It is common where a couple both have debts for a interlocking IVAs to be proposed. The couple may think of this as being a joint IVA but legally it is two separate IVA agreements with a single budget - income and expenditure - and a single monthly payment being made. That may work well, but it's important to look at each person as an individual as well. There is no reason why both partners … [Read more...]
You may prefer to look at Debt Camel's Guide to DMPs. That has links to the most important articles, covering DMP advantages and disadvantages, the different ways you can set one up, things that can happen in a DMP and how to decide if one is the right option for you.
DMPs can be useful if you have a temporary financial problem for a few months or a year or two, or as a long term way of clearing you debts, but you need to be wary of DMPs that will go on for too long.
A reader has asked how Full & Final settlements (F&Fs) would affect her credit rating which is currently looking good as her debts were all defaulted and have dropped off her credit record. A full and final settlement happens when the creditors agrees to accept an amount which is less that the total owed to settle a debt, and agrees that the debtor will not be pursued for the remainder. … [Read more...]
Every debt adviser wants their clients to get out of debt and then stay out of debt. But there is very little evidence about how long people stay debt-free after clearing their debts, through debt management or insolvency. So CAP's Freedom Report, published this week, is very interesting reading. DMPs and DROs were the most frequently used debt solutions for CAP clients in 2015, who had an … [Read more...]
The FCA says that over a hundred debt management firms who applied for authorisation have been refused or have withdrawn their application. In September 2016, Debt Clever became one of these firms. Some firms that are closing are looking for ways to continue to make money from their clients. My previous article, Why the FCA should ban the Compass debt advice model, has some examples. This … [Read more...]
A few readers have asked recently about long term debt payment arrangements. What information do they have to give to a debt collector? Can they can be asked to pay more? etc. Let's look at three different cases: an arrangement with a creditor; what happens if you use a DMP firm; and what if the payment is to a CCJ. Arrangement with a creditor Mr A asks: I have had an arrangement … [Read more...]
Ms F asked: "I have been in debt management for five years after my marriage breakdown. After an inheritance, I want to pay off my DMP as it will carry on for years. I could pay in full but my house needs some urgent work and my car is on its last legs. I asked about my credit score if I offer a partial settlement and was told this would show as partially settled on credit score file. Will I … [Read more...]
A reader, let's call him Mr B, asked: If you can more or less repay the minimum payments on your debts, but the minimum payments are 75% interest and the debt level is sizeable, as a rule of thumb, should you be looking at a DMP (or other debt solution route) or keep those minimum payments going while looking to improve your pay/outgoings scenario so as to pay more to the debts each … [Read more...]
My article on How to ask for a refund of payday loan interest looks at what to do if you had payday loans you couldn't repay without borrowing again. It applies if you have repaid your loans already or if you are still repaying them. But if you still have payday loans, what do you do about this month's repayments? You can't put in a complaint and then carry on borrowing! Payday loans keep … [Read more...]
A reader said she was scared about starting a Debt Management Plan (DMP). Her worries were that her husband's credit rating would be affected and that she would get lots of phone calls from creditors. A DMP is supposed to help with your debt problems, not increase them, so I thought it would be useful to look at the common concerns people have before they start DMPs. I am assuming here you are … [Read more...]
The Council for Mortgage Lenders(CML) has recently provided an update on how the stock of existing interest only mortgages is changing. In 2012 lenders increased their efforts to make contact with the holders of interest only (IO) mortgage, aiming to ensure that as many borrowers as possible can repay the mortgage at the end of the term. So now in 2106 we can see whether this is working. How much … [Read more...]