Sterling Green - Helping you get back in control of your finances
Debt Management FAQs
Q: Will I be taking out a new loan to clear my other debts?
A: No. A Debt Management Plan is a way of helping you make affordable payments to your existing creditors without taking on an extra loan. Settling debts with a loan is called debt consolidation.
Q: How does the plan pay off my debts without me taking out a new loan?
A: Our fully trained advisors will asses your income and outgoings based on the information you provide to us, we will then agree a single affordable monthly payment. From this payment we will distribute an amount to each creditor on a "pro-rata" basis. We will monitor your situation and advise you accordingly, reviewing your circumstances on a regular basis to ensure your payments are relevant to you and your creditors.
Q: Will you be dealing with every company I owe money to?
A: No. Some of your debts may be regarded as “priority” debts due to serious consequences if payments are not made. An example is your mortgage or utility bills. These will be taken into consideration when calculating what amount is available to distribute to your other creditors and it is very important that you continue to pay these in full yourself. Priority debts are those such as a mortgage or secured loan or HP on a car, where repossession could arise from non payment.
Q: Will my creditors/lenders definitely accept your proposed plan?
A: Creditors and lenders do not have to accept our proposals, but most are willing to accept them if we can prove it is beneficial and agreeable to both parties. Please note that there is no guarantee that existing or threatened proceedings will be suspended or withdrawn. Your creditors may also continue to issue default notices and add additional costs to your debt. You can rest assured that we will do all we can to ensure your creditors understand the difficulties you are in, to ensure the best possible outcome.
Q: Will I have to pay for longer, due to the reduced payments involved?
A: This is possible; however, the payments will be affordable every month. In addition, every effort will be made to encourage your creditors to freeze and reduce interest and other charges to ensure your debt reduces as quickly as possible. Should your circumstances improve, your plan can be amended to speed up repayment of the debts. Please note that if your creditors refuse to freeze interest, paying the same debt over a longer period of time will increase the total amount to be paid. Most lenders will after a period of time accept a reduced full and final settlement.
Q: What happens if I fail to make a payment?
A: Your creditors are likely to withdraw their support of the plan and may commence court proceedings. However, if you have good reason for failure to pay and advise us before the due date, we will do all in our power to persuade your creditors to be patient.
Q: How will I keep up to date with progress?
A: We will send you a monthly statement showing what money has been received from you and how this has been distributed. You should also continue to receive statements directly from your creditors.
Q: Can I, or should I, deal with my creditors myself while in the plan?
A: You can if you wish; however, most people prefer to leave that to us as it is part of the service we provide. Either way, you should keep us informed of all contact made between you and your creditors, including forwarding copies of all correspondence from your creditors. Please do not ignore your creditor letters, forward them to us as soon as possible. If you do speak to your creditors then you must us know what was said.
Q: Will agreeing to the plan affect my credit rating?
A: Your credit rating may already be affected if you have been having difficulties making payments to your creditors. In addition, any of your creditors may issue a default notice due to the fact you have not maintained the original agreement with them. Please also note that your first payment is retained as part of our fees and that this will initially put your accounts into arrears or further into arrears. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term. Please note that credit reference agencies will retain details for 6 years after full payment of the debt has been made.
Q: What does a Debt Management Plan cost?
A: Your first two and a half payments are retained by us for setting up your Debt Management Plan and are therefore not paid to your creditors, which means that your account will go into arrears. There is also a monthly management fee of 15% of your monthly payments subject to a minimum of £25
Q: What do I pay the fees for?
A: You are paying for a professional, personal service and employing our skill, expertise and experience of dealing in the finance industry. This ultimately provides you with peace of mind safe in the knowledge that your creditors are being paid regularly with and an amount that you can afford and they find acceptable.
Q: Will I be charged if I change my mind?
A: We will provide you with a 7 day “cooling off” period from the date you receive our Terms and Conditions or, if earlier, from the date your first payment is received. If you decide not to continue with the plan within the first 7 days, we will refund your initial fee.
Q: Should I stop all of my direct debits and standing orders now?
A: No. Please do not cancel any payment arrangements to your creditors until you have made your first payment to us and been accepted to the plan.