the IVA and send out the certificate. We can look to send a conduct letter to state the IVA is closing successfully.

I have received a letter threatening doorstep collections

If you receive a letter of this kind or someone calls at your property, remember that you are fully protected by your IVA, simply hand over a copy of your Chairman’s Report.

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