Debt Management Plan and Receipt of Life Insurance Payment

TroubleWithTribbles

My 90 year old Mum over committed on store cards and has had a debt management plan in place for a number of years.  She has just had a review which I helped her with.  However, since the previous review, my father passed away and Mum is in receipt of the funds from a life policy.  When bank statements have to be submitted to the DMP provider, it will become apparent to them that there is a larger balance in her account than previously.  Can the DMP provider demand that the money is paid to them to reduce the balance of the DNP?

kimwp

Who is the dmp provider?

TroubleWithTribbles

Spectrum Finance

TroubleWithTribbles

Sorry.  That's the name on the Standing Order.  The most recent letter was headed MoneyPlus Advice, Manchester.

Rob5342

TroubleWithTribbles said:

Sorry.  That's the name on the Standing Order.  The most recent letter was headed MoneyPlus Advice, Manchester.

Is she aware of their fees? At the top of the page it says "Free debt advice" in big letters but hidden away at the very bottom in small text is a link to a page that says::

As the setup and initial period of your Debt Management Plan are the busiest, we charge an Arrangement Fee of £399 to cover this initial cost.

Our Monthly Management Fee for new customers will be £46 or 49% of your monthly payment (whichever is lowest).

That is potentially almost £1000 in fees in the first year followed by over £500 a year in fees for the following years. If she has been on it for three years then thats £2055 spent on their fees instead of going towards paying her debts off.  

There is absolutely no need to pay fees for a debt management plan. Both Stepchange and PayPlan are completely free and provide the same service, there is no benefit in paying fees to Moneyplus Advice. I strongly suggest that she uses one of those instead, or even manages it herself. Stepchange never asked me.for.any bank statements, just a payslip as proof of income, and you can phone and talk to them for advice. 

Grumpelstiltskin

As above get her  to cancel her payments to these vultures NOW.

Nothing terrible is going to happen and she has been preyed upon by these people.

You will need to find out who she owes money to and how much she owes then she can either go through one of the charities or you on her behalf can sort it out yourself.

Keep_pedalling

Has your mother made a lasting power of attorney for finance? If not you should persuade her to do so asap. 

backinbusiness

^^  What Grumpelstiltskin said - cancel immediately and do a bit of reading on here.

Good luck!  BiB x 

sourcrates

OK, let me just clarify your mothers position here, Unfortunatly she has signed up to a fee charging debt management company, who are charging her for administration of her DMP arrangement.

You should not pay for a DMP, they are a free service from any of the debt charities, or you can set one up yourself, never pay a fee for this.

The good news is a DMP is an informal arrangement, the debt management company has no power or right to ask for, or take anything whatsoever.

As the other posters have made clear, this agreement should be terminated immediately, and the direct debt to this company cancelled.

If you can help Mum to make sense of what she owes, it should be possible to settle directly with the creditors, funds allowing, or if the debts are too much, ask them to write them off due to her age, vulnerability, and circumstances.

You should also consider making a formal complaint to this DMC for peddling a fee charging debt solution to a vulnerable person, try and reclaim what has been paid in fees.

TroubleWithTribbles

Thanks for your replies and advice. I only really became aware of this since my father passed away last September and have been more involved with her finances and sorting all the things that need sorting since my father's death.  I will certainly look at alternatives which will probably require a lot of reading of these pages as to the best way forward.

kimwp

TroubleWithTribbles said:

Thanks for your replies and advice. I only really became aware of this since my father passed away last September and have been more involved with her finances and sorting all the things that need sorting since my father's death.  I will certainly look at alternatives which will probably require a lot of reading of these pages as to the best way forward.

If you want help with the best way forward (aside from cancelling with the fee-paying company), best just to do a new post here with your mother's statement of affairs (link in my signature), don't feel you need to go trawling for the information.