What to do if?

My creditors say they haven't received payment from you?

If you are in informal debt solution client and we have received your monthly disposable income on the agreed date, your creditors will automatically receive payment from us each month. We will send you a statement listing each of your creditors and how much they have been paid. If a creditor tells you they have not been paid, you can refer back to this statement or if you are in any doubt please contact us.

A creditor telephones me repeatedly chasing payment?

Explain that Debt Free Me are acting on our behalf and will be making proposals for payment in due course. Get a name and telephone number from the creditor and contact us with it. We will then contact the creditor and update them on your case.

I need to open a new bank account?

You can open an account with any bank that you don't owe money to. You need to tell them that all you require is a basic bank account that you can pay money into and set up direct debits or standing orders for bill payments. You do not require an overdraft or chequebook or cheque card but do need a cash card for ATM cash withdrawals.

I get a letter from a solicitor or debt-collecting agent chasing an outstanding debt?

If we already have contact details for the solicitor or debt collecting agent you do not need to send us the letter. If it is from someone saying that they have had the debt passed to them to deal with then you need to send it to us as soon as possible.

If we tell you that we have contacted a creditor we will have evidence of that contact both in document form and our record file that we have for you on our database. Some creditors may say that they have not heard from us in order to put pressure on you to make a payment to them. Simply get a contact name and telephone number from the creditor and we will contact them to confirm when and how we have contacted them.

I get a letter from a creditor that wants to call and see me at my home or asks me to visit their offices?

You do not have to agree to this. Simply inform us who the creditor is and we will contact them on your behalf and explain what your intentions are.

A creditor threatens to send a bailiff to my house?

Usually bailiffs can only become involved if you have stopped making payments after a County Court Judgement has been issued. Some creditors will mention bailiffs as a scare tactic to get you to make payment. If you are not sure what to do, please contact us.

I get a letter from a solicitor or debt-collecting agent chasing an outstanding debt?

My creditors threaten to take me to court?

Creditors will only usually threaten court action if they have been unable to get any response from you regarding an outstanding debt. As a Debt Free Me client you can be sure that regular contact is maintained with your creditors informing them fully regarding what particular stage we have reached with your case and when they are likely to receive payment. This means that court action is unlikely.

I get a threatening letter from a creditor?

If we are already dealing with the particular creditor you do not need to send us the letter. However, if the content of the letter causes you concern, please do not hesitate in contacting us.

I have existing County Court Judgements registered against me?

You must continue to make payments as agreed with the court. We will make an allowance for any payments you make by including them in your regular expenditures. If you are a legal debt solution client entering into an I.V.A. or a Protected Trust Deed, once that arrangement is in place and not before, you will stop making payments. You will be told when this happens.

I receive a letter saying that one of my debts has been passed onto another company to deal with?

You will in due course receive correspondence from the company that the debt has been passed on to. This will usually be a third party debt collecting agent or the debt collecting division of a firm of solicitors. When this happens you need to send the correspondence to us as soon as possible so that we can contact them to inform them of your current circumstances.

I've forgotten to tell you about a creditor?

You need to inform us immediately if you have another creditor to add to the ones we already know about. Failure to disclose all creditors can jeopardise any agreement whether legal or informal that we make with your creditors.

My I.V.A./P.T.D. is rejected by creditors?

IVA’S are not easy to arrange and all care is taken to ensure this is the correct solution for your particular situation. If for some reason your IVA/PTD is rejected, we will inform you and with your permission we will look to find an alternative solution, this could be an informal arrangement (debt management plan).

We have outlined the advantages and disadvantages of an IVA (Individual voluntary arrangement). And if an informal arrangement is recommended we have listed some implications of entering into such informal arrangement.

Disadvantages of an Individual Voluntary Arrangement IVA

Where contributions from income are being made, IVA’s are generally expected to be for a period longer than that in bankruptcy, i.e. 5 years as opposed to 3 years. The 5-year period is often required by creditors as a bargain for allowing the Debtor to avoid the consequences of bankruptcy.
If the debtor (person who owes the money) owns a property & during the period of the IVA the property has equity available, then the creditor can insist that some of this equity be released to further help settle the debt. This usually happens in the third or fourth year of the IVA.
If the Debtor fails to comply with the terms of the arrangement his home and assets can still be at risk if they have not been specifically excluded from the proposals.
If the IVA fails as a consequence of the Debtor not meeting his obligations under it, it is likely that the Debtor will be made bankrupt at this time. There will be no opportunity for a Trustee in Bankruptcy to investigate the actions of the Debtor or possibility of hidden assets.
The client should have at least three unsecured creditors and unsecured debts of at least £15,0000 for an IVA to be a suitable option;
The costs of an IVA are relatively high and may have to be paid in advance.
Assets are at risk if the creditors do not agree to exclude them.
The client will be closely monitored by the supervisor during the period of the IVA and will have to report any changes of circumstances;
IVAs are a matter of public record and so future applications for credit could be affected. Your credit rating will be affected for 6 years, and not only the period of the IVA.

The advantages of an Individual Voluntary Arrangement IVA include:

The lack of stigma or publicity attached to bankruptcy;
If the client runs a company, it can continue to trade and provide income to fund the IVA;
An IVA can be drawn up to meet the client’s situation, so that assets such as the family home can be excluded so long as the creditors agree — eg, because overall they will be better off than in bankruptcy;
Creditors should receive higher payments than they would in a bankruptcy;
Unsecured creditors who voted against the IVA will still be bound by it.
The client is not subject to the restrictions imposed on bankruptcy and so can still be a company director and obtain credit for the business.
One reduced monthly payment to your creditors.
A court order will stop any legal action by your creditors
Telephone calls and letters from your creditors will stop
Interest and charges are stopped, so the spiral of debt is halted.
Fixed repayment method (normally 5 years) at the end of which all your debts are discharged.
All unsecured creditors to whom the IVA proposal is sent, are bound by the arrangement. Even if they do not agree to the proposal, providing 75% of your remaining creditors in value agree to the proposal.
Unlike bankruptcy, details of an IVA are not openly published, it is a confidential arrangement between you and your creditors. Employers and landlords are not informed.

Firstly, is a Debt Management Plan (DMP) suitable to me?

A debt management plan is a debt solution for anyone who has unsecured debts that they can’t afford to repay. A DMP requires you to have a surplus income each month (money left after you’ve paid all your priority debts & living costs such as household bills).

Advantages of an Informal arrangement. (DMP)

You only pay what you can afford based on the statement of affairs. (SOA)
You will no longer need to deal with your creditors alone we will be acting on your behalf in most dealings with them.
We will ask your creditors to freeze interest and charges, this stops the debt increasing.
You will pay only one monthly payment to debt free me who will pay your creditors on a pro-rota basis.
You will receive a monthly statement showing the payments sent.
You will remain in control of your assets i.e., property.
This will enable you to pay the debt back at what you can afford at present rather than your contractual agreement.

Disadvantages of an Informal arrangement. (DMP)

These plans are not legally binding so creditors do not have to agree to the repayment schedules. However, if the arrangement works well the creditor will be more than happy to co-operate.
Your creditors are under no obligation to accept your offer of reduced payments and if they do accept they are entitled to change there mind at anytime.
They can ask for a review of your situation which could cause your payments to increase.
They are not obligated to freeze interests and charges on your account.
They may freeze interest for a limited period of time or charge interest at a reduced rate.
It is possible that the total debt will increase.
It is likely that you would be required to pay your creditors in full over a number of years. It is possible that you will continue to pay them for some considerable time after which an IVA (Individual Voluntary Arrangement) would have been completed. It is also feasible that you will be required to pay greater contributions.
You will have no protection from the courts, and the creditors at anytime can decide to issue a judgement, bankruptcy petition or any other legal process in respect of there debt.

Is it a loan?

No, a debt management plan is exactly what it says it is a way to help manage your debts. We do this by offering a reduced payment to each of your creditors and then negotiate to freeze interest and charges.

How long will my Debt Management Plan (DMP) last?

The length of your DMP depends on your individual situation it also depends on your level of debt and the monthly deposable income available.

When creditors freeze interest and charges, the length of the DMP can be greatly reduced example, if you owe £15,000 and you can afford to pay £180 per month the DMP will last for just short of 7 years (83 months) this applies only if the payments are maintained each month and the creditors freeze interest for the length of the plan. Your DMP can be completed sooner if you circumstances improve and your payments are increased.

Will my creditors agree to my a payment.

Creditors don’t actually have to agree to the payments, but due to debt free me’s reputation in the credit industry; many creditors accept our offers as they know we work to realistic guidelines.

Will interest and charges be frozen?

Creditors are not obligated to freeze interest and charges but again debt free me has a reputation for realistic payments that the creditors are often more co-operative as they see that the debtor is making ever effort to clear there outstanding debts. The creditors will make there decision on freezing interest and charges when they have viewed the Statement Of Affairs (SOA) compiled by us.

Can my creditors still issue me with a County Court Judgement? (CCJ)

As an informal arrangement (DMP) isn’t legal binding creditors are still entitled to take action against you. We will complete all the relevant paperwork required if this happens, and the payment is likely to remain similar or if not the same to our original offer.

Will I get a default notice?

Your creditors are entitled to issue a default notice as in reality you are defaulting on your original credit agreement. This does not mean that the creditor is definitely going to take action. Note: If a default is issued this will stay on you credit file for 6 Years from the date of its issue.

How do I make the payments?

The payments will be collected by us usually by standing order and then paid to the creditors. Based on the information you provide we will then disburse your funds to the creditors or their appointed collectors.

Can I cancel my debt management plan when I like?

You are free to stop the debt management plan at anytime but we insist you put it in writing to debt free me so we can inform all of your creditors of your intentions. If you are stopping your DMP due to further financial problems please let us know and we may be able to restructure your plan. Note: If you cancel the DMP creditors may resume interest and charges.

Who informs the creditors?

We at Debt Free Me will contact your creditors to inform them of our intentions to enter into a DMP. We will explain your situation and present a statement of affairs (SOA) which will outline the offer of payment to them, this should mean that the amount of communication is eased and will cut the stress involved.

How is my credit rating affected?

The likely hood is that if you have financial problems your credit rating has already been affected. Our aim is to get interest and charges frozen to help clear your debt quicker. Your credit rating will be effected if your contractual payments are reduced or stopped.

Do creditors stop making calls and sending letters?

Creditors are still within there rights to contact you directly. Debt free me can not and will not guarantee that all phone calls and letters will cease. Our experience has shown us that once the informal arrangement (DMP) is gone through its due process that they should stop completely. Remember, any letters you receive from your creditors please forward them to us in the pre-paid envelopes provided so we can take immediate action if required.