A debt management plan can be a flexible option to use in order to tackle your debt because, unlike an individual voluntary arrangement, it is not a legally binding agreement. As such, you are fully entitled to cancel your debt management plan with your existing provider whenever you desire and doing so is an exceedingly simple process. In certain cases, you might decide that you simply want to use a different provider to set up and manage your debt management plan. You will either have to do this manually or you new provider will facilitate the entire process and set up a new debt management plan for you to use.
The following page will identify the reasons why you might consider changing debt management plan provider, and the steps you should take if you decide that you want to cancel your existing arrangement.
Reasons for switching
There are a number of reasons why you may decide to switch debt management provider, though you should typically consider changing firm if:
- You are unhappy with the customer service your firm is providing you with.
- You wish to acquire the services of a provider who gives you financial advice as well as processing and managing your debt management plan.
- You believe the fees you are being charged each month by your existing provider are unfair or excessively high.
It is important to remember that debt management plan providers are required by official Financial Conduct Authority regulations to respond to any complaints you make swiftly and fairly, so it might be worthwhile voicing your grievances to them directly first before opening proceedings to cancel your debt management plan. You may be able to come to a resolution with them over your issues and this will save you money and time finding a new provider and setting up another debt management plan.
Areas to address whilst switching
If you have come to a final decision to change debt management plan provider, then it is vital that you consider the following areas to ensure your situation doesn’t worsen whilst you find a new firm:
- Have your creditors begun apply late and interest charges to your account after being notified by your outgoing provider that you have cancelled your existing arrangement?
- Are your creditors happy with you using a new debt management plan provider?
- Will your creditors begin applying additional interest charges to your debt during your switching period?
It is imperative that you get into contact with your creditors directly as soon as you cancel your debt management plan with a provider and start discussing the status of your debt with them whilst you are switching. Furthermore, you should try and negotiate with them to have all late and interest charges frozen whilst you find a new provider, and should receive official authorisation from them to use a new firm before initially cancelling.
How to change provider
Stage one- Evaluate the contract you have with your current provider. This is important because certain arrangements will necessitate that you have to pay a cancellation fee if you prematurely terminate your debt management plan agreement. You will need to assess whether this is applicable to you and pay the appropriate costs in order to avoid complications later on down the line. Furthermore, you should look at whether your contract with a provider specifies anything surrounding the payment of a refund to you for the fees you have paid to them up until the point of cancellation. If they do, then you are fully entitled to pursue them for the repayment of this.
Stage two – Obtain all of your relevant financial information from your existing provider. This will make it easier for you to find a new provider and secure a smooth transition from your current debt management plan to a new one.
Stage three – Officially cancel your debt management plan. You can do this by either contacting your current provider via telephone directly or by post, and you should check your initial contract to see whether there is a minimum amount of notice they need in order for you to cancel. They will then notify your creditors of the termination of your debt management plan, and you will be expected to interact with them on your own.
Stage four – Find your ideal provider and set up your new debt management plan. Whilst it is recommended that you determine who your new debt management provider will be prior to officially cancelling your old agreement, you can still ensure a smooth transition to a new arrangement providing that you are pro-active. You should search around the market and look at how much different providers charge on fees in order to determine which one is best suited to your situation. It might also be worth asking each potential provider whether they provide free financial advice in order to narrow the field down.
After you have identified your ideal debt management plan provider, you should start taking steps to set up your new arrangement and pass on the final information you acquired from your old provider. They will then convene with your creditors and attempt to secure a new arrangement. Providing that you receive the necessary creditor authorisation, your new agreement will begin immediately and you will have to start making payments each month to your new provider.