What is a Debt Settlement Plan?
Similar to a debt management plan, a debt settlement plan only requires one low monthly payment that suits your daily lifestyle and living expenses. To qualify for this plan, you should have a disposable income of around £150 per month and debt exceeding £5,000 owed to two creditors or more.
While you are on this plan, only minimum payments will be made to your creditors, the excess funds will be kept in a settlement account. We use the money in this account to get you discounts from your debts and offer resolutions to your creditors.
Can I pay off my debts early?
Yes, the purpose of the debt settlement plan is to clear your debts for you sooner rather than later. If you receive an increased amount of money as a result of a bonus or promotion, you are welcome to make additional payments. This could greatly reduce your repayment timeframe, a timeframe that one of our expert agents can outline for you.
How do you set up a Debt Settlement plan?
A full financial assessment will be conducted by one of our expert agents and the two of you will agree upon a monthly payment that fits with your lifestyle and expenses. If it is decided that a debt settlement plan is right for you, we will provide you with an estimated repayment (time frame), request your debt balance from creditors, attempt to have all interest and penalty fees frozen, and offer you the assistance from a qualified debt negotiator who can answer any questions you may have.
WHAT ARE THE FEES ASSOCIATED WITH A DEBT SETTLEMENT PLAN?
We won’t charge you any fee for providing you with advice and recommendation of an appropriate debt solution or solutions. Our fees will only apply if you implement a debt settlement plan with our firm.
The service fee is 30% of your total debt and is already included in your monthly payment. It is spread out throughout the length of your plan so as to not burden your budget. Here’s how:
The first 6 months payments – 49% of it goes towards the fee with 51% going into your savings. After that, the balance of the fee is spread out over the remaining months – a portion going towards the fee and a portion going into your savings.
- We will communicate with creditors and attempt to cease interest and penalty charges on your account
- You can pay plan off early if circumstances change and you can afford it
- It may be a better option for your creditors than some other solutions
- Creditors can mark defaults against you since they will be receiving much less than their contractual agreement. This could negatively affect your credit for 6 years.
- As an informal agreement, creditors do not have to freeze interest payments. This could increase both your debt and repayment timeframe.
- Creditors do not have to accept the minimum payments we send and can still contact you at home. While we can often stop this, contact sometimes continues until total repayment is made.