Any initial advice that you receive about Debt Management Plans (DMP) from Wilmott Turner Financial Services (WTFS) either on the telephone, via e-mail or from websites or debt forums owned and operated by us is given without charge.
If you then decide that a DMP is right for you, the cost of carrying out the plan will depend on the way you implement and manage it. This could be either by managing the plan yourself, using a commercial debt management company or a free to consumer organisation.
If you decide to set up and manage a DMP yourself there is of course no cost other than your time.
WTFS will shortly be launching online software which will be available to registered users for free which will aid you in managing you own DMP. If you would like to know when this software is available please email firstname.lastname@example.org and we will keep you informed.
If you choose to use a reputable commercial company to set up and run your debt management plan the service will generally be swift and efficient and the results should reflect this. The company will normally be successful in ensuring that the majority of your creditors do freeze interest after you have been in your plan for 3 months although this is not guaranteed.
A professional company will normally charge you an Instruction Fee and an ongoing Management Fee. Both of these fees are taken from your agreed monthly payments. They are not charged as extra.
This fee is normally taken out of the first 6 months payments that you make into your Plan. As a guide this fee could be 35% of the monthly payment you make. However there will normally be a minimum and maximum payment applied to your agreement.
It covers services including:
– Compiling your Statement of Affairs
– Presenting repayment proposals to creditors
– Responding to creditor contact by telephone and in writing
– Negotiating arrangements with your creditors on your behalf
This fee is typically 15% of your monthly payment (although it may be subject to a minimum or maximum amount). It is deducted from the payment you make into your Plan each month from month 7.
It covers services including:
– Ongoing communication and negotiation with creditors
– The distribution of payments to your creditors
– Negotiating changes to your payments after changes in your financial circumstances
– Conducting a standard annual review of your circumstances and reporting this to your creditors.
Tip: By paying a DMP management fee it will take longer to pay your debt in full as your outstanding balances will ultimately be increased by the same percentage as the fee charged.
Organisations such as the Step Change Charity (formally known as the CCCS), Payplan and some Citizens Advice Bureaus (CAB) can help you set up a Debt Management Plan for free.
There is little evidence that these organisations will have any more success than a commercial debt management company in setting up a DMP for you.
Tip: Although they are free to the consumer these organisations are funded by the creditors themselves. As such there is an argument that it is not in their interest to work as hard to get interest and charges frozen as would be the case if you were to use a commercial DMP company.
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