Mr S is a self-employed builder. He and his wife have two young children and a new baby. They rent their home from a private landlord.

Although Mr S’s business was doing well, he and his wife were experiencing considerable financial pressure since the arrival of their third child. As his wife worked part time prior to her pregnancy, they were feeling the loss of a second income.

Mr S has been using credit cards for some time, but was beginning to rely on them more heavily due to not having a second income and using it to pay for his rent and other financial commitments. He was beginning to slip behind on his monthly payments.

We advised Mr S that a debt management programme would provide a perfect solution to his problem. Rather than 9 separate payments totalling £690 per month, we restructured his credit commitments to one single monthly payment of £310.

Mr S now has control over his finances (as opposed to his creditors demanding control!); he no longer has pressure about missing any payment deadlines as they are all paid through this one monthly payment. Additionally, his interest was frozen by the credit companies, meaning that Mr S was reducing his total indebtedness at a much faster rate.
Fees: set-up cost £620, monthly fee £54.

Mrs A is a teacher and owns a house with her husband worth £180,000, with £130,000 outstanding on their mortgage. Their unsecured credit commitments comprise of two loans, four credit cards and a bank overdraft totalling around £30,000.

Although Mrs A had not fallen behind with making payments, she was finding it difficult to manage and recently had to extend her bank overdraft. Her credit card balances were decreasing very slowly as she could only afford to make minimum payments. She had applied for loans at various companies but had been turned down and was not keen to secure a loan on her property or remortgage.

Mrs A contacted us, and on reviewing her finances we discovered that her total income was exceeded by her outgoings. She was committed to payments totalling in excess of £850 per month towards her unsecured creditors. We contacted her credit companies and negotiated reduced payments according to her circumstances. Mrs A agreed to make a single monthly payment of £437, and in addition we were successful in negotiating an interest freeze with her creditors. As well as the lower payment, Mrs A found that her debts were reducing at a faster rate.
Fees: set-up cost £874, monthly fee £77.

Mr W had worked as an IT consultant for many years. Due to circumstances beyond his control, he was made redundant and had to accept a clerical job on a reduced salary.

Mr W immediately discovered that he was unable to meet the demands of his creditors due to his vastly changed circumstances. After meeting his household commitments, he found that his disposable income was less than half of what he was being asked for by his creditors.

After Mr W contacted us, we were able to demonstrate to his creditors that he was genuinely unable to fulfil his financial commitments. We negotiated reduced payments to all of his creditors befitting of his new circumstances. Rather than him paying £467 per month to 7 credit companies, we organised a single payment of £183 per month. We were also able to arrange a freeze in interest on his unsecured debts.

Although it would take longer for him to clear his debts, Mr W was happy that the flexibility of his DMP would enable him to increase the payments to his creditors should he obtain a higher paid job in the future.
Fees: set-up cost £366, monthly fee £35.

A Trust Deed typically lasts for three years, and you will pay a flat monthly fee. Below is an illustration showing the typical payments and fees, inclusive of VAT, based on a client owing an average of £23,000, completing the Trust Deed in 3 years and having no equity in their home:

• Monthly payments (over 36 months)    £200
• Fee included in your monthly payment (over 36 months)    £130
• Trustee disbursements    £150
• Total repaid by individual (including fees)    £7,200
• Total unsecured debt written off    £15,800 (69%)

The fee is deducted from your monthly payments so makes no impact on the total you’re required to pay. The amount you pay is based on the amount you can afford after essential expenditure has been accounted for, and on the value of your assets.

Your monthly payment will be stored in a ‘creditors pot’ where your fees will be deducted before your creditors receive their payment.

Your creditors will be aware at the start of the proposal what the calculated fees are, as they are presented before the proposal is agreed. Unless a percentage of your creditor objects to the terms in the proposal, it will become protected by law.

The fee covers the Trust Deed set-up cost as well as the on-going management, such as your Relationship Manager who handles the day-to-day running and can answer any queries during the term of your Trust Deed.

It is important that you keep up on your Trust Deed repayments; failure means you’d be liable for the outstanding balance and the costs that have been acquired. You may be granted a short ‘break’ from payments, such as if you are facing unexpected costs or, if your circumstances changes, such as a drop in income, you may be able to change the Trust Deed terms (variation). Always contact your IP before if you have any problems making payments.

We have highlighted some considerations which you may wish to consider about a debt management below, but for personalised advice please contact us today.

Note:

• A debt management plan is for unsecured debts only
• Initial debt advice is free but fees are payable if a debt solution is agreed.

Length of time to repay debts

A key benefit of the plan is the ability to only repay what you can afford each month. Clearly the consequence of this is that it will take longer to repay your debts, and creditors do not have to agree to freeze interest and charges. You will receive allowances to pay Secured and Priority debts.

Fees and Costs

An ‘Initial Fee’ is the set up cost of your Plan and is equal to two months disposable income, subject to a minimum of £295 and will be retained from your initial payment(s). Whilst you pay our initial fee, monies are not distributed to your creditors and this retained payment may place you in arrears.

A ‘Monthly Fee’ payable for our services will be charged thereafter, equal to 17.625% of your monthly agreed disposable income, subject to a min of £35 and a max of £100.

Initial fee

The Initial fee covers the work involved in setting up your debt management plan, including:

• Reviewing draft payment programme
• Preparing the financial statement
• Calculating reduced monthly payments
• Talking to your creditors and negotiating the terms of the debt management plan

This fee doesn’t go towards your debts, so you’ll go into arrears (or further into arrears) for the first 2 months. You will start repaying your unsecured debts with your next payment.

Monthly fee

From the second month onwards, we will charge a monthly management fee. This fee covers the month-to-month running of your debt management plan – including:

• Distributing payments to each of your creditors
• Handling correspondence from your creditors
• Any help or advice you need from our customer support team.
• Putting together and sending your quarterly statements

The fee also covers us reviewing your personal circumstances on a regular basis, or any other time your circumstances require it. If your situation has changed, we can, if necessary, talk to your creditors about adjusting your monthly payments accordingly.

For worked exampled view debt management case studies with fees explained.

Credit Rating

Entering into a Plan means contractual payments will be missed and your debt and repayment term could increase. Your credit rating will be impaired and it may be harder to obtain credit in the medium to long term as records will be retained by credit reference agencies for six years.

Cooling Off Period/Right to Withdraw

On receipt of your first payment we will issue to you a key features document and estimated fees schedule. If for any reason you wish to cancel we offer a seven-day cooling-off period from the date of said letter in which we offer a full refund of any fees which we have taken.

For more information view full terms and conditions of our debt management plans.

Credit Rating

A record of your IVA will be retained by credit reference agencies for a period of six years. Your credit rating will be impaired and it may be harder to obtain credit in the medium to long term.

The fees involved in an IVA are the Nominee’s fee and Supervisor’s fees.

These fees are charged by us to your creditors. They pay us, from money you paid into your IVA. You are not required to pay fee directly nor make any payments over and above the affordable monthly payment as agreed with your IVA advisor.

IVA Fees

Nominee’s fee

The Nominee’s fee covers the set-up costs of an IVA. This includes tasks such as:

• Producing the IVA proposal, which gives your creditors a detailed look at your finances, and sets out the proposed IVA terms.
• Arranging the creditors meeting, in which creditors can raise any issues they have with the proposed terms.
• All administration work involved in arranging the IVA.

Initial monthly payments go towards paying the Nominee’s fee.

Supervisor’s fees

The Supervisor’s fee is a small percentage of each monthly payment made (once the nominee’s fee has been paid). This covers the ongoing service from your IP (Insolvency Practitioner) and our client support team.

Client support takes care of the day-to-day running of your IVA, and deals with any issues that may arise. They’ll also be your first point of contact for issues regarding your IVA.

Your IP is the person who helps you with your IVA proposal and any other necessary legal work. If at any point your circumstances change and you need to adjust your IVA accordingly, your IP will take care of this.

Fee’s Breakdown

Fees vary with the complexity of a case. This is an example for illustrative purposes, based on a client, with £31,000 of unsecured debts on an IVA lasting 5 years and without equity in a property.

*15% of realisations less nominees fee.

*** Bond Fee £50, DTI Fee £15, plus other case dependant costs.

Cooling Off Period/Right to Withdraw

You can withdraw your proposal for a voluntary arrangement at any point up and including the day of your creditor’s meeting. Once the arrangement has been approved at the creditors’ meeting and you have agreed to be bound by its terms, you have entered formal insolvency proceedings and no cooling off period applies.

AllClear Finance have solid relations with a solid panel of lenders who we will use to find a loan deal which is right for you.

You can use your loan for a number of different purposes; many of our clients use our loan company services to source a loan for
debt consolidation purposes. But there are many other reasons why you many approach loan companies to find you a loan, such as making home improvement, buying a new car or a wedding.

If you have been turned down for an unsecured loan, wish to repay your loan over a longer term and borrow a large amount, a secured loan through AllClear Finance could be right for you.

AllClear Finance are More Than a Loan Company

AllClear Finance don’t just deal with loans, we are an all round debt solutions provider.

A Secured Loan is not the right solution to your debt problems, you may benefit from making your current debt payments more affordable to you, and we can help you with this aspect too. So no matter what your personal finance needs, we can help you find a debt solution which is right for you.

Call our Debt Advisors today on freephone 0800 048 1762.

Consolidation Loan UK

If you are a UK resident, AllClear Finance can help you with your consolidation loan. The best way to see if you are eligible is
to get in contact with us directly, we will go through your financial circumstance and try to find a consolidation loan which is right for you.

Even if you have a bad credit history, you could still consolidate your debts through a Bad Debt Loan. These are often secured against your property as they reduce the risk to lenders.

Loan Consolidation Alternatives

One of the biggest considerations with loan consolidation is that the loan will be secured against your house. If you think that
your circumstances may change or don’t feel confident that you will be able to make payments to your news loan, there are loan consolidation alternatives for you to consider.

Debt Management Plans can reduce the outgoings to your creditors, meaning that you are consolidating the debt into a lower monthly payment without the need for a consolidation loan.

AllClear Finance can offer you free information about loan consolidation, as well as the alternatives, on 0800 048 1762.

Two common reasons for an IVA failing are:
- Debtor fails to supply information about their circumstances
- Debtors fails to make payments to their IVA

If you think that you are going to miss a payment to your IVA or that you may fail on some of the IVA terms, it is important that you speak to your IVA Supervisor immediately.

How to Stop your IVA Failing

It is important that you have honest and open communications with your IVA Supervisor throughout the length of the IVA. Remember
that failure to comply with the conditions of your IVA means that your creditors can start bankruptcy proceedings against you.

If your personal circumstances change during the term of your IVA, then you need to contact your IVA Supervisor. They may be able to re-assess your situation and present a revised IVA proposal to your creditors. Each IVA case is different and your options will be dependant on the original clauses of your IVA.

If the IVA fails for any reason, then you will lose the benefit of having your unaffordable debt written off and you will be liable for the whole amount.

If your creditors decide to modify the IVA agreement, it does mean that the IVA process will take a little longer. It can take up to two weeks for these modifications to be made and distributed to your creditors.

However, if 75% of your creditors, in terms on the debt value, do not agree to the proposal, it means that your IVA has been rejected.

Why was my IVA rejected?

There are a number of reasons why your creditors may reject your IVA, and it is dependant on the individual circumstances of your IVA proposal.

Creditors will decide which debt solution will offer them the highest return, either IVA or bankruptcy. Therefore it is always important that your IVA proposal offers both you and your creditors a fair deal.

My IVA has been rejected, what next?

If your IVA negotiations are rejected, then there are other alternatives which you may want to consider, such as a debt management plan or bankruptcy. AllClear Finance are here to help, and we will offer you assistance about which IVA alternatives offer you the greater number of benefits.

Contact the AllClear Finance IVA team on 0800 048 1762.