Clampdown on credit card debts | Chiltern Debt Management

The government has plans to try and stop people developing credit card debts by clamping down on the industry.

New legislation to be introduced will put a stop to credit card firms raising customer’s credit limits when it hasn’t been requested.

Ministers will also request that the unsolicited credit card cheques sent by these companies will also be stopped, as these only encourage credit card debts to develop further.

These cheques are delivered to customers who are then invited to use them to settle other credit card debts or for new purchases or payments.

Generally they are more expensive to use than credit cards, and purchases obtained with these do not have the same level of protection offered for faulty goods – as with standard card purchases.

Debt help organisations have seen an increase in the number of respondents requesting their debt advice over credit cards and other debts.

They have seen many more people struggling with their finances under the current economic climate and needing an alternative solution to ease their financial situation.

Ways to fight credit card debts

Many debt help organisations offer a number of alternative options that can assist people in difficulty – such as debt management plans, Individual Voluntary Arrangements (IVAs) and Trust Deeds.

These enable people to reschedule their debts in a more affordable and manageable way, whilst still repaying the amount owed.

Usually the total amount owed is spread out over a longer term to make the payments easier to handle. This ensures that priority payments (mortgage/rent, council tax, utility bills etc) can be paid, along with living costs (food, travel to work etc).

A debt management plan is an informal way of repaying multiple unsecured balances with only one monthly payment. This makes managing finances easier.

An IVA enables unsecured balances to be repaid over a fixed period (usually five years), after which time any amount outstanding will be written off. Trust Deeds act in a similar way but are usually for a shorter period (three years) and these are only for people living in Scotland.

Reputable debt help organisations will offer free debt advice and IVA advice, and will then be able to show you the most suitable options for your specific circumstances.

Well-established and reputable debt help organisations include Hamilton Locke, Chiltern and The Debt People. They all offer free debt advice and free IVA advice.

The total amount of owed on credit cards in Britain stands at £53 billion.

Fees & Information

We cannot guarantee a reduction in interest or charges. If an IVA is not maintained it could lead to bankruptcy. Whilst initial debt advice is free, fees will be charged if a solution is taken out.

Fees related to Debt Management Plans are in two parts;

"Initial Fee" means your first two "Monthly Payments", which is paid by You to "Us". This represents our fee for establishing your arrangement, and therefore is not distributed to your creditors, and can be paid in two separate instalments. Retention of this fee will put you into further arrears.

"Monthly Fee" means the Fee payable for our Services each month. This is an amount equal to 17.5% of your "Monthly Payment" (apart from your first two "Monthly Payments" which is the "Initial Fee"), subject to a minimum payment of £30 for disposable incomes of 0 - £100, and £35 for disposable incomes of £100.01 - £200.

Fees incurred for Individual Voluntary Arrangements are variable dependent upon the monthly contribution to the arrangement and the agreement that is reached with your creditors. Fees are made up of Nominees fees relating to assistance given to prepare your proposal and Supervisor fees which relate to the ongoing monitoring of your IVA. Fees are already included as part of your monthly contribution. The level of fees and the method of payment are both agreed by your creditors at the outset of the arrangement.

A record of your agreement with us will be held on your credit file for up to six years, and your ability to obtain credit in future may be affected.

You are provided a cooling off period of fourteen days from the date the agreement was deemed to commence, during which you may cancel our agreement. Should you give notice to us that you would like a refund of a payment, or payments, (being other than the initial fee) then where no distributions have, at that time, been made by us, or are in the process or course of being made by us, in respect of that payment or payments this will be made in full (i.e. without deduction of our fee of 17.5%).