DMP FAQs
Questions:
Answers:
- Do I incur any charges if I cancel my plan?
No, you can cancel with us at any time without any further charge.
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- What happens to any money held for distribution if I cancel?
We will refund to you any monies you have paid us which we have not yet distributed to your creditors at the time you cancel with us.
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- How do I contact Baines & Ernst?
It's easy to talk to our Debt Management advice team, simply call on 0800 096 1331, use the debt test or click here to contact us about Debt Management Plans online.
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- Do creditors always accept reduced payment offers?
When you make a reduced offer of payment your creditors have to take your circumstances into account when deciding what to do. They must treat you fairly. When we make an offer on your behalf you can rely on our experience and the relationships we have developed with all the major creditors over the last 12 last years.
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- What if my creditors continue to pursue me for payments?
To begin with you may still get letters and phone calls from your creditors. You must not ignore these. This happens because it takes a short time to negotiate with your creditors and they will continue with their standard collection activities until a new repayment amount is agreed. This is normal and nothing to worry about.
As soon as we have received your signed Letter of Authority and your first payment, you can tell your creditors to contact us. We will then be happy to deal with all letters and phone calls for you. Please note that we cannot guarantee that creditors will permanently cease to contact you - they are still entitled to do so. Do not ignore them, ask them to contact us.
Once your creditors are informed we are dealing on your behalf many of them will start to communicate directly with us, taking a lot of pressure off you. We will keep you informed of any communication we have with your creditors.
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Will I receive a Default Notice?
By coming on plan with us, you will be in default on your original credit agreement and your creditor is therefore entitled to send you a Default Notice. Creditors send out Default Notices to protect their own legal position.
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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 have already been affected if you have missed or made late payments.
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Will the plan prevent my creditors taking further recovery action?
We cannot guarantee that your creditors will not take further action, including court action to recover debts from you but, if they do, we will help you respond so that any repayment that is required is within your ability to repay.
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Can I take out a plan if I already have CCJs against me?
Yes. 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 talk to us before coming on plan.
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Can I take out a plan if I am a homeowner or tenant?
Yes. It makes no difference whether you are a tenant or homeowner or even if you are still living with your parents.
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Do I have to be in full time employment?
No. To come on plan, you only need to have a surplus of income above what you need to live on.
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Do I have to tell my partner?
We believe that it is always best to be honest with your partner. However, you only have to tell your partner if you have shared debts and/or you need your partner’s income to be taken into account to support the plan.
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Does the Payment Plan cover all of my debts?
No. A debt repayment plan can only cover your unsecured debts and arrears.
Priority must be given to other types of debts because of the serious consequences of not maintaining regular payments. You must continue to make these payments yourself. Some examples include rent or mortgage, hire purchase agreements, any loan secured against property, 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.
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Is this a loan?
No our Debt management plan is not a loan. We neither lend you money nor pay off your debts. Your payment plan is a solution that allows you to repay your creditors at a monthly rate that you can afford. If you do not make payments into the plan, we cannot make payments to your creditors.
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What is the difference between a secured and unsecured debt?
A secured debt is a debt secured against an asset that you own. Typical secured debts will be a mortgage, a secured loan, a car loan, etc. An unsecured loan is any loan not secured on an asset, such as a bank overdraft, a personal loan, a credit card, store card, etc.
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- Do I need to cancel my direct debits?
As soon as we have advised you that your Plan is in place you should cancel all standing orders/direct debits to creditors on the Plan, taking care to ensure that any payments to priority creditors such as mortgage, council tax, water rates, gas, electricity etc, are maintained or re-arranged.
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- Do I need to change banks?
It is a strong possibility that if you are with a bank where you have credit facility like an overdraft or loan, they may take steps to collect the money owed to them as soon as your salary or any other payment is paid into your account with them.
You should think about opening another account with no overdraft facility and with a bank you do not owe money to. This will give you more control over your money and will help to make sure that all your creditors get fair payments at a level that you can afford.
Our advisers will give you any advice you may need on how to change bank accounts.
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Will I be credit checked before acceptance?
No. Since we do not lend you any money, we do not need to credit check you.
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How are the fees collected?
Once you have made payment for our initial set-up fee and your first month's contribution we will make a monthly distribution to your creditors on your behalf and will deduct our monthly management fee for that distribution. If we do not make a distribution, we do not take our fee.
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How is my money held until it is distributed to my creditors?
We hold all monies sent to us for distribution to creditors in a client trust account with our bankers. This means that your money is completely protected in the event of our insolvency.
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How long will the plan take?
Because you are making reduced payments on your debts it will take longer for your debts to be paid off. Repaying debt over a longer period may increase the total amount to be repaid. Your ability to obtain credit will be affected in the short term and might be affected in the medium to long term. As part of our initial consultation with you, we will provide you with an estimate of the likely time you will be on plan. Please understand that a Debt Management Plan is not an overnight solution.
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How much does the service cost?
We charge an initial set-up fee (which is equivalent to two monthly payments) and an administration fee of £70. These set-up and administration fees are retained by us for setting up your plan. This may result in a delay of up to two months before creditors receive payment, which will place your accounts into arrears or further into arrears. We then take a monthly management fee equivalent to 17.625% of each payment you make to us, subject to a monthly minimum of £35 and a monthly maximum of £100. Specific costs will be notified to you in advance. There are no other hidden charges.
The set-up fee includes:
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Drafting of your payment plan
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Communication with your creditors, either in writing or by telephone
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Calculation and issue of the reduced payment proposals
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Preparation of the financial statement
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- What are the full terms and conditions of the Plan?
These will be provided to you in writing prior to you entering into the agreement. A copy can be viewed here.
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What if my circumstances change?
Because a Debt Management Plan is an informal arrangement, it is easy to change it as your personal circumstances change, and even to replace it with an alternative arrangement if that becomes more appropriate at a later date.
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We aim to provide a professional service at all times. However, if you are unhappy with the service that you have received, please follow our complaints procedure explaining why you feel that we have not met your expectations. We will contact you straight away to discuss this.
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- What other debt solutions may be available to me if my circumstances change?
If your circumstances change in the future, please contact us to discuss your situation in order that we can help ensure you have the right solution for your circumstances.
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