Key Information

Key Information – Regarding a Debt Management Plan

If you have any questions regarding the Services we offer at Money Village, our friendly team are always at the other end of the telephone to help. You can contact us at any time for a free and confidential chat.

Below are a selection of our most frequently asked questions which have helped other clients.

Q: What does it cost?
A: We are committed to acting in your best interests. Although we are a profit-seeking company and charge a fee for our services, we do not want to undermine your abilities to make significant repayments to your creditors throughout the duration of the debt management plan.Setting up your Money Village plan, for which there is no charge, involves undertaking an assessment of your income and expenditure and general financial position, preparing a Statement of Affairs for your creditors, and making them offers of repayments.We do charge a monthly fee for the on-going administration of your plan which covers the cost of processing your monthly payments and disbursing to your creditors, providing access to a Personal Adviser to answer your queries and handle correspondence from your creditors and for undertaking an annual review of your financial position (and more often should this be required). This fee is deducted from your monthly payment to Money Village and the balance is then disbursed among your creditors on a pro-rata basis.Our monthly fee is comprised of an on-going management fee of £20 plus an amount of £3 per debt included in your Money Village Plan. In all cases, our maximum monthly fee is capped at £75. Notwithstanding this, we will always ensure that not less than 55% of your monthly payment to Money Village is disbursed to your creditors. This may change if creditors are added to or removed from the plan or if your individual circumstances change and your existing monthly payment becomes unaffordable. We will send you and your creditors a revised Statement of Affairs and offers of repayment if there are any changes to your fee.
Q: Can I include all my debts?
A: You can include unsecured debt such as personal loans, credit cards and store cards. Debts such as mortgages and other secured loans, HP agreements, utility bills, fines, taxes and child support payments and arrears on utility and Council Tax bills cannot be included in the plan. You must maintain payments to these arrangements. Non-payment may result in repossession of, or eviction from, your home or loss of essential goods and services.
Q: What do I do if I keep getting letters and phone calls from my creditors?
A: To begin with you may still get letters and phone calls from your creditors. You must not ignore these. This happens because it takes a short time to negotiate with your creditors and they will continue with their standard collection activities until a new repayment amount is agreed. This is normal and nothing to worry about.As soon as we have received your signed Letter of Authority and your first payment, you can tell your creditors to contact us. We will then be happy to deal with all letters and phone calls for you. Please note that we cannot guarantee that creditors will permanently cease to contact you. They are still entitled to do so. Collection actions, including default notices and litigation could still occur and the cost of default notices may be added to the debt. If your creditors do contact you, do not ignore them. Please ask them to contact us.
Q: How safe is my money?
A: We keep a separate Clients’ Account for all the money that we receive from our clients. The amounts that you agree are then paid out of this account to your creditors.
Q: How quickly do you pay my creditors?
A: We will pay your creditors within 5 working days of receiving cleared funds from you.
Q: How will I know my creditors are being paid?
A: You will continue to get statements from your creditors. As long as you keep up your payments to us, these statements will show payments from us. You will then be able to see how much we are paying to each of your creditors.You can also ask for a statement from us at any time.
Q: How will this affect my credit rating?
A: Your credit rating will be impaired by entering a Debt Management Plan as you will no longer be making contractual repayments to your debts. A record of this will be held on your credit file for up to 6 years. This means that you might not be able to obtain credit in the short term and there is some likelihood that you will not be able to do so in the medium to long term.
Q: Can I pay more or less if I want to change payments from time to time?
A: The programme is flexible. If you want to make an extra payment one month, just call us to discuss how you want to do this. If your circumstances change and you need to increase or lower your payments, just get in touch so that we can talk about what you need to do.Please note that it is important to maintain your monthly payments. If a payment is missed, your creditors may restart collection actions and add further interest and charges to your debt. Please get in touch with us immediately if you are struggling to make a monthly payment.
Q: Do I need to change banks?
A: A lot of our clients worry about this. If you stay with a bank where you have credit facilities like an overdraft or loan, they may take steps to collect the money owed to them as soon as your salary or any other payment is paid into your account with them.Because your programme operates by offering payments to your creditors that are based on how much you owe each one, then if your bank take their full payment, you will not be able to make reasonable payments to your other creditors.You should think about opening another account with no overdraft attached to it. This will give you more control over your money and will make sure that all your creditors get fair payments. If some of your creditors see that they are not getting a reasonable payment they may not agree to take part in your programme.Our advisers will give you any advice you may need on how to change bank accounts.
Q: Do I need to cancel my direct debits?
A: As soon as you have agreed your programme you should cancel all standing orders/direct debits to creditors on the programme, taking care to ensure that any payments to priority creditors such as mortgage, council tax, water rates, gas, electricity etc, are maintained or re-arranged.
Q: Is this a loan?
A: At Money Village we look for the best solution for you. Our debt management programme is not a loan. If you take out any more loans you will be increasing your debts. We rearrange your existing debts into smaller payments that you can afford more easily. Although we negotiate to try to reduce or freeze interest rates, you should be aware though that sometimes you may have to pay more interest in the long term.
Q: What if I am not happy with the service?
A: We aim to provide a professional service at all times. However, if you are unhappy with the service that you’ve received, please follow our complaints procedure (click here to download), explaining why you feel that we have not met your expectations. We will contact you straight away to discuss this. You also have the right to refer your complaint to the Financial Ombudsman Service if you are not satisfied with our response.Further information is available on the Financial Ombudsman Service website (www.financial-ombudsman.org.uk).
Q: Cooling Off period
A: You may cancel the agreement at any time during the first 14 days in writing or by telephone, and we will refund any fees you have paid to us. We will not refund any payments that have already been made to your Creditors.
Q: Are you governed by any regulations?
A: We are authorised and regulated by the Financial Conduct Authority and we are members of the Debt Managers Standards Association (DEMSA) whose Code of Conduct we follow.
Q: What happens to my information and records?
A: All correspondence to do with your programme (including letters to and from you or your creditors) will be kept by us for as long as your programme is operating.When your programme ends, we will, if you ask, send all this paperwork back to you. You must tell us in writing during your programme or when it ends.If you do not want your paperwork back, we will store it safely for twelve months and we will then destroy it.
Q: How long will a Debt Management Plan last?
A: The following is an example of how long a plan may last and the total fees that could be payable:-Assume a client who has 5 unsecured debts totalling £25,000 with contractual repayments totalling £750. Money Village has performed a detailed assessment of the clients’ financial circumstances, income, expenditure and concluded that she can only realistically afford to pay the creditors a total of £255 each month. We will charge no initial fee for the set-up of the plan but will deduct our monthly management fee of £35 (on-going fee of £20 plus £3 for each of the 5 debts) from the monthly payment of £255. This will leave £220 to be distributed amongst the creditors on a pro-rata basis as follows –

Creditor Amount owed Monthly pro-rata payment
Barclays Loan £10,000 £88.00
Lloyds Credit Card £5,000 £44.00
Store Card £4,000 £35.20
Catalogue Company £3,500 £30.80
Payday Lender £2,500 £22.00

In this example it will take our client 114 months to repay the debt. They will pay Money Village Monthly Management fees totalling £3,990. The total amount paid to Money Village during the life of the plan will be £28,990 of which £3,990 relates to fees with the remainder being sent to the creditors.

This illustration assumes that the creditors will freeze interest and charges on the debts. Although we are able to negotiate this in the majority of cases, we cannot guarantee that this will happen. You may also be able to decrease the repayment period by increasing your monthly payment if your circumstances permit and, providing you have the funds to do so, Money Village can negotiate reduced settlement figures with some or all of your creditors.

Warning – if we negotiate lower payments to your creditors, this will increase the amount of time it takes to repay your debts and the total amount that you repay.