Are there any costs involved?
Fees related to Debt Management Plans are in two parts:
- An initial fee of your first two monthly payments
- An ongoing monthly fee of 11% of your monthly payments, subject to a minimum payment
of £40.00 and a maximum of £90.00
Your Initial fee will cover the work that goes into setting up a debt management
plan. That involves:
- Reviewing your draft Payment Plan
- Calculating reduced repayment proposals
- Preparing your financial statement
- Talking to your creditors – making the initial contact advising them of your financial
difficulty
- Negotiating with your creditors to try and freeze interest and charges and accept reduced payments inline with your affordability
Because this fee does not go towards your debts, you will go further into arrears
for the two months. You will start repaying your unsecured debts with your next
payment.
In other words, your accounts will go into arrears - or further into arrears - because
your first two monthly payments will not go to your creditors.
The monthly management fee covers the ongoing work involved in keeping your debt
management plan running smoothly. This includes:
- Making the agreed payments to each of your creditors
- Answering phone calls and letters from your creditors
- Creating a payment plan
- Carrying out a review of your circumstances every 12 months (or more often, if necessary)
If it looks like you cannot afford your monthly payments any more, we can renegotiate
with your creditors - they may agree to accept smaller payments if it looks like
the best way of bringing your debt management plan to a successful conclusion.
IVA Fees
Fees incurred for Individual Voluntary Arrangements are variable dependent upon
the monthly contribution to the arrangement and the agreement that is reached with
your creditors. Fees are made up of Nominees fees relating to assistance given to
prepare your proposal and Supervisor fees which relate to the ongoing monitoring
of your IVA.
Promise do not charge any fees relating to an IVA as each IVA is prepared by a specialist
partner which will explain all of the costs to you at the outset. They may also
pay a referral fee to Promise for the preparatory work we have done on your behalf.
There are no costs for you to pay up front as any fees are already included as part
of your monthly contribution. The level of fees and the method of payment are both
agreed by your creditors at the outset of the arrangement.
Nominees Fee
This is a fixed fee that will cover the work that goes into setting up your IVA:
- Creating your IVA proposal. This is the document which must be approved by enough
of your creditors for your IVA to start. It defines the proposed terms of the IVA:
how much you would pay, what each creditor would receive, etc.
- Setting up the creditors meeting. This is when your creditors will formally approve
your IVA proposal, reject it, or request changes to it.
- Assessing any suggested changes. If any creditors have requested changes to your
IVA proposal, your IP will advise you on whether you should accept those changes
- or consider a different approach to your debt problems.
Supervisors Fees
The supervisors fees will cover the ongoing supervision and maintenance of your
IVA all the way through - so for five years, with a typical IVA. That means:
- Your Relationship Manager will deal with any day-to-day issues that arise, ensuring
your IVA runs smoothly.
- Your IP will carry out regular reviews of your IVA and address any more serious
issues that come up - if, for instance, your financial situation worsens, and you
need your IP to arrange an IVA variation (a legally binding change to the terms
of your IVA, designed to help you bring the IVA to a successful conclusion).
After the nominees fee has been paid, a percentage of each monthly payment will
be taken as supervisors fees, as detailed in your IVA proposal.
Note: Keeping up with your monthly payments in an IVA is vital - if you fail
to, your IVA may fail, leaving you liable for the remaining balance and any costs
already incurred. Having said that, IVAs do provide an element of flexibility: you
may, for example, be allowed to take a small break from your payments if you come
up against unexpected costs (such as essential home repairs).
Our IVAs are provided by one of a number of specialist partner company’s dependant
on your circumstances They will confirm the exact fees from the outset.
Trust Deed Fees
Throughout your Trust Deed (which will probably last for 3 years), you will pay
a flat fee every month.
- The size of your monthly payment will depend on the value of your assets and on
how much you can afford to pay per month once you have accounted for all your essential
expenditure (rent/mortgage, food costs, heating and lighting, and so on).
- The size of your monthly fee will be determined before your Trust Deed even starts,
when your IP draws up your Trust Deed proposal. This is the document which details
the proposed terms of your Trust Deed - unless a certain number of your creditors
object to the terms, your Trust Deed will become protected by law.
Your monthly payments will be stored in a creditors pot - once the flat fee has
been deducted from this pot, your creditors will receive their payment. (The timing
of this deduction will vary from case to case.)
The fee will cover the costs involved in setting up your Trust Deed. It will also
pay for the ongoing supervision and maintenance of your Trust Deed right up to the
day it finishes:
- You will have a Relationship Manager overseeing the day-to-day running of your Trust
Deed, as well as providing help and advice and tackling any issues that may come
up.
- And your IP will be there to help if necessary. For example: if your income drops
(or your essential costs rise) and this means you can no longer afford your payments,
your IP may be able to arrange a Trust Deed variation (a legally binding change
to the terms that takes your new circumstances into account).
Note: It is essential that you make your monthly payments to your Trust Deed,
or it could fail - in which case you would be liable for the remaining balance and
any costs already incurred.
However, you may be permitted a small break from your payments if, for example,
you are facing short-term problems (such as dealing with unexpected costs) that
significantly reduce your disposable income.
Our Trust Deeds are provided by one of a number of specialist partner company’s
dependant on your circumstances They will confirm the exact fees from the outset.
Full and Final Settlement Fees
We will charge a fee for negotiating your reduced settlements and managing the payments.
This fee will be taken from the savings or discounts we manage to obtain for you
so you will have no payments to make up front and the amount we pay to your creditors,
plus any fees will always be lower than the outstanding balances. Our fees will
be discussed with you in each case but is normally 11% of the debt.