Debt Management FAQs
- Do creditors always accept reduced payment offers?
- Will my creditors continue to pursue me for payments?
- Will I receive a Default Notice?
- Will the plan affect my credit rating?
- How much does it cost?
- What does the management fee pay for?
- Can I take out a plan if I already have CCJs against me?
- Can I take out a plan if I am a homeowner?
- Will a Debt Management Plan cover all of my debts?
- What are "Priority Debts"?
- Do I have to have a job to qualify for a Debt Management Plan?
- Do I have to tell my partner?
1. Do creditors always accept reduced payment offers?
No not always, but when you make a reduced offer of payment to your creditors they are obliged to take into account your current circumstances and your priority debts (mortgage or rent, Council Tax, utility bills) when deciding what to do. They are required under their own Codes of Conduct to treat you fairly so as long as your repayment offer is reasonable and fair you stand a very good chance of having the offer accepted and interest or charges stopped.
Bridgewood have very good and close working relationships with the creditor community, which can be of great benefit in ensuring that the solution we propose to your creditors on your behalf is responded to quickly and in an appropriate manner
2. Will my creditors continue to pursue me for payments?
Once you give us your authority to act we will inform your creditors that we are working on your behalf. At that point many of them will start to communicate directly with us, taking a lot of pressure off you. Under their own codes of conduct, creditors are required to give you at least 30 days grace in order to get the Debt Management Plan approved and set up.
3. Will I receive a Default Notice?
By offering reduced repayments you will be in default on your original credit agreement and your creditor is therefore entitled to send you a Default Notice, if they haven’t already done so. Most creditors will do this to protect their own legal position.
4. Will the plan affect my credit rating?
Because taking out a plan will result in you not making the contractual repayments on your unsecured debts, you should expect that your credit rating will be adversely affected in the short to medium term. However, your credit rating may already be poor if you have arrears or a history of missed or late payments.
5. How much does it cost?
Every month, you’ll send us the amount we’ve agreed on and we'll take 15% of this as our management fee (subject to a minimum of £15.00 and a maximum of £75.00).
But there's also a lot we have to do to get your plan started, so the first payment you make will be used as a set-up fee - although we will refund this in your final month if you successfully complete your payment plan. We need to:
- Compile your draft plan
- Appoint your dedicated Personal Finance Manager – your single point of contact
- Communicate with your creditors, in writing and / or by telephone
- Prepare your financial statement
- Calculate and issue your reduced repayment proposals
In other words, your first payment is not paid to your creditors, and this may cause some of your accounts to go into arrears. We want to make this totally clear before you sign up to anything, as we're committed to being completely open about the way we operate our services. But have a look around and you’ll see that most other commercial organisations will take the first two payments or even more – this will put you in a far worse position with your creditors. Additionally on successful completion of your plan the final month's payment will be made by us, meaning that in effect we refund your set-up fee at the end of your plan.
If you change your mind about starting a Debt Management Plan, and it’s within 14 days of you making the initial payment to us, then we'll refund this fee in full. No questions.
6. What does the management fee pay for?
The management fee pays for all the work we do dealing with your creditors on your behalf. You have the convenience of making a single monthly payment to us and we do the rest.
We’ll review your case every six months (or whenever you request it) to make sure your payments are always set at the right level and throughout your plan we’ll ensure that you know exactly where you stand.
We’ll also use our expertise and good working relationships with creditors to get you the best possible deal and negotiate new agreements whenever your situation changes. And we’ll spend time supporting you to make the most of your financial situation, by helping you get the best deals on your utility bills, insurance and banking, and by making sure that you are claiming all the benefits and tax credits you are entitled to.
In short, your fee pays for the peace of mind that comes from knowing that your creditors are receiving regular payments and that your financial situation is being well managed.
7. Can I take out a plan if I already have CCJs against me?
Yes you can. You can even use the plan to make payments against any existing CCJs that you have. Just make sure that we know exactly what your current situation is when you first talk to one of our Senior Financial Consultants.
8. Can I take out a plan if I am a homeowner?
Yes, you can use a Debt Management Plan whatever your residential status. Because mortgage payments and rent are treated as priority debts, by entering a Debt Management Plan you are able to ring-fence sufficient money to ensure these are always paid on time.
9. Will a Debt Management Plan cover all of my debts?
No, it can only cover your unsecured debts and arrears. Priority must be given to other types of debts (called Priority Debts) due to the serious consequences of not keeping up these payments. Some examples of priority debts are: rent; mortgage payments; hire purchase agreements; secured loans; council tax; and utilities such as gas, electricity and water.
When assessing your financial situation, we make suitable allowances for you to be able to afford your priority debts and your day-to-day living costs before we calculate how much you can afford to pay towards your other creditors.
10. What are "Priority Debts"?
Priority Debts are the most important debts you have and the ones which, if you don’t make sufficient payments, could have severe consequences.
Some examples of priority debts are: rent; mortgage payments; hire purchase agreements; secured loans; council tax; and utilities such as gas, electricity and water.
When assessing your financial situation, we make suitable allowances for you to be able to pay your priority debts and your day-to-day living costs before we calculate how much you can afford to pay towards your other debts (such as unsecured loans and credit cards)
11. Do I have to have a job to qualify for a Debt Management Plan?
Not necessarily, though you will normally need to have at least £100 available each month to pay towards your debts. Benefits and Tax Credits can be included in this calculation.
12. Do I have to tell my partner?
If the debts are all in your name then you don’t need to tell your partner. However we would always recommend that you are honest with them. It may be that you will need your partner’s income to be taken into account to support your Debt Management Plan.
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Debt Management Plans are subject to status, and conditions apply. Whilst it may be the best solution in the long term, you should note that repaying debt over a longer period may increase the total amount to be repaid. Your ability to obtain credit in the future will also be affected. Fees are payable on this service.
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