If you are in a debt management plan but the company you are using to manage the plan does not seem to be giving a good service, it can be extremely frustrating. We consider what actions you can take to change the situation.
It is the case that many debt management companies do a very good job. However, there are occasions when you may not be satisfied with the service you are getting.
Perhaps interest and charges continue to be added by one or more of your creditors or despite making your payments on time each month, you are continuing to be hassled by your creditors with collection letters
You may also find that your debt management company seems not be passing your payments on to your creditors in a timely fashion which is resulting in late payments on your account and further charges being added.
DMP gives no guarantees
Problems like this can be very frustrating. However, the first thing you need to remember is that when using a debt management plan (DMP) there is no guarantee that interest and charges will be frozen. In addition your creditors do have the right to continue their collection action against you if they wish.
This is because a DMP is an informal gentlemans agreement with your creditors. There is no legal requirement for them to make any allowances for you.
Generally speaking if your DMP is being managed properly by your debt management company, your creditors will very often agree to minimising their ongoing collection telephone calls and letters and freeze extra interest and charges as they are aware that you are making every effort to repay your debt as quickly as possible.
Having said that however, if your creditors are not acting in this way and your debt management company is not responding to your requests for help this can be very frustrating.
There are a number of things you can consider doing in this situation:
Change your debt management company
If you feel that your debt management company is simply not doing a good job, there is no reason why you cannot switch to another provider.
Very often a different and particularly a smaller company will be able to give more time and attention to your case and really work for you to make sure your DMP is properly managed.
A good tip if you are considering changing to a new management company, there should be no cancellation fee. You are within your rights to simply stop your standing order payment and switch.
And make sure that the company you are moving to will not charge a fee for taking on your case. Many good debt management companies will provide this hand over service for free.
Manage the plan yourself
There is no reason why you cannot simply stop making your payments through a debt management company and pay your creditors directly yourself.
You should have received information from your debt management company about how much each creditor should receive each month and so by making the payments yourself, you will know the right amount has been paid on time.
Of course by managing your debt management plan yourself, you will need to manage multiple payments each month which can be time consuming.
Pay some of your debts off early
If you are finding that you are having difficulty with just one or two of your creditors, there is nothing to stop you trying to repay these in a faster time.
If you are able to save a little of your income each month or you come into some extra money, perhaps from a bonus or overtime, you could pay off one or more of your creditors early.
Some debt management companies will suggest that paying off one creditor early will cause problems with the others as they will feel that you have preferentially paid another creditor.
However, generally speaking making such a payment will cause very little issue and will in fact result in your remaining creditors getting a larger slice of your available monthly money meaning that their debts are paid faster as well.
Consider an IVA
A popular alternative solution to a debt management plan is an individual voluntary arrangement (IVA). An IVA is a more formal legally binding arrangement.
A significant advantage an IVA is that once it is agreed, your creditors must stop all further interest and late payment charges by law. In addition an IVA will generally last for 5 years after which and outstanding debt will be written off.
Over the past twelve months or so, creditors have relaxed the criteria they use for accepting IVAs. As such they are now often willing to accept arrangements with a return which is lower than twenty five pence in the pound.
As such, if you have been in your debt management plan for a year or so and were originally told that you did not meet the criteria for an IVA, it might well be a sensible idea to review this.
Change if you need to
A debt management plan can be an extremely good way of managing your debts. However, because it is not a legally binding agreement, your creditors are at liberty to continue taking action against you.
By using the right debt management company, this action can often be minimised.
However, if you feel that the company you are using is not working hard enough to achieve this on your behalf, it can be very frustrating. In these circumstances, it is worth reviewing your options and making a change.
If you are struggling with debt, visit www.beatmydebt.com
Our vibrant forum gives free access to industry experts and others who have suffered with debt problems.
Useful guides, calculators and information are also available designed to help you understand how to manage and resolve debt problems.
James Falla is a debt adviser from BeatMyDebt.com in the UK. For more quality and unbiased information on Debt Management Plans, visit our website at http://www.beatmydebt.com
It is the case that many debt management companies do a very good job. However, there are occasions when you may not be satisfied with the service you are getting.
Perhaps interest and charges continue to be added by one or more of your creditors or despite making your payments on time each month, you are continuing to be hassled by your creditors with collection letters
You may also find that your debt management company seems not be passing your payments on to your creditors in a timely fashion which is resulting in late payments on your account and further charges being added.
DMP gives no guarantees
Problems like this can be very frustrating. However, the first thing you need to remember is that when using a debt management plan (DMP) there is no guarantee that interest and charges will be frozen. In addition your creditors do have the right to continue their collection action against you if they wish.
This is because a DMP is an informal gentlemans agreement with your creditors. There is no legal requirement for them to make any allowances for you.
Generally speaking if your DMP is being managed properly by your debt management company, your creditors will very often agree to minimising their ongoing collection telephone calls and letters and freeze extra interest and charges as they are aware that you are making every effort to repay your debt as quickly as possible.
Having said that however, if your creditors are not acting in this way and your debt management company is not responding to your requests for help this can be very frustrating.
There are a number of things you can consider doing in this situation:
Change your debt management company
If you feel that your debt management company is simply not doing a good job, there is no reason why you cannot switch to another provider.
Very often a different and particularly a smaller company will be able to give more time and attention to your case and really work for you to make sure your DMP is properly managed.
A good tip if you are considering changing to a new management company, there should be no cancellation fee. You are within your rights to simply stop your standing order payment and switch.
And make sure that the company you are moving to will not charge a fee for taking on your case. Many good debt management companies will provide this hand over service for free.
Manage the plan yourself
There is no reason why you cannot simply stop making your payments through a debt management company and pay your creditors directly yourself.
You should have received information from your debt management company about how much each creditor should receive each month and so by making the payments yourself, you will know the right amount has been paid on time.
Of course by managing your debt management plan yourself, you will need to manage multiple payments each month which can be time consuming.
Pay some of your debts off early
If you are finding that you are having difficulty with just one or two of your creditors, there is nothing to stop you trying to repay these in a faster time.
If you are able to save a little of your income each month or you come into some extra money, perhaps from a bonus or overtime, you could pay off one or more of your creditors early.
Some debt management companies will suggest that paying off one creditor early will cause problems with the others as they will feel that you have preferentially paid another creditor.
However, generally speaking making such a payment will cause very little issue and will in fact result in your remaining creditors getting a larger slice of your available monthly money meaning that their debts are paid faster as well.
Consider an IVA
A popular alternative solution to a debt management plan is an individual voluntary arrangement (IVA). An IVA is a more formal legally binding arrangement.
A significant advantage an IVA is that once it is agreed, your creditors must stop all further interest and late payment charges by law. In addition an IVA will generally last for 5 years after which and outstanding debt will be written off.
Over the past twelve months or so, creditors have relaxed the criteria they use for accepting IVAs. As such they are now often willing to accept arrangements with a return which is lower than twenty five pence in the pound.
As such, if you have been in your debt management plan for a year or so and were originally told that you did not meet the criteria for an IVA, it might well be a sensible idea to review this.
Change if you need to
A debt management plan can be an extremely good way of managing your debts. However, because it is not a legally binding agreement, your creditors are at liberty to continue taking action against you.
By using the right debt management company, this action can often be minimised.
However, if you feel that the company you are using is not working hard enough to achieve this on your behalf, it can be very frustrating. In these circumstances, it is worth reviewing your options and making a change.
If you are struggling with debt, visit www.beatmydebt.com
Our vibrant forum gives free access to industry experts and others who have suffered with debt problems.
Useful guides, calculators and information are also available designed to help you understand how to manage and resolve debt problems.
James Falla is a debt adviser from BeatMyDebt.com in the UK. For more quality and unbiased information on Debt Management Plans, visit our website at http://www.beatmydebt.com
