Frequently Asked Questions

How much will I have to pay into my debt management programme?

It depends on your circumstances. It’s important to keep up with your regular monthly payments, or your creditors may cancel the agreements we have made on your behalf. This is why we will work out an affordable monthly payment, based on your earnings and expenditure.

How do I know my debts are being paid?

Once up to date balances from your creditors have been received, your monthly payments between them are pre-portioned based on how much each is owed. A statement showing how much each creditor will receive will be issued. This remains fixed unless your circumstances change. You will be issued a quarterly statement showing all transactions on your account. In addition to this, you will still receive statements from your creditors.

Is this a loan?

No. We neither lend you money nor pay off your debts. Your payment plan is a solution that allows you to repay your creditors at a monthly rate that you can afford. If you do not make payments into the plan, we cannot make payments to your creditors.

Will I be credit checked before acceptance?

No. Since we do not lend you any money, we do not need to credit check you.

Can I come on plan if I already have CCJs against me?

Yes. You can even use the plan to make payments against any existing CCJs that you have. Just make sure that we know exactly what your current situation is when you talk to us before coming on plan.

Does it make a difference if I am a homeowner or tenant?

No. It makes no difference whether you are a tenant or homeowner or even if you are still living with your parents.

Do I have to be in full time employment?

No. To be accepted onto debt management, you only need to have a surplus of income above what you need to live on.

Will you be dealing with every company I owe money to?

No. Some of your debts may be regarded as priority debts due to serious consequences if payments are not made. An example is your mortgage or utility bills. These will be taken into consideration when calculating what amount is available to distribute to your other lenders and it is very important that you continue to pay these in full yourself.

What is the difference between a secured and unsecured debt?

A secured debt is a debt secured against an asset that you own. Typical secured debts will be a mortgage, a secured loan, a car loan, etc. An unsecured loan is any loan not secured on an asset, such as a bank overdraft, a personal loan, a credit card, store card, etc.

Do creditors always accept reduced payment offers?

Creditors do not have to accept any offer of repayment below the contracted minimum. However it is our experience that they are prepared to accept reduced repayment offers where we are able to demonstrate that the offer is reasonable and that you are committed to repaying your debts by use of our debt management service.

Will the plan affect my credit rating?

Because coming on plan will result in you not making contracted repayments on your unsecured debts, you should expect that your credit rating will be adversely affected. However, your credit rating may already be poor if you have arrears or a history of missed or late payments.

What if my creditors continue to pursue me for payments?

Certainly in the short term, your creditors will continue to take action to recover your debts. Do not ignore them. Deal with calls politely, informing creditors that you have appointed ourselves to act on your behalf. You should forward any letters to us to deal with on your behalf.

How long will the plan take?

Because you are making reduced payments on your debts, it will take longer for your debts to be paid off. As part of our initial consultation with you, we will provide you with an estimate of the likely time you will be on plan.

What will a Debt Management plan cost?

All the costs associated with your debt management plan are included in the payments you make into it. You don’t pay anything extra. At NDC, we are committed to being totally clear, open and fair to both you and your creditors about our fees and any other costs that may be incurred. We will fully inform you of the proposed fees for your particular case before you enter into the debt management plan. See Key Information and Fees

What if my circumstances change?

Because a Debt Management Plan is an informal arrangement, it is easy to change it as your personal circumstances change, and even to replace it with an alternative arrangement if that becomes more appropriate at a later date.

My bank says they will not deal with you and will take me to court if I use you?

A creditor cannot refuse payments from a debt management company and then take you to court for non-payment. Some credit companies may prefer not to deal with us so they can apply more pressure to you, however you have a legal right to have anyone you wish deal with your finances.

My bank says you have not written to them, but you say you have. Why?

Employees of a creditor’s collections unit have one job, to try to get you to pay money. Unfortunately, some will do this any way they can. Once they acknowledge we are dealing with the account, they know they have to negotiate through us. If they tell you they have not heard from us then they have more leverage. If they make you think we are not doing our job properly, they will convince you to cancel the agreement with us, and then they can use any tactics they like to get the money from you. If this happens inform them that we are dealing with your affairs, contact us immediately and we will then issue a further copy of correspondence to them. .

My bank said they are going to send a bailiff round to collect their money, can they?

No. A bailiff can only be instructed and sent by a County Court or Sheriffs office, this means a bailiff can only call if you default on a court order. A debt collector may try to trick you by saying,”if you don’t pay this bill, we could send a bailiff round” this is not true unless you’ve defaulted on an earlier court order.

Will my creditors deal with you?

Normally the answer to this question is yes, especially at the present time when so many people find themselves in debt. NDC has a well-established record of dealing with creditors on behalf of people in debt. The Office of Fair Trading encourages representation. They express the view that when a consumer appoints a representative to negotiate on their behalf, it is an unfair and improper business practice on the part of the creditor to operate a policy, without reason, of refusing to consider such a request. It is a principle of law that creditors cannot refuse to accept payments tendered by someone on behalf of someone else.

Can I cancel my plan at any time?

You have the right to cancel during the first fourteen days cooling off period from the day after the contract was concluded and that you were in receipt of the paperwork you will get a full refund if payment has been made less any charge for services already provided.

You may cancel the agreement after the cooling off period (although you would not be entitled to a refund of anything you have paid to date) by giving us one month written notice to
NDC 5th Floor 44 Broadway Stratford London E15 1XH so we can inform your lenders.

What is an IVA?

Using Government legislation that is designed to help you clear debt, an IVA is a legal agreement between you and your creditors under which you pay an affordable and agreed monthly sum usually for 5 years. The total amount paid by you is divided up between all of your creditors and they accept this amount in full and final settlement of all the money that is owed to them once you have made the final monthly payment into the arrangement. Your creditors will then write off any amount which has not been paid in this way. This will regularly result in creditors writing off up to 75% of what they are owed and in many cases even more than that.

How can an IVA help me?

Once set up and if you continue to pay the agreed amount each month you’ll be protected from any further action being taken against you by your creditors.

How does the process work?

Talk to us, explain your situation, and we’ll assess whether or not an IVA could be the right solution for you. If it is, we’ll work with you to draw up an IVA Proposal – a formal offer showing your lenders what you would be able to pay. Assuming this Proposal is approved, you’ll simply start making your monthly payments (which will be based on your available income after you’ve paid all your regular expenses). As long as you fulfil your side of the agreement, any outstanding debt will be written off at the end of the IVA.

What will happen if I cannot meet my payments?

NDC will agree the payment plan that best suits your needs. This should ensure you can meet your payments for the duration of the IVA, as not meeting your agreed payments can result in bankruptcy. If your circumstances do change and you find that you are unable to meet your payments, we will try to renegotiate the terms of the agreement with your creditors.

What happens when the IVA is completed?

As long as you have fulfilled the terms of the agreement, your creditors will have no further claim against you and the balance of any remaining unpaid debts is written off.

Do all of my creditors have to agree to an IVA?

Even if they don’t vote, or they vote against your proposals, each of your creditors will be bound by the agreement as long as it has been accepted by this majority

Why would my creditors accept an IVA?

In accepting an IVA, your creditors will expect to get a better return than they would from any other reasonable alternative, and your payment proposals should demonstrate this to be the case. Your creditors will also benefit from the fact that your performance with the terms of your IVA will be monitored.

What will an IVA cost?

All the costs associated with your IVA are included in the payments you make into it. You don’t pay anything extra. At NDC, we are committed to being totally clear, open and fair to both you and your creditors about our fees and any other costs that may be incurred. We will fully inform you of the proposed fees for your particular case before you enter into the IVA. See Key Information and Fees

Will an IVA protect my house?

One of the key benefits of taking out an IVA over bankruptcy is that the individual’s home is safe from repossession.

How much will I have to pay each month?

We will carry out a full assessment of your income and expenditure and thereafter ensure that the monthly amount that we will ask you to pay is an amount that is affordable to you and will allow you a comfortable standard of living during the course of the voluntary arrangement. The amount that you pay will be calculated by looking at your monthly income and your monthly outgoings to ascertain what surplus cash is available to be paid to your creditors. To do this we ignore any payments that you presently make to your creditors because these will also stop once the IVA begins.

Will I qualify for an IVA?

Any individual who is having difficulty paying their debts can apply for a voluntary arrangement. We will need some basic information from you so that we can ascertain if a voluntary arrangement will be the right solution for you and if it is we will prepare the papers to put the arrangement forward to your creditors.

Will my creditors really write off debt?

In voluntary arrangements creditors are offered more than they would receive if you were made bankrupt. Additionally the creditors know under the voluntary arrangement what they are going to receive and when they are going to receive it. They do not have to spend time and money chasing you for payment or employing debt collection agencies or issuing court proceedings and can thus save time, cost and expense. Creditors usually take a sensible and practical approach to the situation.

Will I be able to keep my car?

You will always be able to retain your vehicle because more often than not you will need a vehicle to get to and from work to allow you to earn the money that you need to live on. Creditors recognise that if you cannot get to work then you will have no surplus income to make payments into the voluntary arrangement and are therefore happy for you to keep your car.

Can I have an IVA if I have a CCJ?

Yes. Indeed it will help as it will prevent your creditors from pursuing enforcement proceedings against you.

Do I need to be working full time?

Not necessarily. However you will need to demonstrate to your creditors that you have sufficient surplus income to pay into the arrangement.

Does my partner need to know about my IVA?

Yes if you are married or co-habiting. It is likely that creditors will require full information on household income and expenditure.

Will all my debts be covered by my IVA?

An IVA only covers unsecured debts including unsecured loans, store cards, credit cards, catalogue debts and arrears regarding utilities.

Will my credit rating be affected by my IVA?

If you are already in arrears with your repayments to your creditors then you will already have a poor credit rating. If you successfully complete an IVA it will go some way towards restoring your credit rating.

What happens if I don’t keep up the payments on my IVA?

If you default on your payments, the supervisor of an IVA can initiate bankruptcy proceedings against you.

I am self-employed. Can I do an IVA and continue trading?

Yes you can, however IVAs for individuals in this position are generally more complicated and often require more work on the part of the IP. Once we have all of your information we will be able to discuss this issue with you and look at how this may alter the way that the IVA proposals are put together.

What if my creditors do not accept my IVA proposals?

In the event that your creditors do not accept the proposals then the IVA will not be implemented and the creditors remain free to take any action they wish (and are entitled to do so) against you. This may result in bankruptcy proceedings being started.

Can I finish my IVA early?

Yes. If you wish to pay a lump sum into your IVA, then we can arrange a variation meeting with your creditors to offer it and confirm any final settlement. Under normal circumstances this will not happen, but it may be that you inherit a large sum or win the lottery. This is usually called a windfall. There will be a windfall clause in your IVA contract that will require you to pay the money into your IVA. As your creditors have agreed to freeze interest and charges and write off a large proportion of your debt, it is only fair that you should come to a new arrangement with your creditors.

Can I cancel my IVA?

No, as an IVA is a legal process it means that once it has been set up it cannot be cancelled.

What is bankruptcy?

Bankruptcy is essentially a declaration to your creditors that you cannot afford to repay your debt. Once a bankruptcy order has been made your creditors will not be able to contact you directly again. Recent changes to regulations in bankruptcy, effective from 1st April 2004, allow for automatic discharge from bankruptcy within 12 months. You will be required to make payment towards bankruptcy debts for a total of 3 years after the bankruptcy order has been made.

How can I bring about my own bankruptcy?

We can assist you in applying for your own bankruptcy. The procedure involves you completing a set of forms, making an appointment at your local county court where your bankruptcy application can be presented to the court. Once consideration has been given to your application by the court clerk, an Order is made and the Official Receiver is appointed in the first instance to manage your financial affairs and to take over negotiation with your creditors. The Official Receiver may appoint a Trustee in Bankruptcy to take over the management of the bankruptcy. This usually happens when there are assets, which can be recovered for the benefit of your creditors.

What are the consequences of bankruptcy?

The disadvantages of bankruptcy are that any assets you have at the time of your bankruptcy will vest in the Official Receiver. If you own your own house and there is equity in it the Official Receiver, through the appointment of a Trustee in Bankruptcy, will take steps to take possession of your house and sell it so that any equity can be released to the creditors and help to pay the costs of administering your bankruptcy. Any policies you have will vest in your Official Receiver. This will include any ISA’s, unit trusts and endowment policies.

Whilst a Trustee cannot take any sums out of a pension policy for the benefit of your creditors it is important to note that if you have a works pension policy and you file for bankruptcy your entitlement to a payment out of the policy on retirement may be affected. Whether or not this is the case it can be ascertained from reading the small print in your pension policy. We can help you with this.

People often think that by filing for bankruptcy they do not have to repay their debt. This is not the case. The Official Receiver can expect you to make income payments for 3 years. S/he will assess what surplus income you have each week/month and expect that you pay that sum for the benefit of your creditors. The circumstances surrounding how the debt was incurred will be investigated by the Official Receiver.

In some circumstances the Official Receiver may apply to the court for a Bankruptcy Restriction Order. This would prevent you from being automatically discharged within the 12 month period. Non co-operation could also result in a bankruptcy restriction order. For the duration of the bankruptcy order you will not be able to obtain credit over or act as a company director. There are also some jobs that you would not be able to undertake if you were made bankrupt.

Some employers’ frown on bankruptcy and it may be a term of your contract that you are solvent. If this is the case then there is a chance that you will lose your job as well. If you are concerned about any of these disadvantages then please contact us for further advice. Bankruptcies are advertised in local newspapers and in the London Gazette. You will find it very difficult indeed to operate a bank account whilst you are bankrupt.

What are the advantages of bankruptcy?

The advantages of bankruptcy are that the creditors will not be able to make contact with you or make demands for payment directly. Once the bankruptcy order has been made you can look forward to being debt free within 3 years with the potential for the bankruptcy order to be discharged within 12 months.

Can creditors make me bankrupt?

Creditors can apply to the court for a bankruptcy order to be made against you. This is a totally separate procedure to that of you applying for your own bankruptcy. Creditors are usually likely to take this step if you have assets which the creditors can require to be sold to repay the outstanding debt or where by the issuing of the petition the creditors feel that they can improve their prospects of receiving payment in full for the outstanding amount.

The procedure for this is that the creditors usually have to apply to the court for a judgment. Then the creditor will instruct enquiry agents to arrange for service of a statutory demand. This is the start of the process. You then have 19 days in which to make an application to the court for the statutory demand to be set aside. If this time lapses and no application is made then in those circumstances a bankruptcy petition can be presented at any time thereafter. If a bankruptcy petition has been presented please contact us for advice on how to defend it or what avenues are available to you.

What about my bank account?

All of your bank accounts will be closed and any funds in them used by the Trustee to pay people you owe money to. If an account is in joint names with your spouse or partner then only half the funds can be taken. You’ll be allowed to open a new bank account with the authorisation of your Trustee.

Will my student loan be written off as well?

If your student loan was taken out after 1st September 2004 then it can’t be written off. It will be treated as if the bankruptcy had never happened – if you are currently having payments taken directly from your salary then these will continue until the loan is repaid. If you fall below the income threshold no payments will be made until your salary reaches the level where repayments automatically start.

Note that interest will continue to accrue, as per your agreement with the Students Loan Company. If your student loan was taken out before 1st September 2004, you can include the Student Loan Company as a creditor in your bankruptcy and your monthly payments to them should cease.

What will happen to my Credit Rating?

Once you have been declared bankrupt, your credit reference agencies will be notified. The bankruptcy order will remain on your file for six years. Even after this time you may still have to declare your bankruptcy status when applying for credit, such as a mortgage.

Does Bankruptcy write off all my debts?

Although bankruptcy does clear most of your earlier debts, there are still those which are not written off. These include Court fines, Child support, Debts connected with fraud, Student Loan Company debts and Secured creditors.