You are provided a cooling off period of fourteen days from the date the agreement was deemed to commence, during which you may cancel our agreement. Should you give notice to us that you would like a refund of a payment, or payments, (being other than the initial fee) then where no distributions have, at that time, been made by us, or are in the process or course of being made by us, in respect of that payment or payments this will be made in full (i.e. without deduction of our fee of 17.5%).
Will your credit rating be affected?
A record of your agreement with us will be held on your credit file for up to six years, & your ability to obtain credit in the future may be affected. Creditors are not obliged to accept reduced payments or to freeze interest and/or charges & fees & that, unless they do so, repaying the same debt over a longer period of time will increase the total amount to be repaid. Furthermore, recovery proceedings, including default notices & legal action (which may incur costs), can ensue & we cannot guarantee that any existing or threatening proceedings will be suspended or withdrawn.
If an IVA is not maintained it could lead to bankruptcy.
Fees related to Debt Management Plans are in two parts;
- An initial fee of your first two monthly payments
- An ongoing monthly fee of 17.5% of your monthly payments, subject to a minimum payment of £30 for disposable incomes of £0 – £100, and £35 for disposable incomes of £100.01 – £200
Your Initial fee will cover the work that goes into setting up a debt management plan. That involves:
- Reviewing your draft payment programme
- Figuring out the reduced repayment proposals
- Preparing your financial statement
- Talking to your creditors – renegotiating your monthly debt payments
Because this fee does not go towards your debts, you will go further into arrears for the two months. But do no\’t worry – you will start repaying your unsecured debts with your next payment.
In other words, your accounts will go into arrears – or further into arrears – because your first two monthly payments will not go to your creditors.
The monthly management fee covers the ongoing work involved in keeping your debt management plan running smoothly. This includes:
- Making the agreed payments to each of your creditors
- Answering phone calls and letters from your creditors
- Creating the detailed payment statement you will receive every quarter
- Carrying out a review of your circumstances every six months (or more often, if necessary).
It also pays for your PFMs services – all the way through, they will be there to answer your questions and help you solve any problems you may run into while your plan is in progress.
If it looks like you cannot afford your monthly payments any more, we can renegotiate with your creditors – they may agree to accept smaller payments if it looks like the best way of bringing your debt management plan to a successful conclusion.
To see an example of a Debt Management Plan, click the tab above.
Fees incurred for Individual Voluntary Arrangements are variable dependent upon the monthly contribution to the arrangement and the agreement that is reached with your creditors. Fees are made up of Nominees fees relating to assistance given to prepare your proposal and Supervisor fees which relate to the ongoing monitoring of your IVA. Fees are already included as part of your monthly contribution. The level of fees and the method of payment are both agreed by your creditors at the outset of the arrangement.
This is a fixed fee that will cover the work that goes into setting up your IVA:
- Creating your IVA proposal. This is the document which must be approved by enough of your creditors for your IVA to start. It defines the proposed terms of the IVA: how much you would pay, what each creditor would receive, etc.
- Setting up the creditors meeting. This is when your creditors will formally approve your IVA proposal, reject it, or request changes to it.
- Assessing any suggested changes. If any creditors have requested changes to your IVA proposal, your IP will advise you on whether you should accept those changes – or consider a different approach to your debt problems.
Your first few monthly payments (depending on what you have agreed with your creditors) will go towards paying the nominees fee before your creditors receive any money – so your accounts will go into arrears – or further into arrears – because your first two monthly payments will not go to your creditors.
The supervisors fees will cover the ongoing supervision and maintenance of your IVA all the way through – so for five years, with a typical IVA. That means:
- Your Relationship Manager will deal with any day-to-day issues that arise, ensuring your IVA runs smoothly.
- Your IP will carry out regular reviews of your IVA and address any more serious issues that come up – if, for instance, your financial situation worsens, and you need your IP to arrange an IVA variation (a legally binding change to the terms of your IVA, designed to help you bring the IVA to a successful conclusion).
After the nominees fee has been paid, a percentage of each monthly payment will be taken as supervisors fees, as detailed in your IVA proposal.
Note: Keeping up with your monthly payments in an IVA is vital – if you fail to, your IVA may fail, leaving you liable for the remaining balance and any costs already incurred. Having said that, IVAs do provide an element of flexibility: you may, for example, be allowed to take a small break from your payments if you come up against unexpected costs (such as essential home repairs).
Our IVAs are provided by our sister company, The Debt People who are a licensed Insolvency Practitioners.
To see an example of an IVA, click the tab above.
Trust Deed Fees
Throughout your Trust Deed (which will probably last for 3 years), you will pay a flat fee every month.
- The size of your monthly payment will depend on the value of your assets and on how much you can afford to pay per month once you have accounted for all your essential expenditure (rent/mortgage, food costs, heating and lighting, and so on).
- The size of your monthly fee will be determined before your Trust Deed even starts, when your IP draws up your Trust Deed proposal. This is the document which details the proposed terms of your Trust Deed – unless a certain number of your creditors object to the terms, your Trust Deed will become protected by law.
Your monthly payments will be stored in a creditors pot – once the flat fee has been deducted from this pot, your creditors will receive their payment. (The timing of this deduction will vary from case to case.)
The fee will cover the costs involved in setting up your Trust Deed. It will also pay for the ongoing supervision and maintenance of your Trust Deed right up to the day it finishes:
- You will have a Relationship Manager overseeing the day-to-day running of your Trust Deed, as well as providing help and advice and tackling any issues that may come up.
- And your IP will be there to help if necessary. For example: if your income drops (or your essential costs rise) and this means you can no longer afford your payments, your IP may be able to arrange a Trust Deed variation (a legally binding change to the terms that takes your new circumstances into account).
Note: It is essential that you make your monthly payments to your Trust Deed, or it could fail – in which case you would be liable for the remaining balance and any costs already incurred.
However, you may be permitted a small break from your payments if, for example, you are facing short-term problems (such as dealing with unexpected costs) that significantly reduce your disposable income.
Our Trust Deeds are provided by Gregory Pennington Ltd.
To see an example of a Trust Deed, click the tab above.
Debt Management Example
Mary is a single mother from Manchester with a two year old daughter. She works 16 hours a week in a shop and claims benefits. She built up credit card debt whilst she was pregnant and once the baby was born on necessities.
Before her Debt Management Plan
Mary owed money to 3 lenders for credit cards, see the figures below:
- NatWest – £4,550 with a minimum payment of £136.50
- Lloyds TSB – £2,130 with a minimum payment of £63.90
- Barclays – £890 with a minimum payment of £26.70
Her total debt was £7,570, she was trying to pay a minimum of £227.10 per month and even at this rate it would take her around 14 years to clear her cards.
Unfortunately, she was regularly unable to afford to pay the minimum meaning that she missed payments and was charged for this, at up to £30 a time, this was increasing her debt each month rather than allowing her to reduce it.
During her Debt Management Plan
After contacting us, we assessed her disposable income (DI) at £150 per month, this is what she pays each month into the plan, she is able to afford this as it is based on her circumstances, not what she owes.
- NatWest is paid £69.00 based on 60% of total debt
- Lloyds is paid £32.20 based on 28% of total debt
- Barclays is paid £13.80 based on 12% of total debt
- Fees come to £35
Additionally, as we were able to freeze the interest and charges with all three lenders, the amounts that are paid are paid directly off what she owes. In this case we were also able to reduce the term to 5 years 6 months.
At this point, we must point out again that an IVA is very much an individual arrangement and that no two are the same. This is just an example aimed to help you understand how they work.
There are two kinds of fee involved in an IVA – the Nominees fee and the Supervisors fees. Here is an example of the fees and payments on a typical clients IVA:
|Typical monthly repayments (60 months)||£300|
|Total paid by borrower (including fees)||£18,000|
|Total unsecured debt written off on completion||£13,000 (42%)|
Example based on a typical client, with approx. £31,000 of unsecured debts who completes a 5-year IVA and has no equity in any property.
As a formal insolvency procedure, an IVA is a legally binding agreement with your unsecured creditors and requires an Insolvency Practitioner (known as an IP).
An IP is a qualified professional with the experience to handle insolvency cases. They will be responsible for ensuring your IVA is fair to both you and your creditors all the way through.
Trust Deed Example
Throughout your Trust Deed (which will probably last for 3 years), you will pay a flat fee every month. Here is an example of the fees and payments on a typical clients Trust Deed:
|Total repaid by individual||£7,200|
|Total unsecured debt written off at completion||£15,800 (69%)|
|Typical monthly payments (x36 months)||£200|
|Fee element included in monthly payment (x36 months)||£110|
Example based on a typical Trust Deed client, with approx. £23,000 of unsecured debts who completes a 3-year Trust Deed and has no equity in any property. Fees shown do not include VAT.
The fee will be taken out of your monthly payments – it will not affect the amount you actually pay every month.
Calls from a BT land line are free, however, calls from non BT land lines may vary. Calls from mobiles will be charged, as such it may be cheaper to dial 0161 927 4789 from a mobile phone.
To arrange a FREE callback, please complete the form on the right of the page below the navigation.