Your views and questions.

Moderators: TalbotWoods, JaneClack

By Craig1983
#472505 Good Day Folks,

I am looking into the possibility of a Debt Management Plan, and wondered if someone could give me a timeline of events, starting from today if I contacted Payplan.

I have already signed my contract for my new bank account, so it isn't the same as any of my creditors.

My next 2 pay dates are Tuesday 25th August & Friday 25th September.

All bills are up to date, with the next batch due from Tuesday 25th August. I have 9 creditors in total.

If everything went to plan, and Payplan agreed that a DMP was the way forward, am I right in thinking that we are looking at roughly a 6 week period of this all being set up?

Would that mean then that my August pay wouldn't be touched by any creditor bills, and the start of the DMP would likely be going from my September pay check going forward?

Any advise would be appreciated.
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By JaneClack
#472506 Hello Craig

This is how it works. It should be the same with any debt management company but I am afraid it does not always happen which is why I am glad you are contacting a non fee-charging debt management company!

You would telephone the Helpline and if it is suitable a financial assessment will be booked as soon as possible. It could be the same day if you have all the information needed to hand.

Once the financial assessment is completed you will be presented with all the options that would be appropriate for you. You then make the decision and if a debt management plan is a suitable option you would be passed through to Payplan Client Services. You will be sent a copy of the financial statement and your list of creditors to confirm this is OK and also a letter of authority without which we cannot contact your creditors. There is also a copy of the terms and conditions of entering a debt management plan and a list of banks for those people who would need to open a safe bank account. You will also receive a telephone call from a case officer who will introduce themselves and who will answer any questions you may have.

Once the letter of authority is received and you are happy with the budget - and let us know of any changes in circumstances - then the creditors will all be sent a proof of debt letter which asks them to confirm the balances on the account. Once all the balances are confirmed - and you as a client can help with that by forwarding any correspondence received - and you have made your first payment (which is distributed), then offers will be sent to your creditors. They should confirm whether the offer is accepted or rejected but whether they accept or not, they will accept your payment which is made on a pro rata basis.

At this point your debt management plan has begun - a lot depends on how many creditors there are and how quickly we can get the balances confirmed which is beyond the control of the debt management company and how a client can help by providing up to date balances. We advise not missing payments but making a payment of as much as you can afford until your first payment into the debt management plan. We do not encourage people to miss payments completely. It can take six weeks but I have seen them set in place much quicker than that. I have also seen them take longer to set up as payments have not been made.

A debt management plan is an informal arrangement between a client and his or her creditors where the debt management company acts as the distributing intermediary. As such it is a gentleman's agreement and all parties are dependent on the goodwill of the creditors as to whether interest and charges will be frozen or futher action taken.

As circumstances can change throughout a plan, you should always let your case officers know how things are progressing as sometimes another solution will become more appropriate as time goes by.

I hope that is helpful.
By Amanda@GFS
#472532 Hey Craig,
Debt management plans( DMP) works great in some cases but you need to know the loopholes and as suggested by Sarah the process is nearly the same but you should be aware of the way things work else you may end up in the wrong foot. Do not opt for any Debt Management plans that are costly as it may affect you the other way. However while choosing the free debt management services make sure that you can understand their advice and can get your finances on the right track.
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By JaneClack
#472533 Thank you for your post, Amanda. The process is exactly as I described here in the UK - it may be different in California from where you are posting and although we do not allow advertising and never recommend any company that charge any fees on debt management plans on the forum, we would love to see any updates you may have in our world wide section.