I have been told that the "Free Debt Management" companies get paid by the creditors and I heard how much they each charge
CCCS = 11%
Payplan = 17%
This information came directly from employees of both these "charities".
I cannot find any mention of these figures on their websites Seemingly every other company providing DM services need to tell their charges. How come the "charities" don't. I think thye should have to be as upfront as the Debt management companies. Calls into question what exactly they do for their fee.
All companies doing IVA's will make a charge, they are commercial companies after all.
The creditors are obviously happy with the charges made.
If they are doing a DMP then companies such as Payplan or CCCS don't charge and although you will pay back 100p in the pound, they will claim back money from the creditor.
At the end of the day, as long as you pay back what you can and the creditors are happy, what is the problem?
Thanks for the reply Harpic. I think you may have missed the point of my post. I was wondering why all other companies are bound by the terms of the Debt Management guidelines in terms of they way they must reveal how much they receive for the various services they provide whereas the charities I mentioned do not have to reveal that they receive a sizeable portion of the monthly repayment back from the creditors. One must question their impartiality or indeed the suitabilty of the solutions they recommend. There are so many good companies offering different debt solutions but there seems to be this insistance that the charities are better than the fee chargers. I have used both and I have found that the fee chargers provide a better service in that they are working for me and not for the creditors. Interest and charges are frozen quicker with the fee charging company. I assume this is what the charites do for the creditors, ie don't hassle them over interest and charges. This can significantly add to the debt repaid and also repayment period.
There does need to be transparency around the issue of who pays the fees/commission/donations Payplan and CCCS receive as it is incorrect of them to say or give the Impression they offer 'free' debt services.
Who is responsible for enforcing these type of things. I felt mislead by the charities before I educated myself. The banks are owned by the public mostly so why would it make sense that they would give money away to a charity when they can get paid in full by a DM company in a period not much longer in most cases. The only reason I can see is that there is a cushdy arrangement to go easy on the banks over interest and charges. One day the truth will come out and a lot of people will be very embarrassed and angry.
There seems to be a fog of definition here. I have had a short discussion eleswhere with a payplan rep on this subject, many moons ago. For DMPs, which in fact Payplan and CCCS do do very well, they do not get "fees" as such, but donations from the creditors (possibly in the form of cashback, therefore related to recoveries).
For IVA's they charge in much the same way as everyone else, as agreed with the creditors.
Whilst it's true that no company ( charity or not) will be able to function without some form of income, the "charity" firms do seem to rather let the public carry on in the belief that they are free!
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Yeah that's right Foggy. I think where a donation is a fixed amount that it is viewed as a commission payment and is subject to transparency. This transparency is not forthcoming.
Boomer, Payplan is not a charity. It's part of Totemic Ltd and makes millions for its shareholders.It's paid, as you say, on the same basis as a debt collection agency. It's advice is not impartial because it has a financial interest in the outcome - as does CCCS.
I didn't know that but that would explain why, looking yesterday at all my paperwork going back to the start of the IVA, the creditors received surprisingly small proportion of the huge amount of what I actually paid in, which was nearly £700 per month. Also, makes me wonder just how stupid those creditors must be refusing to negotiate with the debtors a sensible payment plan, slapping on interest charges only to end up paying 17% to the insolvency firm, and writing off debt that they could have otherwise collected directly with more sensible approach. Well, my creditors certainly lost out as I was just beginning being behind with my payments due to temporary hardship, and was in arrears by no more than 2-3 months, with some none at all but DMP didn't work for all the reasons above. In an actual fact, my situation recovered very shortly after I started IVA but it was too late. Still, my heart does not go out to MBNA, Halifax and the rest!
I agree with Boomer and the other contributors that there is an issue with transparency. Creditors push their clients in the direction of these firms and then pay them for collecting the debt. It can be dressed up in any way you like but that is the reality.
This should be explained to any prospective client so they can take a view on the impartiality of who they are dealing with. The client should also be shown comparatives with the professional sector showing how long DMPs in particular run. It is pointless having 100% of your monthly payment going to creditors when interest and charges have not stopped.
Finally someone in the mainstream media should look at these connections because they are as guilty as any of forcing desperate people into the hands of these people.
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Finally someone in the mainstream media should look at these connections because they are as guilty as any of forcing desperate people into the hands of these people.
If you recall a few monthsd ago i posted a link to the BBc iplayer after a 'special' was aired on north west tonight (regional news after the biggie at 6!!) advocating only the use of 'free' IVA and DMP providers, totally demonised IP's and compaines you 'pay' for!! It was a very unfair piece of media and reporting!
At the time i commented that i feel if i 'employ' services of an IP in affect they work in my interests as well as the obligations to ensure maximum credit is returned, personally i would never use a service who is paid for by the creditors, in effect is this not the same as a debt collecion agency?!?!?
Just a thought [:)]
Arty
IVA completion and certificate received 08/10/2012!!!
Not much chance of the media showing an interest I'm afraid, Michael - 'free' sector lobbying has been much too effective. If they were to, they might also look at the fee-charging Claims company Payplan / Totemic has just started up - 'Stake Your Claim'.MOJ advice is that you should not use a fee-charging claims company if you're on a debt management plan as whilst your balance may be reduced with a successful rebate you will not end up with any cash in hand to pay the claims company.At the same time as touting for business with their debt management clients, they're also pushing a claims service on customers in their IVAs via a different company charging 40% of the rebate as a fee. Where are the customers supposed to get that money from and why is there dual pricing ?
Arty and Tiger.
I understand where you are coming from and it would probably take a Panorama style investigation which is unlikely to happen. Maybe some independent journalist will look at it someday but I doubt that too.
No chance Michael. All journalists are cowards. The papers are supported by the credit industry for advertising, the credit industry support payplan and cccs because they can get more money back from unsuspecting consumers. All the while the consumers state that the 'free' sector are the best thing for them not knowing why they are free. My father always says 'there's no such thing as a free lunch'. I get that now that I am older.
what happens if IVA fails? as far as I can see from my statements it looks like the bulk of IP fees were collected from year 1 payments, so I would have paid his fees then, not creditors if it failed now?
