There are numerous Companies advertising in newspapers and on the internet offering debt management services. This is where the Debtor makes a monthly payment to a Company who will negotiate a repayment plan on their behalf. Whilst the companies that run these plans are regulated by the Financial Conduct Authority, the debt management plan itself has no basis in law and, therefore, it is not enforceable in law. The debt management company will attempt to negotiate an agreement with your creditors at a level that you can afford. However, before you enter into such an agreement you need to find out whether or not the interest on your debt is frozen, and whether you are still having to repay the full amount of the debt including interest.
The position in debt management is to be contrasted with that of an Individual Voluntary Arrangement (IVA) where interest is frozen on unsecured debt and in many cases a substantial part of the debt will be written off. IVAs generally last for one to five years so you can see an end to your financial problems. Finally, an IVA is a statutory process backed by law. If 75% by value of creditors accept it then this will bind the 25% that may dissent. There is no statutory basis for debt management plans and if a creditor decides not to take part in the scheme, or perhaps changes its mind during the course of the plan, there is nothing in law that can be done to stop them. Creditors are free to continue to pursue you directly when in a debt management plan.
At Lines Henry we give you the facts and let you decide what is best for you.Before you enter into a debt management plan ask the following questions:-
- Will interest still be charged on my debts?
- How long will it take for my debts to be repaid?
- Are my creditors writing off any of my debts?
- Will all my creditors agree to it?
Finding the right financial advice when things have gone downhill for you financially can be difficult.
At Lines Henry we will discuss the options available to you. The important thing is that you are taking control of your financial position. To do that you need impartial professional advice.
Call Lines Henry on free phone 0800 012 6649 for free debt advice before you make any decision regarding debt management