i dont get it??????

jj151201

after once being in debt myself i offered my help to my relations on how to prioritise...budget etc they have turned my offer down in favour of one of these debt management companies, now what i don't understand is....this company is alleged to be able to pay off their £11k debt at £106pm for 3-4 yrs....in my working out the sums just don't add up...they tell me it is a government based scheme, but surely everyone would be borrowing ex-amount if they only had half to pay back???

am i missing the point? i have not questioned them further but on looking on the web it seems everyone is offering to clear 65-95% of your debt.......WHATS THE CATCH?????

thanks guys

from flabbergasted

CLAPTON

it sounds like an advert for a IVA (especially the bit about a 'government based scheme') but it wouldn't apply in the circumstances you describe.

It will probably turn out to be a DMP for which they will be charged.
however do tell them not to part wih any money upfront and to review the situation once they have seen and had time to assimilate the written proposal.

suggest they contact either CCCS or Payplan that both offer genuinely free debt advice.

jj151201

already asked them with regards the IVA and they said its not, they also said its free of charge!!!!!(i doubt that!!) is a DMP a debt management program? sorry have only just joined, and if it is a DMP what kind of charges are they faced with?

livinginhope

jj151201 wrote:

already asked them with regards the IVA and they said its not, they also said its free of charge!!!!!(i doubt that!!) is a DMP a debt management program? sorry have only just joined, and if it is a DMP what kind of charges are they faced with?

A DMP should be FREE of all charges! a DMP is NOT a government based scheme,an IVA is.
There are loads of companies out there who convince people they are not entering into an IVA,when in fact that's just what they're doing.
I have tried advising a family memeber about her massive debts (much bigger than mine) she has been 'brainwashed' by a company who is charging stupid amounts of fees,when she mentioned Payplan to them,they told her 'waste of time',because she thinks they know more than me and as they charge,they must be better,she is now losing evertything.
You can lead the horse to water,but you can't make it drink!

CLAPTON

yes a DMP is a debt management programme
do you know the name of the company .. people here may have some views on it.

basically what happens is the company works out what you can afford to pay based on you income and spending. (an SOA or I&E). they then prorata the amount you have spare to your debts and ask each of your creditors to accept reduced payments.
creditors will obviously be unhappy. depending upon the circumstances most will eventually agreee. they will generally default the debts and your credit record will be trashed for 6 years.
At this stage they do not reduce the debt only the debt monthly payment. interest and charges may or may not be stopped.

you make one payment to the DMP company and they then pay the creditors the reduced sum. the free companies do this for nothing (they are not for profit companies with independant funding) but commercial companies deduct their fee from the monthly amount. this means it will take even longer to pay off the debts.

in due course the debts will probably be sold to debt collection agencies ..at this stage it might be possible to make full &final offers to right off the debts ..however, this assumes you have sufficient funds available to do this.
However it all depends upon the person specific circumstances.

jj151201

apparently its a payplan scheme, i thought payplan was an IVA? are this company reputable and do they charge for using their service?
I'm still a little baffled how they can rid over half their debt with no strings attached??

cheers

lollujo

Payplan is not an IVA. As mentioned above, they work out what your 'spare' income is after all essential bills, and offer this to your creditors. The creditors then have the option to accept or decline the offer. Most will accept, but while we were with Payplan, we had a CCJ and 8 defaults registered against us by companies not happy with the offer made. Payplan do not charge a fee, they are funded by a group of lenders who see the advantage in getting their money back, no matter how slowly. They will also try to negotiate for a suspension of interest and late payment charges. My opinion of Payplan is they do valuable work, they are just a bit slow to respond to any queries you may have.

jj151201

thanks lollujo

my relations say that they are only paying off £106pm over 3-4 yrs =£3816-£5088 is the rest of the debt written off? or are they fibbing to the amount per month....i wonder??? they owe between £11 and £12k with a secured debt of £5000 sorry to ask all the questions but im really confused

CLAPTON

Payplan will offer free advice and depending upon the person specific circumstances they might recommend that carefully budgetting or a DMP or an IVA or bankruptcy is appropriate.

now, if they recommend a DMP Payplan will manage that for free

if they recommend a IVA their sister company can run it for you but at a cost (all IVAs cost money)

The reason why in an IVA creditors are willing to accept writing off 50% or more of the debts is that if they don't, they will get even less i.e. the person might go bankrupt.

jj151201

thanks clapton

im beginning to think its an IVA due to the debt being written off, they are over spending by about £400-500pm but without any debt they could have £700pm spare,so £106pm doesnt seem very much at all!
are there any long term affects with this as regards to future credit?

lollujo

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