Debt Management Plans | FAQs

Do you lend me money?
No. We do not make loans to you. The payment plan we advise you to take on is a solution that helps you to spread your repayments as a monthly expense that you will be able to afford. When you make payments into the plan we pay your creditors.

What if I have County Court Judgments (CCJs) against me?
CCJs do not bar you from making use of the plan. Payments you are making against current CCJs can be incorporated into the plan. To be certain we must know what your existing situation is when we carry out a initial discussion with you.

Does it matter whether I rent my property or own it?
It makes no difference at all.You may even be living with your parents. The plan is available for everyone.

Do I have to be in full time work?
No, but to take out a debt management plan you should have a surplus of income after deducting the money you need to live on each month.

Does a debt management plan cover all debts?
No, a debt repayment plan will only cover unsecured debts and arrears. Secured debts such as a loan against a car, a mortgage or a second mortgage, cannot be included.

Will the repayment plan prevent my creditors taking further action?
This cannot be guaranteed but if this happens we will help you by explaining to your creditors your circumstances and try to ensure that any repayments that are required are within your ability to pay.

Say my creditors continue to pursue me for payments?
In the short term your creditors will continue to take action to recover the money owed to them. Do not ignore them. Deal with them politely and inform them that you have appointed Debt Solutions to act on your behalf and forward all demand letters to us so we can deal with them on your behalf.

How long does the plan last?
Now that you will be making reduced payments against your debts it may take more time to clear your debts. We will provide you with an estimate of the time you will be on the plan during our initial consultations and of the costs. If you think that your circumstances will change within a foreseeable time scale it may be a better option to consider a debt management programme rather than, say, an IVA (Individual Voluntary Arrangement) which commits you to a 5-year payment programme. You may also prefer a debt management programme initially but still retain the option to propose an IVA at any time if your circumstances change or you feel you are not making any progress.

What if my circumstances change?
A Debt Management plan is an informal arrangement so it is easy to change it if your financial circumstances get better, or worse. We shall undertake periodic reviews in any case.

Can I cancel the plan?
Yes at any time. If you decide the debt management plan is unsuitable you have the right to cancel the agreement

How do you safeguard my money until it is distributed to my creditors?
All monies we collect from clients to distribute to creditors are held in a client account.

What do you charge me for this service?
We do not receive funds from Government nor commissions from lenders so, like the majority of debt management companies, we charge a fee. Our fees are disclosed up front so that you can compare us to other companies and then make an informed decision. Debt Solutions charges an initial set up fee (usually your first payment) and retain a fixed fee of 15% of each monthly payment to help with the administration costs of maintaining your debt management plan and liaising with your creditors. An estimate of the total cost of your plan will be given to you before we take your instructions. This will enable you to make an informed choice on the best way forward. We have no hidden charges or small print in our terms of business. Our fees are generally lower than other Debt Management Companies.

Who tells my creditors?
Debt Solutions will write to your creditors, with a copy of your letter of authority, advising them that we have been retained to carry out a review of your finances and asking for details of your account and what action they are taking, or thinking of taking. This will alert your lenders to the fact that you are trying to deal responsibly with your debt problem. However, if your bank is a creditor we will not write to your bank until you have told us that you have opened an account elsewhere.

How much can I afford per month?
Debt Solutions will produce a Financial Statement which will show how much you can afford to pay to your creditors from your disposable income and, assuming interest is suspended or frozen, how long it will take you to clear your debts.

Is my credit rating affected?
Almost certainly, yes. Some lenders have a policy of automatically issuing a Default Notice as soon as you miss a payment or they are notified of your difficulties or of the appointment of a third party. This will affect your chances of obtaining further credit and may incur further costs added to your debts. Debt management information may also affect your credit rating but if you are currently in arrears creditors may have already passed such information to the credit reference agencies in any case.

What if my account has been passed to debt collectors?
Many lenders are not geared up to dealing with long-term debt and they may refer or 'sell' your account to their debt recovery agents. This is often a more preferable arrangement because these agents have a better understanding of the practical side of debt management and they may be able to agree an arrangement that the lender cannot.

Who submits my proposal?
Once you have agreed the proposal with us we will send a copy of the Financial Statement to your creditors. We shall also explain how you got into difficulty, what you have done to resolve it and how you propose to repay your debts from your available surplus income. We shall advise your creditors of the dates on which payments will be made, which we shall agree with you in line with your pay date. We shall ask your creditors to freeze or reduce interest charged to the account so that the repayments you make will reduce the capital balance and pay off the debt sooner.

Will my creditors agree with my proposals?
Not all lenders will agree to your proposal nor may they agree to suspend interest and, if this unhelpful attitude prevails, you will find your repayment term extended and the debt increases. This could also result in charges and additional costs being added to your account. However, whilst we cannot guarantee a favourable outcome, we shall do our best to negotiate with your creditors so that they can appreciate your difficulties and understand how you are doing your best to resolve them. Lenders will always reserve the right to continue with or re-instate legal action but in many cases the proposal and payment plan is often more acceptable to lenders and their agents than going to court. You will, of course, lose the right to continue using the borrowing facility of the lenders you are dealing with and will be expected to return or destroy the cards in your possession.

How do I pay my debt management plan?
Once we have agreed the proposal with you, you simply make one payment per month to Debt Solutions (Standing Orders are preferred) and we will undertake to pay the proposed pro-rata payment to all your creditors within 5 days of receipt of your cleared funds.

What happens if I fail to make payments to the debt management plan?
If you do not maintain payments at the agreed level and on the agreed dates your creditors are likely to withdraw their support for the plan and may commence legal action.

Can I pay off my debts with a reduced lump sum?
Most creditors are unwilling to accept a lump sum settlement of less than the owed amount in the early stages. However, it is often common for creditors or their agents to offer reduced settlement figures when you have demonstrated your commitment to repay your debts after a period of time. We can help you with this negotiation.