LONG-TERM DMP? Could you be debt-free quicker? TACKLING DEBT MONEY ADVICE LIFESTYLE BUDGETING

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1 LONG-TERM DMP? Could you be debt-free quicker? TACKLING DEBT BUDGETING LIFESTYLE MONEY ADVICE

2 STUCK IN A LONG-TERM DMP? Could you be debt-free quicker? Like most of our clients, you probably felt a great sense of relief when you entered a Debt Management Plan (DMP) with us. Contact from your creditors reduced dramatically, you could finally afford your revised debt repayments, and most importantly you could get on with living your daily life. In a DMP you repay all your unsecured debts in full. So if your debt level is high or if you can only afford minimal repayments it could take many years to clear your debts. What s more, if your creditors carry on adding interest and charges, it will be even longer before you re finally debt-free. And another thing your creditors can register payment defaults against you at any time, so you could have to wait up to 6 years after you ve completed your DMP for all the defaults to disappear. Clearly, this can cause long delays in repairing your credit rating, which isn t ideal if you re trying to plan for your financial future Is there another way? The good news is that there could be a better way to deal with your debts! Read this leaflet to find out more and see how you could become debt-free quicker... We re here to help! If you have any queries, or if you would like to discuss the options in this leaflet in more detail, simply give us a call FREE on

3 COULD YOU INCREASE YOUR DMP PAYMENTS? Your regular DMP payment is set at a level you can afford, after all your essential living costs and any priority debts have been taken care of. If your financial position has improved even slightly since we last reviewed your income and outgoings, why not consider increasing your DMP payments? Just a small increase in your regular DMP payment, could significantly reduce the amount of time needed to repay your debts. For example * : If your outstanding debts are 10,000, and you re paying 50 per month, it will take you 16 years and 8 months to clear your debts. Increase your monthly payment to 70, and you could clear your debts in just under 12 years. That s you debt-free nearly 5 years earlier! If your outstanding debts are 15,000, and you re paying 100 per month, it will take you 12 years and 6 months to clear your debts. Increase your monthly payment to 130, and you could clear your debts in 9 years and 7 months. That s you debt-free nearly 3 years earlier *These examples are based on outstanding debts with no further interest and charges applied by creditors for the remaining DMP duration. If interest and charges are added, this will increase the amount to be repaid, and extend the duration of the DMP. How long will your DMP last? To work out how many more payments you ll have to make before your DMP is completed, just do this simple calculation: Total outstanding debt current regular DMP payment amount = remaining number of DMP payments to make Now try increasing your regular DMP payment amount slightly, and do the calculation again to see what a difference it makes. If you can t afford to increase your regular DMP payments, maybe a different debt solution could enable you to become debt-free quicker? Read more about alternative debt solutions on the next few pages...

4 COULD YOU SWITCH TO AN INDIVIDUAL VOLUNTARY ARRANGEMENT (IVA)? With an IVA, you could be debt-free in just 5 years, regardless of how much you owe. A substantial portion of your debt can be written off, and you pay the rest back in affordable monthly payments with no more interest added, no more threats of legal action, and no more hassle from your creditors. In an IVA, you will have to stick to a tight budget, but your debt repayments will be taken care of, and you ll still have enough money left over to run your home, buy food and clothes for your family, and keep on top of all your essential bills. Am I eligible? At least 7,000 of outstanding debt Unable to afford your contractual unsecured debt repayments Some disposable income to offer your creditors each month Your creditors may not agree to your IVA Proposal Your credit rating will be adversely affected If your IVA fails, there is a risk of bankruptcy Your IVA will be recorded on the public Insolvency Register Your current or future employment may be affected If you re a homeowner, you may have to release equity from your home to pay into your IVA if you can t, your arrangement may be extended for a further 12 months PayPlan refer clients to our associated companies PayPlan Partnership Limited and PayPlan Bespoke Solutions Limited for IVAs. Switching from my DMP into an IVA was very easy PayPlan sorted it all out for me. And my monthly payments actually went down a bit too. I ve only got 2 years of my IVA left now it s a huge relief knowing there is a fixed end date. (Pearl, Sheffield)

5 COULD YOU SWITCH TO A DEBT RELIEF ORDER (DRO)? With a DRO, you don t make any further debt repayments and after a year, all the debts included in your DRO are written-off, leaving you debt-free. A DRO is effectively a simpler version of bankruptcy, which you can apply for without attending court and the process only costs 90, which can be paid in instalments if necessary. Am I eligible? No owned property Total unsecured debts of less than 20,000 ( 15,000 in Northern Ireland) A vehicle worth no more than 1,000 Other assets worth no more than 1,000 ( 300 in Northern Ireland) Disposable income of less than 50 per month Your credit rating will be adversely affected, and you will also face restrictions in obtaining further credit in the future Your current or future employment and tenancy agreements may be affected Your DRO will be recorded on the public Insolvency Register Further interest and charges may still be applied, and added to the debt if your DRO fails COULD YOU OPT FOR BANKRUPTCY? Bankruptcy usually lasts for a year, after which most of your remaining debts are written-off, leaving you debt-free. But if you have some disposable income after all your essential living costs and any priority payments have been taken care of, you may be required to make payments from your earnings into your bankruptcy for 3 years.

6 Am I eligible? Limited assets There is a fee for bankruptcy: 680 in England & Wales, 647 in Northern Ireland Control of your significant assets (including any property you own) is passed to the Official Receiver who may sell them to repay your debts Your credit rating will be adversely affected and you will also face restrictions in obtaining further credit in the future Your current or future employment and tenancy agreements / mortgage contracts may be affected Your Bankruptcy will be recorded on the public Insolvency Register You cannot be a Director of a company or be involved in its management You cannot obtain credit of 500 or more without disclosing your Bankruptcy COULD YOU OPT FOR A DEBT SETTLEMENT? If you have access to a lump sum of money that isn t enough to repay all your debts in full, you could offer all or part of it to your creditors on the condition that they agree to write off your remaining debt to them. This is more likely to be accepted if you have limited spare funds with which to make your regular debt repayments. Am I eligible? A lump sum of money available Limited disposable income with which to repay your debts Your creditors may not agree to your Debt Settlement proposal Your credit rating will be adversely affected

7 ANY OTHER OPTIONS TO CONSIDER? If you have equity in your home or any other property you own you may wish to consider releasing some of the equity to repay your debts. Your options may include downsizing, re-mortgaging, secured loans, or equity release (over 55 s only). Am I eligible? Own a property with available equity Some disposable income to repay your secured lending Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay Also, if you own any other valuable assets (for example vehicles, art, antiques, jewellery, electronic items, etc.) you could consider selling them and using the money you make from the sale to repay your debts. We don t give advice on equity release or sale of assets. To find out more, you should seek specialist independent advice. If you re stuck in a long-term DMP and would like to become debt-free quicker, we re here to help! Call us on to find out if there s now a better debt solution for you.

8 COULD YOU SWITCH? If you re stuck in a long-term DMP and would like to become debt-free quicker, we re here to help! Call us on Calls are free from all landlines and mobiles. We re open 8am-8pm Monday to Thursday, 8am-5pm Friday and 9am-1pm on Saturdays. payplan.com payplanplus.com Please contact us if you d like this leaflet in Braille, large print or other languages. PayPlan is a trading name of Totemic Limited. Totemic Limited is a limited company registered in England, Company Number: Registered Office: Kempton House, Dysart Road, PO Box 9562, Grantham, NG31 0EA. Totemic Limited is authorised and regulated by the Financial Conduct Authority. Financial Conduct Authority Number: Totemic, the Totemic logo, PayPlan and the PayPlan Logo are all trademarks of Totemic Limited. Version 1 (England/Wales - online) - January 2017