Case Notes is your first newsletter from free debt advice provider PayPlan, that will keep you up to date with the latest news from within the Money Advice Sector and provide useful information for you and your clients.
In the first edition, we introduce your new PayPlan contact and update you on a range of topics including IVA’s and pensions, debt solutions for the self-employed and advice on how to help your impacted clients move from a fee charging Debt Management Plan (DMP) to a free DMP.
There’s a new contact for all your PayPlan queries.
Sarah McNeice has joined the PayPlan team following ten years working within the Citizens Advice network as a money advice caseworker. She went on to manage teams of advisers working on a variety of debt contracts including EDF Energy and The Money Advice Service. Sarah has also helped to provide workshops and training on the provision of free debt solutions.
She is pleased to be working within the Citizens Advice network again.
“As part of my new role, I am delighted to be working in partnership with the local Citizens Advice offices across the UK. During the past 12 months I have already met with some great staff and volunteers who are keen to utilise PayPlan’s services to support their client’s needs. Over the next few months, I look forward to making contact with many more of you and working together to help client’s implement solutions to manage their debts.”
Advice Sector Partnership Manager
Telephone: 01476 518178
Mobile: 07773 221184
Impacted Client Support – helping consumers move from a Fee Charging DMP to Free DMP
Many of you will be aware that the FCA are currently making decisions about which Debt Management firms should receive full authorisation. It is estimated that there are over 400K consumers in a Debt Management Plan (DMP) and these decisions could leave many without a DMP provider going forward.
The largest firm to exit the market to date has been PDHL where 13,000 clients were impacted, all having to find a new provider or try and deal with multiple creditors independently, a very scary proposition through no fault of their own. Feedback that we have received from creditors suggests that even now, several months after closure, 50% of PDHL clients are yet to resume payments or positively engage.
It is clear from the PDHL fallout that consumers need to be engaged earlier in the exit process and given swift direct access to free debt advice. By working with exiting firms PayPlan have devised a pro-active ‘rescue service’ that prevents clients ever becoming orphaned and in many cases delivers a smooth transition from a fee charging plan to free PayPlan DMP.
How does it work?
- The exiting firm works with PayPlan for an agreed period of time (typically 3 months) BEFORE their permissions lapse
- During that period the firm calls all of their clients informing them that they can no longer represent them and offer a hotkey referral over to PayPlan
- PayPlan receive the referral and the client progresses through our advice process arriving at the appropriate solution
- This gives the client ample time to set up a new arrangement prior to the firm closing which means no payments are missed to creditors
What do the results look like?
We have recently completed a rescue of Ashley Park and Express Debt (circa 2,300 clients).
- 83% of clients agreed to be referred to PayPlan
- 90% of those agreed to complete a full assessment
- 73% of those assessments resulted in a DMP outcome (client moving from fee to free)
- On average we achieved a 45% surplus uplift in DMP payments meaning the client will now become debt free quicker
We are delighted to be able to rescue these clients and hope to complete more rescue exercises in the coming months.
Have you got a self-employed client? We can help.
When it comes to being in debt, self-employed people have specific worries.
Supplier relationships, cash flow and business reputations are just some of the areas that can be put at risk.
Every year PayPlan helps thousands of self-employed clients to keep their businesses running with a range of debt solutions all aimed at helping them deal with their unaffordable personal debts.
At PayPlan, self-employed people have access to:
- A full range of debt solutions and personalised debt advice.
- Access to a specialist case officer
- 20 year’s experience helping people to resolve the business and reputational risks surrounding their personal debt.
Just refer your self-employed client to PayPlan and we will conduct an initial assessment and begin to help them take control of their business and personal debts right away.
If you’d like some more information or training to help self-employed people struggling with debt, contact Sarah or our business support team on 01476 518178 or email email@example.com.
A Client Case Study
We helped a self-employed newsagent who owed over £60,000 to several different loan, credit card and store card companies. He lived with his wife and two young children in their jointly owned mortgaged property. He was worried that in the event of bankruptcy, he would not be able to trade as his shop lease contained a clause which would be terminated in the event of bankruptcy which would mean he could not trade. He was also anxious to protect this property. He owed money to two of his key suppliers – if they stopped supplying, it would also affect his ability to trade.
We helped the client to compile a 12-month cash flow for his business.We achieved this by meeting him face-to-face to discuss his income and by examining his bank statements and accounts. After the client’s business expenditure and personal living costs, he could afford to make a monthly payment of £250 to his debts.
We agreed with the suppliers for the arrears to be included in the IVA so they would receive a return on their debt, while the suppliers would still continue to supply in future, providing he paid cash on delivery. This allowed his business to continue to trade.
We set up and completed an IVA for the client, which allowed him to continue trading and retain his lease.
IVAS and pensions
Entering into any kind of debt solution can be quite daunting and the Individual Voluntary Arrangement (IVA) is no exception.
From queries about eligibility and how long it lasts to worries about how being in an arrangement will affect a partner, we are always on hand to help address any concerns.
But one of the most common queries we often come across is what will happen if you reach pensionable age during an IVA.
Although a person’s state pension won’t be affected by entering into an IVA, their personal pension payments may be.
We spoke to our Insolvency Practitioner Nick Payne to find out more:
“If a client wants to draw down a pension lump sum to offer creditors in an IVA, whether that is a pure full and final IVA or a lump sum followed by monthly contributions, then they are able to do so. However the Supervisor/IP cannot force a client to draw down a pension to pay creditors. During an IVA, if a client actually receives a pension lump sum or monthly income from a pension, then we apply the annual review clause. This states that the client should increase their monthly contribution into the IVA by 50 percent of any increase in their surplus as shown on their Income and Expenditure.”