StepChange #debtmyths

StepChange_James

The myth: Creditors are able to send bailiffs to collect debts

The reality: Only the courts have the authority to instruct bailiffs to visit you to collect consumer credit debts.

If someone came to your door calling about a debt then as long as you haven’t defaulted on a CCJ it’s likely that they’re a debt collector working for a creditor rather than a bailiff. These people don’t have any special powers at all.

If your debt really has been passed to bailiffs then you might want to read our "know your rights" article on bailiffs.

Former_StepChange_Rachel

The myth: A debt management plan is a legally binding agreement

The reality:

When you start a debt management plan (DMP) you will sign an agreement with certain terms and conditions. However, this isn’t legally binding. It’s an informal arrangement where we can help you manage your debts, and you’re free to change your mind at any time.

This means that you can cancel a DMP if your situation changes and a better solution becomes available.

Alice_in_Welfareland

StepChange_Rachel wrote: »

The myth: A debt management plan is a legally binding agreement

The reality:

When you start a debt management plan (DMP) you will sign an agreement with certain terms and conditions. However, this isn’t legally binding. It’s an informal arrangement where we can help you manage your debts, and you’re free to change your mind at any time.

This means that you can cancel a DMP if your situation changes and a better solution becomes available.

Can you explain what are the certain terms and conditions please?

Freshstart2012

Hi

Are there any plans for a more formal version of a DMP similar to the Scottish equivalent in the near future ?
One where creditors would be obliged to accept a fair agreed repayment for the entire length of The DMP whilst agreeing not to add further interest and charges.

StepChange_James

Alice_in_Welfareland wrote: »

Can you explain what are the certain terms and conditions please?

Hi Alice,

When our clients sign up to a DMP they sign a “DMP agreement “ which is something that basically says they’ll pay on time, not take out new credit and keep us informed of any changes to their finances.

There’s other things in there about getting permission to talk to creditors on their behalf and data protection type stuff.

Hope this answers your question.

Kind regards

James

StepChange_James

!!!!!!!!!!2012 wrote: »

Hi

Are there any plans for a more formal version of a DMP similar to the Scottish equivalent in the near future ?
One where creditors would be obliged to accept a fair agreed repayment for the entire length of The DMP whilst agreeing not to add further interest and charges.

Hello,

Not so far as we know. There is a law on the statute providing for non-profits to offer regulated DMPs (the Tribunals, Courts and Enforcement Act 2007) but the relevant section has never been implemented.

Kind regards

James

StepChange_James

The myth: You can’t get a new bank account after bankruptcy #debtmyths

The reality:
Many people are put off personal bankruptcy because they don’t want to go without bank account. It’s understandable in way, as most of us get our wages paid straight to bank accounts, pay our bills by direct debit and even send money to friends through internet banking.

Thankfully it’s not true that you can’t get a bank account after bankruptcy. There are no laws to say you can’t have a bank account after going bankrupt. Unfortunately many banks are unwilling to let undischarged bankrupts have accounts with them, but Barclays do! It’s a no-frills basic kind of account but does all the things a bank account needs to do.

StepChange_James

The myth: DMPs are the only help StepChange provide #debtmyths

The reality:
We’re best known for providing free debt management plans (DMPs) but this is far from the only thing we do. We give free and impartial advice about all the available debt solutions and help guide people all the way through their journey to becoming debt-free.

We do benefits checks, IVAs, DROs, bankruptcy support, equity release and mortgage advice amongst many other things. We’ve a blogpost that summarises some of the lesser known services we provide at StepChange Debt Charity.

Former_StepChange_Rachel

The myth:

I’ll have to get rid of my pet if I’m in debt.

The reality:

I spoke to one of our helpline advisors today who told me that she’d spoken to two people in the same afternoon who thought we’d tell them to get rid of their pets. While we pride ourselves on being able to help our clients reduce their expenditure to help their financial situation, we don’t want to see people having to part with their pets.

Trying to keep the costs of pets to a minimum is a good idea, so we might recommend experimenting with cheaper brands of food but we understand that pets are part of the family and getting rid of them would have to be a last resort.

For those of you struggling with pets and debts we’ve a blogpost about 10 money saving tips for pet owners.

StepChange_James

The myth:

You have to pay to see your credit report

The reality:

It's true that you have a right to a copy of your credit report if you pay a £2 fee to the credit reference agency. However, you can get one completely free from noddle.co.uk and they guarantee that their service will remain free for life.

The information provided from noddle comes from Call Credit; the other two major credit reference agencies, Experian and Equifax, have free credit report options but (and it's an important but) you've got to sign up to their premium monthly services and more vitally, remember to cancel within the trial period.

So only do this if you know you're organised enough to cancel before you start having to pay, otherwise it’d be cheaper in the long run to just pay the £2.

Read more about credit reports on our blog and Credit Ratings on the MSE website.