Still Confused

denise007

does anyone actually know if debt management companies actually right off any debts, after you've paid into them. also will i need to enter into a new agreement to pay off the rest of my debt after this first 5 year repayment period is over ?

misspoppy

Hi

You need to be clearer about the agreement you have made. Are you referring to an IVA? If so it is best that you only use one that doesn't charge ie speak to National debt helpline or CCCS. Others charge you and take that from the figure you pay them, the two i have mentioned do not charge and therefore all money paid goes directly to the organisations that you owe.

Have you signed an agreement?

Northernbird_2

I think you're confusing Debt Management Plans (DMPs) with IVAs.

Debt Management Companies (and always use CCCS or Payplan who don't charge a fee) negotiate with your creditors reduced payments that you then pay through them who then pass on the payments to your creditors. You then finish paying when the debt has been paid off (which can be many years down the road). It is not a legal arranagement and creditors don't have to agree (or stick) to it.

IVAs use Insolvency Practitioners (and often Debt Management Companies offer both services - DMPs and IVAs) who negotiate with your creditors an agreed monthly payment, which you would then pay for 5 years. At the end of the 5 years, whatever debt has not been re-paid is written off by the creditors. It is a legal arrangement, where at least 75% of your creditors have to agree to it, and if you fail to keep to the payment schedule, any of your creditors can then petition for bankruptcy.

Hope this helps. Go to CCCS or Payplan for the best info.

CLAPTON

there are two main ways of paying off your debts if you can't meet the contractual payments. (i'm excluding banruptcy here)


a. debt management programme DMP. Basically using CCCS, Payplan or doing it yourself (but dont use companies that charge fees), one aims to get your creditors to freeze interest and charges and agree a monthly fee. It takes as long as it takes. i.e if you owe £20,000 and you pay £200 a month and if they freeze interest and charges then it takes 100 months to clear the debt.
In practice, the debts are often sold off to other companies (DCAs) and one can often agree discounted full and final settlements with them.


b. and IVA . these are heavily advertised as writing off up to 75% of your debts and you making payments for 5 years.
Whilst this is sometimes possible, your creditors have to agree (there has to be a 75% by value of those that vote in favour) and you pay for five years (often they require a remortgage in year 4 to release equity in your home). Once agreed these are legally biinding and if you keep to the T&Cs you are free of debt after five years.


who are you dealing with ?

if you post a SOA we will be better able to advice how best to deal with your debts.

denise007

hi, thanks for replying. i am currently involved with a company called spectrum, over 15 months now.i pay £168 per month and this agreement lasts for 5 years, i owe just under £20,000. i pay £168 per month of which £29.30 is paid to spectrum for their services.

denise007

CLAPTON wrote: »

there are two main ways of paying off your debts if you can't meet the contractual payments. (i'm excluding banruptcy here)


a. debt management programme DMP. Basically using CCCS, Payplan or doing it yourself (but dont use companies that charge fees), one aims to get your creditors to freeze interest and charges and agree a monthly fee. It takes as long as it takes. i.e if you owe £20,000 and you pay £200 a month and if they freeze interest and charges then it takes 100 months to clear the debt.
In practice, the debts are often sold off to other companies (DCAs) and one can often agree discounted full and final settlements with them.


b. and IVA . these are heavily advertised as writing off up to 75% of your debts and you making payments for 5 years.
Whilst this is sometimes possible, your creditors have to agree (there has to be a 75% by value of those that vote in favour) and you pay for five years (often they require a remortgage in year 4 to release equity in your home). Once agreed these are legally biinding and if you keep to the T&Cs you are free of debt after five years.


who are you dealing with ?

if you post a SOA we will be better able to advice how best to deal with your debts.

hi, thanks for replying. i am currently involved with a company called spectrum, over 15 months now.i pay £168 per month and this agreement lasts for 5 years, i owe just under £20,000. i pay £168 per month of which £29.30 is paid to spectrum for their services.

Crown

Hi Denise,

I would seriously suggest that you look into cancelling your agreement with spectrum and contact either CCCS or Payplan that offer EXACTLY the same services but for free. that 29.30 could be coming off your debts instead of paying the wages of the guys at spectrum.

you would need to check your paperwork to see if there are any penalties for leaving but you are going to be paying approx 1750 pounds to spectrum over the 5 years when the same amount could have come off your debt.

denise007

Crown wrote: »

Hi Denise,

I would seriously suggest that you look into cancelling your agreement with spectrum and contact either CCCS or Payplan that offer EXACTLY the same services but for free. that 29.30 could be coming off your debts instead of paying the wages of the guys at spectrum.

you would need to check your paperwork to see if there are any penalties for leaving but you are going to be paying approx 1750 pounds to spectrum over the 5 years when the same amount could have come off your debt.

thanks for replying, i will check my paperwork tonight and see what it says, they did say that i will need to save half of my debt to be able to clear them off, but im having trouble saving at all, any suggestions ?

RAS

See this thread

http://forums.moneysavingexpert.com/showthread.html?t=294792

and have a look at these three reports.

http://www.bbc.co.uk/consumer/tv_and_radio/watchdog/reports/insurance_and_finance/insurance_20061031.shtml

http://www.abcmoney.co.uk/news/2120062652.htm

http://www.asa.org.uk/asa/adjudications/non_broadcast/Adjudication+Details.htm?Adjudication_id=42374

You need to ask them

Whether you are on a IVA or a DMP?

precisely how much of your IVA or DMP has gone to your creditors. it may be that nothing has?

Suggest you talk to CCCS or Payplan about your debts, and contact CAB regarding your current contract with Spectrum, taking the ASA adjudication with you.