Frequently asked questions about creditors relating to debt management plans.
Are all creditors included in a DMP? Will credit still be charged by creditors one a debt management plan has been set up? We have the answers to all these questions here, and if you have your own question, you can ask the ClearDebt Community at the bottom of this page.
FACTS - Important information
about how a Debt Management Plan works
BENEFITS - Advantages of entering into a Debt Management Plan
BE AWARE - Important issues that may affect your relationship with your creditors, pending or potential court action and of course, your credit rating
Creditors and lenders do not have to accept any Debt Management proposal put to them, but most are willing to if we show it is beneficial to both parties. There is no guarantee existing or threatened proceedings against you will be suspended or withdrawn. Creditors may also continue to issue default notices and add additional costs to your debt. Please be assured that we will try our best to discuss your situation with your creditors and encourage them to freeze interest and charges on your debt.
A creditor cannot refuse payments from a debt management company and then take you to court for non-payment. Some credit companies may prefer not to deal with a Debt Management Company so they can apply more pressure on you, however, you have a legal right to allow anyone you wish to deal with your finances.
No. Some of your debts may be priority debts due to serious consequences if payments are not made. Examples are your mortgage or utility bills. These will not be included in the DMP but will be taken into consideration when calculating the amount available for you to pay living costs before we distribute the remainder to your other lenders. This will enable you to continue to pay these in full yourself.
Yes. Once the Debt Management Plan is in place, we will liase directly with your creditors on your behalf. There is a period of time between speaking with our advisors and receiving our information/application pack, and the time that you make your first payment to us. During that period, although we will not be officially representing you, we do encourage you, for ease of mind, to immediately direct your creditors to us and explain you are in the process of setting up a Debt Management Plan. As soon as you have made your first payment to us, we will inform your creditors that we have taken over the management of sorting out your financial affairs and that they should then be liasing directly with our team. At any stage of this process, we are always on hand to offer you support and advice.
Creditors do not have to accept any offer of repayment below the contracted minimum. However, usually they are prepared to accept reduced repayment offers where we are able to demonstrate that the offer is reasonable and that you are committed to repay your debts through our debt management service.
If this happens inform them that we are dealing with your
affairs and contact us immediately. We will then issue them a
further copy of correspondence by post and email.
Employees of a creditor's collections unit have one job, to try to get you to pay money. Some will do this any way they can. Once they acknowledge we are dealing with the account, they know they have to negotiate through us. Unfortunately, because of this, some collection units may tell you they have not heard from us to give them more leverage and encourage you to pay their fees. If they make you think we are not doing our job properly, they will try to convince you to cancel the agreement with us and then use any tactics they like to get the money from you.
We cannot guarantee that your creditors will not take further action, including court action, to recover debts. However, if they do, we will help you respond so that any repayment that is required is within your ability to repay.
Although we can't guarantee your creditors will cease charging interest on your debt in most cases they do acknowledge the fact that you've chosen to enter into a Debt Management Plan and agree to freeze any further interest. Due the long standing relationship we have with most creditors, we are able to do this for our clients, but are unable to guarantee this for you. Most creditors understand that by freezing your debt, you are able to pay them back over a quicker period of time.
Whilst you are setting up your Debt Management Plan and completing all the necessary paperwork it's highly likely that your creditors will continue to take action to recover your debts. It's vital you do not ignore these. You must continue to deal with calls politely, inform creditors you have appointed our company to act on your behalf and forward any letters to us so we can deal with them on your behalf.
No. Bailiffs can only be instructed and sent by a County Court or Sheriffs office. This means a bailiff can only call if you default on a court order. A debt collector may try to trick you by saying, "if you don't pay this bill, we could send a bailiff round" this is not true unless you've defaulted on an earlier court order. For more information on bailiffs, please read our guide here.