Gregory Pennington - debt management company

Debt Management Plan or IVA – which is better for me?

What’s the difference between an IVA (Individual Voluntary Arrangement) and a debt management plan from a debt management company such as Gregory Pennington?*

If you’re if debt, of course, the real question is: “Which would be better for me?” Take a look at the most important similarities and differences.

Debt management and budgeting – the cost of kids

As anyone on a debt management plan will know, budgeting can be an eye-opening experience. Actually writing down where the money goes can be an unwelcome – but essential – ‘reality check’.

Keeping track – an essential part of debt management
For example, research from the Co-operative Bank Savings indicates that the average British family spends around £5,000 per year entertaining the kids! If that sounds far-fetched, it just shows the importance of keeping track of your finances, and why it’s such a vital part of any debt management plan: the big expenses are easy to spot, but it’s the little expenses that really add up.

Full andamp; Final Settlement offer - what is it?

If you have an overdue debt that you do not think you will be able to repay in full, some creditors may accept a ‘full & final settlement offer’. This is an offer to your creditor(s) of a lump sum in order to settle your debts. This lump sum is unlikely to be for the full amount: if you’re in financial difficulties and your creditors aren’t sure they’d ever get the full sum, they may well prefer to get some of it now than hope to get all of it in the future.

There are a number of reasons why your creditors may accept a full & final settlement offer...

What is an Administration Order?

It’s a mistake to think the courts are only there to help creditors. If you’re having problems keeping up with monthly payments to your debts, you may be able to ask the County Court for an Administration Order (see ‘Do I qualify for an Administration Order?’ below).

An Administration Order would group all your debts together and lay down how much you can afford to pay towards them all each month. You’d make just one monthly payment to the Court, which would then pay each creditor an agreed amount. The Court would also take a small percentage of the money to cover costs.

What are you entitled to? (Part 2)

If you’re having problems managing your debts, you’d undoubtedly find it easier if you could increase your disposable income: raising your income, lowering your expenditure, or both.

Of course, wages aren’t the only form of income, but far too many people aren’t aware of what they’re entitled to. The government estimates that billions of pounds in benefits are going unclaimed across the UK.

Here are just some of the benefits available to UK citizens. Are you entitled to any?*

What are you entitled to? (Part 1)

What is a Statutory Demand?

A statutory demand is a demand for payment of a debt over £750. It’s also a warning that your creditor may start bankruptcy proceedings against you if you don’t pay within 21 days. A creditor does not need to get the court involved to serve a statutory demand.

It’s worth noting that no-one can push for bankruptcy unless you owe them £750 or more. So if you receive a statutory demand, you could consider paying enough of the debt to bring the total under that minimum. This isn’t the best way of managing your debt – and you’ll still need to deal with the remaining debt – but at least you’ll no longer face the immediate threat of bankruptcy.

Debt management – in a credit crunch

Many people with multiple unsecured debts look into debt management or debt consolidation as a way of reducing their monthly outgoings and simplifying their finances.

The option that’s right for one person may not be right for another, since debt management and debt consolidation both have their benefits and drawbacks. So it’s a decision they should only take after talking to an expert debt adviser – and one of the factors that adviser will consider is the cost and availability of a debt consolidation loan. Clearly, that can vary from person to person and from month to month, as the credit market goes through good times and bad times.

What is County Court really like?

What is County Court action really like? On television, courts tend to be shown as glamorous places where defendants make passionate, witty speeches to solemn judges and fascinated juries. So depending on the kind of person you are, the thought of going to County Court could be either exciting or terrifying.

But real life is very rarely like TV.

What happens if I don’t pay my Council Tax?

Council Tax pays for local services, from policing to refuse collection. It’s a priority bill, which means paying it is even more important than paying your non-priority bills (such as credit cards or unsecured loans), as the consequences can be much more severe.

Creditors and Debt Collection Agencies

"Will my creditors call in a debt collection agency?"
"When – and why – would they do this?"

These are extremely important questions if you’re in debt, especially if you’re struggling to make your payments. Unfortunately, there are no ‘standard’ answers, as it depends on which company you owe money to.

Is debt management better than debt consolidation?

As with most questions about debt, the answer is `It depends`.

It depends on the individual. Not just the amount they owe, but their financial history, their attitude to dealing with creditors – and their confidence in their own financial skills.

What is a default notice?

To answer this question, we need to start by taking a look at the Consumer Credit Act 1974.

Consumer Credit Act 1974
The Consumer Credit Act 1974 is a piece of legislation that regulates almost all aspects of personal credit (for amounts up to £25,000), protecting borrowers and lenders alike.

Debt management: What debts can I include?

When dealing with debt becomes unaffordable, overly complicated, or both, many people turn to a debt management specialist like Gregory Pennington.

Gregory Pennington’s Debt Management Programme can deal with unsecured debts – debts not secured to goods or property (a house, for example, or a car or TV).

Debt management: What debts can’t I include?

When dealing with debt becomes unaffordable, overly complicated, or both, many people turn to a debt management specialist like Gregory Pennington.

Gregory Pennington’s Debt Management Programme can deal with unsecured debts – debts not secured to goods or property (a house, for example, or a car or TV).

Limitation Act 1980: when does a debt ‘die’?

“This morning, I got a letter from a credit card company I hadn’t heard from since 2000. I’d forgotten all about it, but they say I owe them £2,200. What do I do?”
Mr X.

If you’re worried about old debts coming back to haunt you, you might like to hear about the Limitation Act 1980.

Common Debt Terms

Here’s 8 quick debt definitions:

Debt management
An informal arrangement that can bring someone’s monthly payments down to affordable levels.

When someone can’t make their monthly payments, they can ask a debt management company to help. The company will then negotiate with their creditors, asking them to accept lower monthly payments (based on what they can afford after their essential living expenses), freeze interest and / or waive charges. Some debt management companies also distribute funds on behalf of their clients.

Bailiffs and Debt Collectors - what’s the difference?

When someone asks you to repay money you owe, your first question might not be ‘what’s your job title?’. But understanding exactly who they are and who sent them is a key part of understanding your rights.

Bailiffs
Bailiffs have the right to take away some of your possessions (but not anything that you can’t live / work without) so they can be sold to repay your creditor(s). They could be court officials, or employed by a private firm.

What Exactly is My Credit Report / File / Record?

Your credit report is your financial ‘track record’, made up of information collected about you by the UK’s Credit Reference Agencies (Equifax, Experian and Callcredit).

When you apply for credit, the lender will probably check your report to help them decide whether or not to approve the application – and how much to charge you if they do.

Bailiffs

Using bailiffs is one way that creditors can recover overdue debts. Bailiffs are rarely instructed unless there are serious arrears and a number of failed attempts to agree payment plans.

A bailiff can ultimately be sent to your home to take away your possessions so they can be sold to pay your debt.