Beware Of No-Paperwork Debt Management Plan Providers

A debt management plan is used to handle a small to moderate amount of debt. UK consumers who are interested in this often wonder what types of documentation and paperwork are required. They want to have everything on hand so the plan can be set up as soon as possible. Different debt management companies have a different document and paperwork requirements so check with yours to learn more. Regardless of which company you use to manage debt, be aware of one issue.

Beware of no paperwork debt management plan providers and check they are regulated by the Financial Conduct Authority or if they are an Insolvency Practitioner. All Insolvency Practitioners are regulated usually be the Insolvency Practitioners Association (IPA) or the Institute of Chartered Accounts England & Wales. (ICAEW) We can confirm if you are dealing with a regulated provider by filling out the form online.

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Some companies that provide debt management plans are not reputable

These firms typically request little or no documentation in order to establish a plan. Though some people may view this aspect as convenient, it is actually a huge red flag that the company is not conducting business properly or in compliance with the law.

The Office of Fair Trading (OFT) has issued debt management guidance stating that providers of plans for managing debts must make a reasonable attempt to verify income and expenses. If they fail to, there is a risk that the advice they offer will be inappropriate for your financial situation. In addition, creditors may be sceptical about the information they receive. This type of management firm is not looking after the interests of the debtor and can get into regulatory trouble.

Bypass a company that does not require documentation or paperwork to establish a DMP with one that adheres to OFT guidelines. You will need to make weekly or monthly payments based on your income and expenses. The plan administrator will determine the amount that you can afford to pay through the plan. Payslips for at least the past three months are typically required to confirm income. Self-employed individuals may be required to provide alternate documentation such as a copy of the most recent tax return or a letter from their accountant.

If the debtor receives other forms of income like tax credits or benefits, relevant documentation may be requested

Some companies will accept bank statements as proof of these payments. In addition to income, major expenses like utilities may have to be verified. Vendor bills or bank statements may be accepted as proof of monthly expenditures. Several months of bank statements can also be used to verify financial status.

Creditors will view a repayment proposal as credible if the information within it is based on this documentation. Bank statements confirm identity, prove that financial information has been correctly recorded, and ensure that the advice provided by the debt expert is suitable. The debt professional will also need details regarding creditors, including names and account numbers. If this information is not readily available, the debtor can contact creditors to obtain it.

If a solicitor or debt collection agency has become involved in collecting the debt, their contact information should also be provided. Supplying the plan administrator with current balance information may expedite the delivery of repayment proposals to creditors. Information gaps can be filled in during the process. The key is to provide as many details as possible so an affordable repayment plan can be established.