Why pay fees for a debt management plan? See how much we could save you
A fee charging debt management company is a firm that will charge you for debt advice and debt service. They usually take the first two months’ payments into your plan as upfront costs followed by 15% of your monthly payment plus VAT. The New Protocol launched in February 2013 will mean that the up front fees will be taken over six months. See Debt Management Protocol
There are some good fee charging firms operating in the debt industry and if you are happy with your firm then fine. However there are some shockers out there and we have the following guide to help you spot them, see our 7 point guide to spotting a dodgy debt advice website!
If you are thinking of starting a debt management plan or wish to transfer to a 'non' fee debt management plan and not pay fees then see how much we can save you by using the slide bars on our unique fee saving calculator above.
Page last updated Wednesday, 10 April 2013
Changes in the way debts can be enforced, affecting all consumers with unsecured debts and who are house owners, have quietly slipped in under the radar.
From the 1st October 2012 an unsecured creditor such as credit or store card, personal loan, payday loan or even a catalogue company can now apply for a charging order on a debtor’s assets, usually the home, even in cases where the debtor is making the agreed payment under a County Court Judgement (CCJ).
The old method of applying for a charging order
Prior to October, creditors could only apply to secure a charging order on unsecured debts if they first issued a default notice, and would then need to apply for a CCJ and have to wait until the borrower missed a payment under the CCJ before they could apply to get the charging order.
Now, to apply for a charging order, all the creditor has to do is successfully secure a CCJ on the debt and at the same time submit an application for the charging order whereby they can then secure the debt on the house.
Cash-poor but asset-rich
Many creditors see this change in the law as closing a loophole that previously allowed a debtor who was ‘cash-poor’ in terms of income but ‘asset-rich’ in terms of owning a property to escape getting away with just offering small monthly payments to pay off large debts and then selling off their assets with not having any legal obligation to use any surplus proceeds of that sale to pay off any judgement debts.
Providing payments are being met through the instalment arrangement under the CCJ then there is no risk of the creditor being allowed to apply for an order for sale of the home. However, miss a payment and you are at risk of having what you thought was an unsecured credit card debt, being secured on your home, which could then lead to its forced sale. You have been warned.
How to avoid a charging order
If you are struggling to meet your debt commitments then it is imperative that you get free debt advice sooner rather than later.
One way to avoid a charging order is to include the creditor in your Individual Voluntary Arrangement, IVA, or Trust Deed if suitable, and once it has been approved then that creditor will be unable to apply to the court for a CCJ or charging order as they will be legally bound by the IVA.
So, it is essential that any consumer struggling to make their debt commitments seeks professional and free debt advice, with free debt solutions to get the best way to manage their debts and avoid any unnecessary charges on their home.
Where can I get free debt advice and debt solutions with no fees?
You can either telephone DebtWizard on 0800 197 8433 or click on the following link where you will get access to organisations that also include the debt charities.
Take me to free debt advice agencies.
Further reading, Mike's blog -
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