Debt Management FAQs
Here you’ll find the answers to the most frequently asked Debt Management Plan questions. If you can’t find the answer to your query here, please don’t hesitate to call us.
A Debt Management Plan is a solution that allows you to consolidate debts into one, easier to manage monthly repayment plan.
If you’re struggling to keep up with repayments, a Debt Management Plan is an effective way for you to get back on track and reduce repayments so that they’re more affordable within your budget.
Repayments are based on what you can realistically afford after all your other household bills have been taken into account.
No, you will not be charged for cancelling a Debt Management Plan with Baines & Ernst. Simply speak to a member of the team if you wish to cancel.
Any money that has not yet been distributed to your lenders at the time of cancelling will be refunded to you.
As a provider of only protocol-compliant Debt Management Plans your lenders will be confident that the proposed payment is based on what you can realistically afford to pay towards your debt balances. We will also request that your lenders freeze interest and charges on your debts, so your debts can only reduce. In 93% of the debts we manage we are successful in this.
Although we cannot guarantee that lenders will stop contacting you completely, we will do all we can to reduce this contact as much as possible.
While we are setting up your protocol-compliant plan, we’ll let your lenders know that we are working on your behalf. This means your lenders will start communicating with us directly.
However, if lenders continue to contact you, please do not ignore their letters or calls, please ask them to contact us instead and we will handle their questions.
Debt Management Plans are not legally binding, therefore a lender could still take court action to recover debts – it really depends on each individual lender.
That said, many lenders will not take further action to recover the debt as they are receiving regular monthly repayments based on what you can afford to pay. Being part of a structured repayment plan will also show your lenders that you are making every effort possible to clear your debts.
If you get a letter regarding further debt recovery action, please contact us straightaway and we will do all we can to help.
Lenders will send a Default Notice because you have defaulted on your original credit agreement. Because you are not repaying your debt at the amount you originally agreed with your lenders, you could receive a Default Notice while on a Debt Management Plan, this is to protect their own legal position.
If you have already struggled to make repayments on time or have missed them altogether, your credit rating may already be affected.
With a Debt Management Plan your credit rating will be affected in the medium term because you will not be repaying your debts at the rate you originally agreed with your lenders.
It is also worth noting that if you have been issued a default notice during the period of the Debt Management Plan, this will remain on your credit record for six years from the date the notice was issued.
Yes. You can even use the Plan to make payments towards any existing CCJs that you have. Just make sure that we know exactly what your current situation is before commencing with a Debt Management Plan.
Yes – It makes no difference whether you are a tenant, homeowner or even still living with your parents.
No – we will carry out a financial review to find out if a Debt Management Plan is the right solution for you first. This is what the decision is based on, not whether you are in full time employment, self employed or working part time.
Our financial reviews are under no obligation, so if you’re interested in finding out whether it would be the best way for you to deal with your debts, please contact us; we’ll be happy to help.
It is advisable that you tell your partner – especially if your partner’s income has to be taken into account to support the Plan.
You can only include unsecured debts in a Debt Management Plan; this means debts that have not been secured against your property. Typical unsecured debts that can be included are credit cards, store cards, personal loans, payday loans, catalogue accounts and bank overdrafts.
Household bills, mortgage arrears, child maintenance repayments and secured loans are types of secured debts that cannot be included.
When a repayment plan is being arranged for you, all your priority bills will be taken into account to make sure you have enough money to pay for these every month.
Repayments will be based on expenditure guidelines that have been put into place to ensure you can maintain a reasonable standard of living.
A secured debt is a debt secured against a property or asset that you own. Typical secured debts will be a mortgage, hire purchase loans, homeowner loans, etc.
An unsecured debt is any debt not secured against a property or asset, such as a bank overdraft, a personal loan, a credit card, store card, etc.
No, a 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 lenders at a monthly rate you can afford. If you do not make payments into the plan, we cannot make payments to your creditors.
Also, because we are not lending you money, you do not need to be credit checked to qualify.
As soon as we have advised you that your Plan is in place, you should cancel all Standing Orders / Direct Debits to lenders on the Plan, this includes Continuous Payment Authority (CPA) for payday loans you may have. Under the Financial Services Authority’s Payments Services Regulations (PSR), customers can cancel a CPA by contacting the bank or card issuer directly at any time.
Please ensure that any payments to priority creditors such as mortgage, council tax, water rates, gas, electricity, etc, are maintained or re-arranged.
It is a strong possibility that if you are with a bank where you have credit facilities 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.
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 lenders get fair payments at a level that you can afford. Our advisors will give you any advice you may need on how to change bank accounts.
If you are worried that your credit rating may stop you from opening a new account, take a look at the Evolution Current Account.
The Evolution Current Account offers:
- A basic bank account with no hidden fees or unexpected bank charges
- One off set up fee of £12.50 and a monthly management fee of £12.50
- Pay your bills by Direct Debit and Standing Orders
- Earn cash rewards at leading high street retailers
- Simple, secure online banking
- Guaranteed acceptance – no credit checks*
*UK residents aged 18 and over. Subject to satisfactory identity and residency checks. The Evolution Current Account is managed by Secure Trust Bank PLC.
No. Since we do not lend you any money, we do not need to credit check you.
The repayment length of your plan will depend on how much debt you have and how much you can realistically afford to repay each month.
As you will not be repaying your debts at the rate originally agreed with your lenders, it will take longer to repay your debts with a Debt Management Plan.
While this is not an overnight solution, you will have the peace of mind knowing that you are repaying your debts at a rate you can afford and you will be free from unsecured debts at the end of the Plan.
A Debt Management Plan is a flexible solution, so if your circumstances change and you wish to increase repayments and clear your debt in a shorter amount of time, you can.
You will make one payment into the Debt Management Plan every month; this will be based on what you can realistically afford.
Once we deduct our monthly service fee and set up fee (which will be collected over a period of 6 to 24 months depending on your situation) the remainder of your payment will then be distributed between your lenders.
We spread the cost of the set up fee of £240 to make it affordable for you. Spreading the cost of the set up fee means your lenders will receive payment in the first month of the plan so that you can begin clearing your debts straightaway.
Baines & Ernst do not change an annual renewal fee.
All money for distribution to lenders is held in a client trust account with our bankers. This means that your money is completely protected. Lenders are paid within two working days of receiving payment from you.
We charge a set up fee of £240, but to make this affordable for you, we will spread the cost over 6 to 24 months depending on your individual circumstances.
Your set up fee covers the following:
- Drafting a bespoke payment plan
- Creation of a Debt Management Plan pack
- Communication with your lenders, either in writing or by telephone
- Negotiations with lenders
- Calculation and issue of reduced payment proposals
- Preparation of the financial statement
- Setting up regular payments to your lenders
- Allocation of a Personal Account Manager
Your monthly service fee is equivalent to 20% of your monthly disposable income, subject to a monthly minimum of £40 and a monthly maximum of £100. The service fee covers the on-going work we do to ensure the plan runs smoothly and you are provided with all the support you need. Specific costs will be notified to you in advance.
Rest assured all your other household expenses will be accounted for before your Debt Management Plan repayment is calculated.
You can learn more about our fee structure here.
Over the lifetime of your Debt Management Plan we will:
- Review and act on lender correspondence we receive on your behalf
- Update your Debt Management Plan to deal with any debts that have been transferred to debt collection companies and negotiate with them
- Continue to distribute the agreed payments to your lenders
- Prepare and send to you your regular payment advice
- Update your Debt Management Plan to take account of any change in your circumstances and renegotiate your payments to lenders if necessary
- Safeguard your money in a protected client account whilst we hold it
- Provide an online statement and payment facility
If your circumstances change, the best thing to do is speak to a member of our team as soon as possible so that we can help you.
A Debt Management Plan is an informal arrangement, so we will do all we can to alter the Plan to suit your personal circumstances.
If your circumstances change in the future, please contact us straight away. Depending on your financial circumstances, we may feel that you would benefit from an alternative solution such as an IVA or Debt Relief Order.
Alternatively, if you need advice on dealing with personal insolvency or information on going bankrupt, we can help you there too.
We aim to provide a professional service at all times. However, if you are unhappy with the service that you have received, please contact our Customer Service team or follow our complaints procedure explaining why you feel that your expectations have not been met.
These will be provided to you in writing prior to you entering into the agreement. A copy can be viewed here.
Getting in touch with us is easy – simply call us on the number at the top of the screen or complete the enquiry form and a member of our team will call you back.
If you are an existing customer and would like the Baines & Ernst customer services number, please visit our contact us page.