Tenant Arrears Management
Debt Management FAQ’s
What advantages does a Debt Management Plan offer to help tenants with their debts?
Money Angels works with EuroDebt, a specialist Debt Management Company. We do not introduce or broker any re-financing services and the EuroDebt policy is not to encourage people in unmanageable debt situations to borrow more money. They will, however, discuss the advantages and disadvantages of re-financing if this remains a viable option, based upon your tenant’s circumstances. The service is very personal, including a home visit by a Regional Advisor in almost all cases and the appointment of a Personal Case Manager once your tenant is on a Debt Management plan. Your tenant will receive as a minimum a monthly statement and, if they elect to, diary notes of all correspondence relating to their account in the previous month.
Key features of the service are:
- It is confidential and non-judgmental
- Your tenant receives immediate confirmation of their Advisor appointment. Our aim is for a Regional Advisor to meet your tenant within 2 working days of contact with a debt advisor
- Immediate prioritization of any rent arrears and the establishment of a repayment plan that is acceptable to the agent or landlord
- Urgent processing of court documentation, for example; to try and stop bailiffs entering the property or get a variation order on any judgment debts which they may have. This applies to approximately one in four EuroDebt clients.
- Upon approval of the Debt Management Agreement (DMA), EuroDebt will contact the tenant’s unsecured creditors within 2 working days (or 14 days if your tenant does not waived their right to the cooling off period) to advise of their appointment and to request up-to-date balances and request that interest and charges be frozen.
- On average, EuroDebt’s clients have 8 creditors and over £24,000 of unsecured debt. Over 21% of clients have rent or mortgage arrears when they start their Debt Management Plan.
- EuroDebt is able to offer a basic bank account facility if the tenant has arrears with their existing bank. This can be important to ensure that priority creditors are paid ahead of the banking group where the tenant may have other accounts, like a credit card or loan.
- EuroDebt set-up a Single Payment Plan that enables the Tenant to make one or more payments per month into a client account that EuroDebt manages and then is responsible for promptly distributing to the tenant’s creditors. This payment includes EuroDebt's monthly management fee. A wide range of payment methods are available, including payment cards.
- Whilst the Money Angels Debt Management service provided by EuroDebt is not bound by Distance Selling Regulations, a 14 day "cooling off" period is offered after a tenant signs the agreement. They will be offered the opportunity to waive this right if they want to immediately move onto a plan.
- On average clients stay on a Debt Management plan for 57 months, demonstrating that EuroDebt have an excellent record of keeping clients on their plans and consistently making creditor payments, which is important for most creditors in continuing to freeze interest and charges and agreeing to full and final settlements if the tenant’s circumstances materially change.
- EuroDebt offer regular financial reviews, but no less frequently than the anniversary of the tenant joining the plan or the last annual review. Creditors' may also request reviews which we will deal with at short notice.
- EuroDebt deal with clients that are employed, self-employed, retired or on benefits.
- EuroDebt will support tenants in dealing with arrears on priority debts like rent, council tax or utility arrears.
Does the tenant have to borrow more money from EuroDebt to pay off their debts?
EuroDebt do not lend your tenants any more money (they do not need this) and EuroDebt do not pay off their debts for them. The Debt Management Plan allows your tenants to pay off your debts at a rate they can comfortably afford.
Will my tenants need to inform their creditors that EuroDebt will be acting on their behalf?
No, once they have given us all of their details and ensured that we have all their latest account information and statements EuroDebt will be able to deal with all of the creditors directly. EuroDebt will contact creditors and verify with them that the information your tenant has given us is correct and from that point they will be aware that our partners, EuroDebt will be dealing with your tenant’s financial matters. EuroDebt also then request all further communications to be through EuroDebt.
Who does the tenant need to contact if they have any questions concerning their finances?
Debt Management customers will have their own designated Personal Case Manager; whenever they have any questions they will be able to discuss matters with them personally.
How will our tenant’s know that their creditors are being paid?
They will receive a fully itemised statement every month. This statement will clearly itemise the monies received from the tenant and how much each creditor has been paid on the tenant’s behalf. Furthermore they will normally continue to receive statements from their creditors.
Will this affect my credit rating?
If your tenant’s are experiencing debt problems and they are, or have been, behind with payments it is probable that most of their creditors will already have recorded information concerning this with the UK consumer credit reference agencies, who are Callcredit, Equifax and Experian.
If the tenant opts to ignore their financial problems, hoping that they will sort themselves out, the credit reference agencies will almost certainly be informed by the creditors or via the courts if legal action is taken against them. If they attempt to borrow more money when they are already in financial difficulty then applications for credit will also be recorded on the respective credit reference agency files. Recent attempts to obtain credit, whether successful or not, may be taken into consideration by creditors when deciding whether to accept reduced payment proposals.
Whilst entering in to a DMP (Debt Management Plan) may adversely affect a tenant’s credit rating, it is our general experience that those who approach us already have an impaired credit record. Over the term of the DMP it is our objective to ensure that your credit file reflects regular payments to an agreed plan with each of your creditors.
Where we are able to settle accounts we aim to ensure that these are shown as satisfied on your credit file. Each credit agreement on your credit file can be marked to indicate that you are on a Debt Management Plan and that a payment arrangement is in place.
At the very least your credit file should demonstrate that you have taken a responsible attitude towards tackling your current financial difficulties. Where tenants give us permission, EuroDebt will pay for the cost of obtaining their Experian credit report under the Consumer Credit Act 1974. They send EuroDebt their file to assess the impact of the DMP on the tenant’s credit rating and provide comments on the content of the credit file relative to the information provided on the Client Financial Planner.
What happens if a creditor contacts the tenant?
The tenant simply forwards any correspondence to EuroDebt. If they get a telephone call, they ask the caller to 'phone EuroDebt and speak to their Personal Case Manager. Any calls/letters will usually cease once a regular payment system has been established.
What happens if a tenant wants to stop using the Debt Management Plan?
Your tenant’s are free to give written notice to terminate their Debt Management Agreement with EuroDebt at any time during their plan. However, EuroDebt request that your tenant gives at least two weeks notice so that they can formally inform any creditors that they are no longer acting for your tenant. Tenants may also ask to have copies of paperwork returned to them.
Tenants will also be advised of the probable consequences of ending their DMP before they have repaid their debts or put in place alternative arrangements with their creditors. Creditors are not duty bound to freeze interest and charges, so one immediate consequence of cancelling a plan early may be that collection calls and letters will resume once creditors are told that a tenant has cancelled their debt management plan.
Are there any incentives for me and our tenants?
Most definitely. EuroDebt survey all of their new clients after they have been on their Debt Management Plan for 6 months. 74% of the respondents confirm that they would recommend EuroDebt to someone in similar circumstances. When you sign your Debt Management Agreement your local Advisor will leave you with a EuroDebt folder which
will hold all of your key documents. It will also include several Referral Vouchers.
Your tenant
will be paid £20 for every appointment that is undertaken with someone that they have referred and who has given us permission to contact them. If they subsequently become a client then your tenant will receive a further £100. This money can be used to accelerate the repayment of their debts or they can be sent the money in High Street Vouchers
for any purpose of their choice. Your local Advisor will leave their business card in the folder for ease of contact.
Can you help with credit card or pay day loan debts?
We can help with all your tenant’s debt problems, by offering advice about debt to help resolve their current financial difficulties.
Important points to remember:
- Whilst lenders are not obliged to freeze interest and charges in 88% of current cases EuroDebt have referred to them they have done so*. Where a lender does not freeze interest and charges the amount owed and the period over which your tenant repays that credit account may increase, though EuroDebt will continue to request interest and charges be frozen once several payments have been made to the DMP.
- Whilst entering into a DMP can adversely affect a tenant’s credit rating it is common that those who approach us already have an impaired credit record. By entering into a DMP a tenant will be showing creditors that they are taking a responsible attitude to resolving any financial problems and this could help them in the future.
- With permission from your tenant, EuroDebt will pay for a copy of the Experian Credit Report for each signatory to the Debt Management Agreement and provide an assessment of the impact of the DMP on their individual credit file. EuroDebt will also match the information on the credit file to that on the Client Financial Planner to improve the accuracy of the initial statement of affairs that is issue to your tenant.
*Figure accurate at the end of February 2009
|
