Discussion thread - DMPs and the continuing addition of interest.

[Wintry]

***This thread has been created out of another in order to allow a rather interesting discussion to take place. Original thread

 

http://www.consumeractiongroup.co.uk/forum/showthread.php?394680-StepChange-(CCCS)-–-Interest-Charges-–-Help/page7

***

 

 

 

 

That's disgusting, it seems like they have not suspended the interest at all, you could get an unsecured loan and pay it off at a better rate. Have you discussed this with your case worker at stepchange ?

 

Hi

 

I more or less agree here

 

Why are charges and interest not frozen when people go with a creditor sponsored agency such as Stepchange?

 

They should be universally frozen if people have complied and are doing their best or what is the point people may ask?

 

Charges and interest should be frozen anyway if people are doing their best, but especially so when going with one of these not for profit 'creditor sponsored outfits' I would think!

 

Stepchange should be 'stepping in' heavily on behalf of 'their clients' in these type of situations as after all they are getting paid to handle peoples Debt Management Plans via the creditors.

 

Can anybody spot the contradiction maybe?

 

Going with a free DMP provider is still a no brainer for me however or do it yourself (if suitable of course) as I understand more and more people are now doing!

 

My views:)

Edited August 2, 2013 by citizenB

[DuffNCustard]

The issue here is that a DMP is an informal arrangement, creditors are not required by law to freeze interest. The changes to the CCA 1974 that made it very much easier for a creditor to obtain a charging order has been implemented, however that part of the proposal to give DMP providers statutory powers to order creditors to freeze interest has been booted into the long grass.

 

The only toehold available to debtors is the banking code of practice that requires a lender to deal sympathetically when debtors are in difficulty. There is an argurment to be had that continuing to charge interest and ignoring requests by a debt charity recognised by the courts indicates that they are not adhering to their own guidelines

 

http://www.bba.org.uk/downloads/bba/The_Lending_Code.pdf

 

I had a DMP with CCCS as ait was then - paid off all my debts in June 2011. MBNA and Halifax refused point blank to stop interest charges, it wound me up no end but there was nothing I could do. They even fiddled the minimum payment so that my DMP payment fell within it. For me as other debts got paid so these two got an increased payment. In the last months of my DMP payment to MBNA exceeded £800 a month, the debt and the interest being charged soon fell dramatically. It may be that this will apply to you. All I can say is keep slogging on. I know that when you tell yourself "next year I'll be finished" and then find interest charges kibosh that vision its gut wrenching, but it does come to an end and you'll get there too and its the most marvelllous feeling in the world, so grit your teeth and allow yourself a 'tourettes time" every week when you soundly, roundly cuss them to perdition in the rudest most disgusting words you know.

 

For the final payment I ensured that CCCS paid them each a few extra quid, enough to put the accounts in credit. I have left them as it is and at intervals write to them instructing them to close the accounts. Then I ignore their responses. It pleases me vastly that they still have to service these accounts.

[Wintry]

Hi

 

Actually, I have thought again about my previous post -

 

Stepchange get paid out of the money that is paid in by their clients really when you think about it, don't they?

 

The creditors basically get less as a result.

 

Tricky subject then if charges and interest continue to be applied!

 

My logic I suppose.

 

Are Stepchange reps still posting on here? if not, then I betcha they look in every now and then.

 

Be nice if they would comment on this very open forum, maybe explain why creditors still apply charges & interest (if this is the case of course)

 

Rumour has it that they have spent enormous amounts on advertising and dare I say it 'marketing' since changing their name.....strange that, some might say... for a 'charity'

 

Why not come on this very popular and open forum and answer the legitimate questions?

 

Those independent, impartial non creditor kick back payments debt advisers wont bite...promise:)

 

Yer gonna have to come out in the open sooner or later guys, but Im not telling ya something you don't already know am I?

 

Just my opinions with just a touch of harmless banter amongst friends and allies, on a hot summer night in 'Robin Hood' Citizens A land:)

[Peterbard]

I would have thought that if you wanted to know why creditors apply interest on these accounts you would have to ask the individual creditor.

 

As for the advertising, well whats is the use of a service if no one knows it exists, They do have to compete with commercial firms after all who have no compunction about it.

[Wintry]

I would have thought that if you wanted to know why creditors apply interest on these accounts you would have to ask the individual creditor.

 

As for the advertising, well whats is the use of a service if no one knows it exists, They do have to compete with commercial firms after all who have no compunction about it.

 

Hi

 

Yes, fair points to certain extent

 

But when you are directly funded by the same creditors and paid out of the clients monies then you have to answer in my opinion?

 

The creditors know the standard debt advice procedure with debt management plans and pay millions to Stepchange out of money paid in by Stepchanges DMP clients, you would at least think that Stepchange would make an issue with the same creditors on behalf of their clients, how can it be acceptable to keep piling on the interest and charges.

 

The Stepchange site has client testimonials, you cant have it both ways, especially if you market yourself as an independent, impartial charity

 

Why don't they name and shame, have some kind of social policy

 

Have a look through this 2010 CCCS report, some interesting stuff and statistics in there given some of their previous claims on success rates, they no longer operate the token offer scheme mentioned as far as I am aware. The mentioned CAB Debt Management Plan partnership is also now defunct as far as I am aware.

 

http://www.stepchange.org/Portals/0/Documents/media/reports/additionalreports/BIS-managing-money-and-dealing-with-debt-CCCS-response.pdf

 

Their Debt Remedy Tool has also recently been seriously scrutinised and questioned on another forum by qualified experienced advisers I understand with Stepchange still to comment on this as far as I am aware.

 

Questions being asked by some is - are Stepchange now basically a giant Debt Management Plan factory and who's interests are they really working on behalf

 

Why don't they come on and address / answer the points and questions, they have in the past when they were called CCCS

 

Your comment on them competing with commercial firms is a very valid one and maybe answers a few questions, but at what and who's expense maybe.

 

I think Stepchange went for broke and maybe took their eye off the ball and are now a little trapped in their business plan with little room to manoeuvre with the scrutiny now piling up.

 

The competing thing works both ways as Stepchange are now finding out

 

Me, I am for genuine free independent, impartial advice on behalf of the consumer the best I can.

 

Again, thanks for the reply, that's what these forums are all about, maybe Stepchange can take the cue and join in!

 

My opinions

[DuffNCustard]

There is always the option to manage and run your own DMP, indeed there are many examples of this being done successfully by folks posting on CAG. For my own part I was very happy with CCCS and the help they gave me. I was not confident enough to set up and run my DMP, it was such a relief that someone was speaking to my creditors and sorting things out for me.

 

I sense that some folks here are getting rather exercised about CCCS/Stepchanges getting a kickback from the 'creditors'? For my part as ALL of my DMP payments went to my creditors why would I give a monkeys about it, especially as I was very confident that I had got a 'good deal'. How otherwise would they suggest the CCCS operational costs be met?

 

Finally no one is forced to use either Stepchanges or Payplan, you are completely free to run your own DMP or to pay a company to do so for you. Seems to me that some among us just like to be p*ssed off for the sake of it.

[Peterbard]

Thanks for the link, it is very interesting, I had not seen it before and raises a number of issues, some not related to this thread.

 

I am just a simple sole Wintry, to me as long as the debtor gets a deal where all his money goes to paying off his debts and none into he pockets of the DMP provider, i am not overly concerned in who provides funds to run it. I do see your point however.

 

I deal with Payplan a lot and it has to be said that the number of ancillary services(including goods on credit) they now try and sell to their clients is a bit unsettling.

 

It is good that they have to set out their stall and let people know of there existence, at one point, when asked why people didn't use the free agencies, the answer always used to be because no one knew they were there, they seem to be addressing that.

[Wintry]

There is always the option to manage and run your own DMP, indeed there are many examples of this being done successfully by folks posting on CAG. For my own part I was very happy with CCCS and the help they gave me. I was not confident enough to set up and run my DMP, it was such a relief that someone was speaking to my creditors and sorting things out for me.

 

I sense that some folks here are getting rather exercised about CCCS/Stepchanges getting a kickback from the 'creditors'? For my part as ALL of my DMP payments went to my creditors why would I give a monkeys about it, especially as I was very confident that I had got a 'good deal'. How otherwise would they suggest the CCCS operational costs be met?

 

Finally no one is forced to use either Stepchanges or Payplan, you are completely free to run your own DMP or to pay a company to do so for you. Seems to me that some among us just like to be p*ssed off for the sake of it.

 

Hi

 

Thanks for the interesting comments and points and I agree with some of them, but not all...

 

If you were happy with CCCS payments wise etc and if you don't give a monkeys, then fair enough

 

All the O/Ps payments will also be going to their creditors I should imagine but it would appear that huge amounts of interest and charges are still being added and this person has been informed that their DMP has been extended.

 

Stepchange receive millions in payments from creditors, how can the above then be be right?

 

There are other issues that have been raised about Stepchange concerning their Debt Remedy Tool

 

There are people questioning Stepchanges independence and impartiality, I am one of them and will continue to do so.

 

Stepchange seem to be conspicuous by their silence, If I worked for them I would welcome the opportunity to engage posters and address the issues after all they spend vast amounts on marketing don't they?

 

What are they afraid of, these are very serious issues and wont be going away.

 

I openly invite Stepchange to comment on here, maybe they will be able to help the O/P, perhaps look at getting any interest and charges reimbursed?

 

Tick, tock

 

My opinions

[Peterbard]

Hi

 

Thanks for the interesting comments and points and I agree with some of them, but not all...

 

If you were happy with CCCS payments wise etc and if you don't give a monkeys, then fair enough

 

All the O/Ps payments will also be going to their creditors I should imagine but it would appear that huge amounts of interest and charges are still being added and this person has been informed that their DMP has been extended.

 

Stepchange receive millions in payments from creditors, how can the above then be be right?

 

There are other issues that have been raised about Stepchange concerning their Debt Remedy Tool

 

There are people questioning Stepchanges independence and impartiality, I am one of them and will continue to do so.

 

Stepchange seem to be conspicuous by their silence, If I worked for them I would welcome the opportunity to engage posters and address the issues after all they spend vast amounts on marketing don't they?

 

What are they afraid of, these are very serious issues and wont be going away.

 

I openly invite Stepchange to comment on here, maybe they will be able to help the O/P, perhaps look at getting any interest and charges reimbursed?

 

Tick, tock

 

My opinions[/QUOT]

 

I think they would just say that it is up to creditors whether they freeze interest or not.

 

I would be interested to know what the original repayment details were on these accounts, if the OP is still about.

[Wintry]

Thanks for the link, it is very interesting, I had not seen it before and raises a number of issues, some not related to this thread.

 

I am just a simple sole Wintry, to me as long as the debtor gets a deal where all his money goes to paying off his debts and none into he pockets of the DMP provider, i am not overly concerned in who provides funds to run it. I do see your point however.

 

I deal with Payplan a lot and it has to be said that the number of ancillary services(including goods on credit) they now try and sell to their clients is a bit unsettling.

 

It is good that they have to set out their stall and let people know of there existence, at one point, when asked why people didn't use the free agencies, the answer always used to be because no one knew they were there, they seem to be addressing that.

 

Hi

 

Thanks for the reply and you make some fair points that are valued as much as mine or anybody elses, perhaps more so on occasions depending on peoples point of view, that's what forums are all about.

 

I am all for the free sector, and always point people towards them, its a no brainer really by going to a provider who is genuinely free and where all the payments go towards the debt as is the case with both Stepchange & Payplan - not forgetting of course that Payplan are actually profit making business.

 

Agencies have to be funded and business need to cover their costs and profit that's not the issue really.

 

The report is very interesting as you say, more so perhaps when it is studied very carefully and taking into account certain claims that have been made.

 

Marketing, spin works for so long, then the scrutiny starts to bite.

 

In my opinion Stepchange went for broke, bolted at the start going many lengths clear, leaving the rest behind along with something else, or so they thought, their problem is that they are perhaps now running out of steam and coming back to the field, into a chasing pack where one or two dark horses are still very much full of running.

 

It could get very interesting, mark my words.

 

My opinions

[Wintry]

Hi

 

Thanks for the interesting comments and points and I agree with some of them, but not all...

 

If you were happy with CCCS payments wise etc and if you don't give a monkeys, then fair enough

 

All the O/Ps payments will also be going to their creditors I should imagine but it would appear that huge amounts of interest and charges are still being added and this person has been informed that their DMP has been extended.

 

Stepchange receive millions in payments from creditors, how can the above then be be right?

 

There are other issues that have been raised about Stepchange concerning their Debt Remedy Tool

 

There are people questioning Stepchanges independence and impartiality, I am one of them and will continue to do so.

 

Stepchange seem to be conspicuous by their silence, If I worked for them I would welcome the opportunity to engage posters and address the issues after all they spend vast amounts on marketing don't they?

 

What are they afraid of, these are very serious issues and wont be going away.

 

I openly invite Stepchange to comment on here, maybe they will be able to help the O/P, perhaps look at getting any interest and charges reimbursed?

 

Tick, tock

 

My opinions[/QUOT]

 

I think they would just say that it is up to creditors whether they freeze interest or not.

 

I would be interested to know what the original repayment details were on these accounts, if the OP is still about.

 

Hi

 

Maybe they would

 

Wish they would come on here and maybe say that:)

 

Yes, also agree, more information might help, maybe we don't have the full picture to be fair

 

Best regards

[Peterbard]

I share the same disgust that all interest has not been frozen on these accounts. One problem with the big free DMP organisers is they appear not to have the time to devote to individual clients as, say, a small independent free debt charity might. It can be a long, hard slog with some banks to get interest frozen. They do usually eventually though.

 

The Banking Code is great as far as it goes, but IMO it is of more benefit to look good on the banks' leaflets being able to state they subscribe to the Banking Code - it looks good! Whether they actually comply with what they have subscribed to is a totally different matter. Taking them to court over it would be an almost guaranteed loss as there is no legal obligation to comply, in the same way as guidelines are just that, guidelines, not legislation.

 

Getting interest and charges frozen is really a matter of making yourself as big a thorn in their side as possible so they do it just to get rid of you in the end. That is my experience anyway. Lloyds TSB have never presented a problem for me, but I think much depends on how the initial letter is written as well. The worst I have ever had was Ulster Bank which is part of Nat West.

[Nick Pearson]

Interesting post and one on which I'd like to make a couple of observations. Creditors tell me that they treat repayment offers from free or fee charging customers in exactly the same way with regard to freezing interest and charges - that may or may not be true. I work for a fee charging debt solutions provider and in our experience your comment " One problem with the big free DMP organisers is they appear not to have the time to devote to individual clients" may have some validity. On to this case specifically and to play the devils advocate if I may. If the monthly repayments offered cover the interest accruing and reduce the capital, (and looking at the figures, they appear to be doing this), why should a lender freeze the interest and/or charges to which they are contractually entitled?

[Peterbard]

Interesting post and one on which I'd like to make a couple of observations. Creditors tell me that they treat repayment offers from free or fee charging customers in exactly the same way with regard to freezing interest and charges - that may or may not be true. I work for a fee charging debt solutions provider and in our experience your comment " One problem with the big free DMP organisers is they appear not to have the time to devote to individual clients" may have some validity. On to this case specifically and to play the devils advocate if I may. If the monthly repayments offered cover the interest accruing and reduce the capital, (and looking at the figures, they appear to be doing this), why should a lender freeze the interest and/or charges to which they are contractually entitled?

 

That raises an interesting point Nick, are you saying that a debtor is better presenting a smaller repayment if he wants interest freezing on an account ?

 

yes I know that the repayments are based on the disposable income of the debtor, but it seems hardly fair that someone willing/able to pay more is penalized by having to pay contractual interest.

[Wintry]

Hi

 

Very interesting discussion.

 

A relevant question on this subject -

 

How do Stepchange work out the disposable income for their DMPs?

 

Do they work out payments in the standard way - for example - the largest debt gets the standard percentage proportion of the disposable income?

[Nick Pearson]

No, Im not saying that at all. A persons DI is their DI. When you enter into a DMP it is about what you are able to repay (rather than what you're willing or want to repay which may be an entirely different thing!) which is crucial and should represent the best effort to repay the debt off as quickly as possible, at an affordable level whilst at the same time allowing the person to have a "modest but adequate" lifestyle.If a persons DI is such that they can repay the interest and charges as well as clear the debt in a "reasonable" period, is it unreasonable for a creditorto continue making interest charges ( perhaps even at a reduced rate)? Comparison to other customers with completley different circumstances is not relevant surely ie someone who is not able to meet interest and reduce balance in a reasonable period.As creditors are fond of saying, you need to look at every case and judge it on its on merits eg if a client can meet interest and charges but it will take 30 years to clear the debt and there is no hope of their situation improving, then freezing % and charges would perhaps be appropriate. Similarly it may not be unreasonable for a creditor to continue to charge interest if a person who can only afford to repay £1 pm is only likely to be in that situation for a limited period eg 3 months.

[Nick Pearson]

Hi

 

Very interesting discussion.

 

A relevant question on this subject -

 

How do Stepchange work out the disposable income for their DMPs?

 

Do they work out payments in the standard way - for example - the largest debt gets the standard percentage proportion of the disposable income?

 

Hi Wintry, My understanding is that Stepchange use a method of pro rata calculation based on age of debt rather than size - its one of those things I did know for sure once but old age means I cant remember now how they do it.

[Peterbard]

No, Im not saying that at all. A persons DI is their DI. When you enter into a DMP it is about what you are able to repay (rather than what you're willing or want to repay which may be an entirely different thing!) which is crucial and should represent the best effort to repay the debt off as quickly as possible, at an affordable level whilst at the same time allowing the person to have a "modest but adequate" lifestyle.If a persons DI is such that they can repay the interest and charges as well as clear the debt in a "reasonable" period, is it unreasonable for a creditorto continue making interest charges ( perhaps even at a reduced rate)? Comparison to other customers with completley different circumstances is not relevant surely ie someone who is not able to meet interest and reduce balance in a reasonable period.As creditors are fond of saying, you need to look at every case and judge it on its on merits eg if a client can meet interest and charges but it will take 30 years to clear the debt and there is no hope of their situation improving, then freezing % and charges would perhaps be appropriate. Similarly it may not be unreasonable for a creditor to continue to charge interest if a person who can only afford to repay £1 pm is only likely to be in that situation for a limited period eg 3 months.

 

I would say with respect that this answer equates to the same thing, the debtor is better off declaring a smaller DI, yes I know that in theory the DI is the DI but in practice there is almost always means to "adjust" this figure, perhaps by including a partners debts and doing a joint application.

[Peterbard]

Hi Wintry, My understanding is that Stepchange use a method of pro rata calculation based on age of debt rather than size - its one of those things I did know for sure once but old age means I cant remember now how they do it.

 

That is interesting I understand that Payplan operate in a strict pro-rata basis.

[sequenci]

Hi Wintry, My understanding is that Stepchange use a method of pro rata calculation based on age of debt rather than size - its one of those things I did know for sure once but old age means I cant remember now how they do it.

 

I think they offer percentanges based upon the original/normal contractual instalment rather than amount of debt.

[sequenci]

That is interesting I understand that Payplan operate in a strict pro-rata basis.

 

That they do.

[sequenci]

Oh, hello Nick and Wintry. Great to see you both on here; I trust you're both doing well.

[Nick Pearson]

I would say with respect that this answer equates to the same thing, the debtor is better off declaring a smaller DI, yes I know that in theory the DI is the DI but in practice there is almost always means to "adjust" this figure, perhaps by including a partners debts and doing a joint application.

 

A dishonest debtor or indeed adviser can simply make up a I&E and reduced their repayments if they wish to take that risk and lie. Fact is creditors have no moral or business reason to automitcally freeze interest in every case surely. Delighted to have provoked a debate!

[Nick Pearson]

Oh, hello Nick and Wintry. Great to see you both on here; I trust you're both doing well.

 

Hi Sequenci. CAG is a bit like my local pub - I dont get to pop in as much as I'd like but when I do I enjoy it!

[Peterbard]

A dishonest debtor or indeed adviser can simply make up a I&E and reduced their repayments if they wish to take that risk and lie. Fact is creditors have no moral or business reason to automitcally freeze interest in every case surely. Delighted to have provoked a debate!

 

 

No one is talking about dishonesty, but in the real world there is always leeway, mostly dependent on how much pain the debtor is prepared to endure on the pittance he is left to exist on.

 

I fully understand what you say about the creditors obligations under law, I may dissagree however that this would necessarily reflect the "moral" responsibility.