Frequently asked debt management questions

1. How much will I have to pay into my debt management programme?

Firstly it would be very difficult to put anybody on a single set monthly payment for the entire term of a debt management programme, your disposable income is determined based on your income & expenditure both of which are variable. If your income increases, or decreases it will reflect how much you can afford per month to pay to your creditors, likewise with your expenditure. Simply put, you have to pay to your debts each month what you can afford once you have paid for your essential living cost’s, rent/mortgage, fuel; food, travel and so on. Minimum Payments for a debt management programme start from £70 per month

2. Will explanation be given about the end of the programme?

 A debt management programme will last until the debt is paid back in full. A request to the creditor may be made to send you a notice of satisfaction, which can then be forwarded onto the credit reference agencies thus satisfying the debt in full on your credit file. Provided you have completed the debt management programme the second payment which you made initially should be returned to you, or used as the last payment on the programme. Support and advice is given to the client as and when requested.

2. How will I be ensured that I am properly advised?

All options are discussed on the first consultation, and your file is monitored by your own case worker. Things change in the options that are available to you from year to year, if a better solution becomes available at anytime based on changes in law, or terms & conditions of different products, these options will be discussed with you by your case worker on your quarterly, or six monthly review. At all times we propose unbiased advice to suit you.

3. How will I know my debts are paid properly?

When Southern Tree have contacted your creditors and received a confirmed balance on each of your accounts, we will be able to make offers to your creditors on a prorate bases, this simply means the creditor you owe the most get’s the highest proportion of your monthly payment, and the creditor you owe the least get’s the least. Statements are sent out to you every quarter showing what has been paid to each creditor; also your creditors will provide you with statements showing payments received. Southern Tree also has an online database, when your debt plan is running your case worker will supply you with a user name, and password, you will be able to login to our website and view payment’s you have made to Southern tree. You will be able to view, when the payment arrived, when the payment was sent out to your creditors, the payment/cheque reference number, and whether or not the creditor has banked the payment, you will also be able to check balances of each of your debt’s, and update your financial statement i.e. provide Southern Tree details of any changes in your circumstances.

4. Will this affect adversely my credit rating?

Your credit rating being affected is a necessary part of the process from your creditor’s point of view, if you are struggling to maintain payment’s to your creditors, or are missing payment’s to them, then obtaining more credit or attempting to obtain more is absolute madness. Creditors need to protect themselves from borrowing to people that can’t afford to pay them back

5. Will my creditors/lenders definitely accept your proposed debt management plan?

Creditors as a rule will always except a reasonable offer, if Southern Tree send a payment to your creditors they have to bank the payment against your account, if you are expecting your creditors to accept a reduced payment and you carry on using their credit facilities problems will arise, creditors will be less likely to freeze interest, and stop charges if you are not being honest and upfront with them.

6. Is this just a loan of another type?

This solution is not a loan, the total sum of your debt will still stand, and still be in your name, it will however be restructured to a more manageable monthly payment, and all reviews; negotiations, and administrative roles will be performed by Southern Tree.

8. Prior to acceptance, will I be credit checked?

No credit checks will be performed on you, as you are not borrowing any money.

9. Can I take up these plans if I already have CCJs against me?

If you already have a ccj it will not prevent you from getting a debt plan put in place; however it is essential that you disclose this information upon your first consultation.

10. Is there any difference myself being a homeowner or tenant?

There are no differences based on accommodation, if debt help is needed it will always be made available.

11. Will that be acceptable if I am not a full time employee?

Employment or lack of, will not stop you from going onto our debt management programme, the only thing that will stop you from going on our debt management programme is qualifying for a more viable solution, or not being able to afford the £70 minimum monthly payment.

12. Should information be passed on to my partner?

If your debt’s are in your own name only, your partner need not know, it would be essential to inform Southern Tree on your first consultations, if we are not to speak to anybody else about your financial circumstances,

13. Will every company I owe money to will be dealt by you?

Southern Tree will only deal with your unsecured creditors, if you are up to date with your utilities providers gas/water/electric then there is no need for you to put them on a debt plan, if you are in arrears with suppliers and the debt has been passed on to debt collectors then these could be added.

14. What difference is there between a secured and unsecured debt?

With a secured debt you have a liability a secured debt would usually be secured against your property such as a house or car, failure to maintain payment to a secured loan may result in you losing your property. Unsecured debts have no liability, nothing to be taken away from you if you fail to maintain the payments.

15. Will the creditors always accept reduced payment offers?

If your creditors don’t accept the first offer they will still bank the payment, default the debt, and pass the debt onto a debt collector ( a debt collector is not a bailiff a bailiff is court appointed) the debt collector will accept the payment on behalf of the creditor provided the offer is reasonable and accurate.

16. My credit ratings will be affected by this plan?

Most likely your credit rating is already affected, if it is not yet, chances are it will be if you are struggling to maintain your payments, and have a decent standard of living, and quality of life.

17. Will a Default Notice be served to me?

 Almost definitely you will receive a default notice, however we have found your creditors like to carry on charging interest against your account for as long as possible, if a default is served it is more likely your creditors will reduce, or freeze your interest earlier.

 18. Will the plan stop my creditors to take further recovery action?

 If your creditors wish to take further action they are fully entitled to, knowing what happens when a creditor takes action is essential. The first step of legal action is a default notice, this is registered against your credit file to prevent you from taking out further credit, next the creditor may pass the debt onto a debt collector, to collect the debt for them, and this is done through correspondence, and telephone calls. If your creditor decides to take the next step you would receive a blue county court claim form, which you fill out with your income & expenditure and an offer of payment, at this time you would also attach an N9a form and send it back to the creditor, they will read and decide if they wish to pursue a ccj (county court judgment) if they do you will receive a second set of blue court forms again these need filling in with an N245 for (variation order) and forwarded onto the court, the court decide if the offer of payment is appropriate, and a ccj is registered against you, normally at the amount offered, as long as this payment is met no bailiff action will go ahead, your creditor may then apply for a charging order (if you’re a home owner), this secures the debt against a house, the offer of the payment through the ccj is still in place and is accepted by the creditor, if you sell the property or re-mortgage the charge against the property is paid out as a higher priority than the homeowner. If you are on a debt management plan, all of the above would be dealt with for you.

19. What if my creditors continue to pursue me for payments?

If your creditors persist in calls requesting payment, firstly request the creditor ask your debt management company for any information they need, as your debt management company will normally have all the answers they need. if it is something that the debt management company are not aware of, answer the creditors questions, but if the creditor is simply phoning to demand money, or worse demand money with menace such as; if you don’t give me £100 today we are going to ....... Anything after this sentence is demanding money with menace and under section 40 of the administration of justice act is against the law. You would be within your right to phone the police, and fines are given out to creditors that do this.

20. What will be the estimated time of the plan to get over?

An estimated time frame is sent out with paperwork based on figures supplied by you, the more you pay into the debt plan, the shorter the time frame, the less you pay the longer, if you come into money whilst on a debt plan, and your creditors have defaulted and passed to collections, you can contact the creditors directly and ask if they are able to offer you a full & final settlement, whereby you pay an amount, and the creditor wipes off an amount of your debt, again shortening your time frame.

21. What if there is any circumstantial change?

This is an informal arrangement, and anything can be changed at any point, if you wish to cancel your plan at anytime you are able to do so. A debt management company are there to relieve the pressure of your debt administration, and at all times are working on behalf of the client.

22. What am I supposed to do if my bank says that they are not ready to deal with you and will take me to court if I use you?

Legally you can appoint a debt management company to represent you regards your debts, if a creditors were to threaten to take you to court if you used a debt management company, they would find themselves in court. When a debt management company sends a payment to a creditor, the creditors must bank the payment against the clients account, they are not allowed to refuse a payment physically, if they want to say verbally they are not accepting the offer that’s fine, but they must accept the payment.

23. Why my bank says that I have not written to them, but you say I have.

Some creditors like to take advantage of a debtor’s ignorance of what the creditor can and cannot do, or can and cannot say, this usually happens when you have an over enthusiastic collector, who’s only interest is getting money out of you, on top of the amount that has been worked out, that you can afford. If you sit on the phone, and let them make you feel negative about your debt management company, and undermine your decision making skills, they will do so gladly, it is what they are paid to do.

24. My bank has told they will send a bailiff to collect their money, can they do this?

 A bailiff is court appointed and only turns up on your door step if you have a ccj registered against you and have not paid it, bailiffs normally deal predominantly with parking fines, court fines, and council tax arrears. More likely is your creditor have said they are sending round a debt collector to your door, whom you can ask to leave and do not have the right to levy your goods.

25. Can I have with me one of my credit cards just for the sake of an emergency and not count this debt or credit card as part of a debt consolidation programme?

At no point should you priorities one creditor above another, they can find out if you have a credit card and are making full contractual payments towards it, Using a debt management plan to administer your debts can be used as a learning experience, learn to save for anything you need, and learn to live within your means, if you can’t afford your monthly payments on a debt management plan, then you haven’t told the advisor the truth regards your expenditure, or your debt management company are squeezing you, so they can get a higher management fee.

26. If my mind changes, will I be charged for withdrawing from the plan?

If you cancel your management programme within seven day of making the first payment, you will receive a full refund. If you are with a company that use your first payment as a deposit to be used as your last payment at the end of your plan, you may lose that deposit, but your debt management company will not be able to charge you for a loss of their management fee that you would have paid them had you have stayed on their debt management plan.

27. Explain about your charges for this service?

As a business just like any other, we will take the costs of setting up your debt service, out of your initial payment. After this, a charge of 17.625% is deducted from your monthly payment subject to a minimum payment of twenty five pounds; this will cover the running costs of your debt plan, and will not be noticed as it will come straight out of your disposable monthly payment to your creditors.

28. Fees collection - how will it be done ?

When your payment comes into the debt companies’ account, it is allocated against the clients file, the management fee is taken from the amount, and the payments to each of your creditors is raised, and sent out.

29. Am I allowed to cancel my plan at any time?

Cancelation of the plan is allowed at anytime; all that is asked is that two weeks written notice is given in advance. 30. Will I be forced to pay any charges if I cancel my plan? No extra payments will be asked of you, if you wish to cancel your plan.