Debt Doctors

I assume we are talking about http://www.cleartoday.com/, who are a licensed Claims Management Company with authorisation number CRM16883. Resolve is another trading style and is featured as logo on the website – clicking on this logo takes you to TPL Claims. What is very strange is that they do not have a Consumer Credit Licence as Clear Today Limited (Company registration 06261448). It is illegal to offer debt adjustment services without a licence – which appears to be the case here. Of concern is the fact that a company called Pixpay Plc trades at the same address in Chiswick and has a trading style of Clear Today (CCL. 0596737) – who are licensed to provide debt adjustment and debt counselling services. This company is fairly young and was licensed in 2007 and is run by someone called Karl Ahmed. Both the Ministry of Justice and the Office of Fair Trading have issued strong warning before taking up the services of a Claims Management Company claiming they can get your debts written off because they are unenforceable. These stories are available on the DMT website. There is a major difference between them acting as a debt adjuster and negotiating a settlement of your debts for which they are not licensed AND challenging the enforceability of the credit agreements you have. You should also consider how you would be able to afford their fees if you are already in financial difficulty.

Defaulting on your IVA can have serious consequences and should really be discussed with your IVA supervisor. Where your disposable income increases there is a protocol in place to reflect your ability to make a larger contribution, but this is not all of your additional income as the original proposal should have been based upon £200 per month for typically 60 months. Any debt solution provider should use the same criteria to establish your disposable income using the Common Financial Statement, this would be used for both an IVA and a Debt Management Plan (DMP). So your contribution should be over £200 per month unless you genuinely can’t afford this. A DMP’s great strength is its flexibility and your monthly payments can be varied at any point, though your creditors will have to agree to freeze interest & charges. You may also want to consider the impact of a break in payments to your creditors where there appears to be no underlying reason why the IVA fails. Switching to a DMP on the same monthly contribution would not make sense as you would be paying back the whole debt (with interest & charges frozen) when you appear to have approximately 50% write off on your IVA. At this stage you will not have paid much to your creditors as you have mainly been paying the Insolvency Practitioner’s nominee fee in year one. You would probably have around 100 months of payments on a DMP to clear the debt in full, against a remaining term of 48 months on your IVA.

Once you start to miss agreed repayment dates or begin to re-schedule payday loans then the interest rolls up at an incredible rate, probably at an Annual Percentage Rate (APR) of 1,000% or more. Breaking the cycle is not easy, but borrowing more shouldn’t be an option, as you have loans out with three brands already. Looking at the headline rates they are: PaydayUK (1,737%),

If you borrowed £250 on PaydayUK (MEM Consumer Finance Limited) then their site says that you repay £312.50 provided you have repaid the debt by the next pay day. I note from their site that they make some strange claims, notably:

‘Rebuilding your credit rating'

 As soon as you repay your loan on your payday, we will report that to the credit reference agency, so that they will know that you have repaid your loan. This will help to rebuild your credit rating, as the credit referencing agency can see that you have repaid a loan. We will report this every time you take out a loan and repay it to us. As you gradually improve your credit rating, you will find that you may be able to borrow larger amounts from us and apply for other financial products that you may have been refused for in the past.

However, if you do not repay your loan and fail to contact PaydayUK, this will also be reported to the credit referencing agency, which may have a negative impact on your credit rating.’
 
On this basis they will report adverse information that may impair your credit file if you miss contractual payments and there is limited debt forgiveness as there can be with a longer term credit agreement when you miss one payment. You should take advantage of our free credit report facility to check your file. You may need to check all 3 agencies (i.e. Experian, Equifax and Callcredit) because these companies do not necessarily file information with all of them. As PaydayUK’s site confirms, they check your credit record in order to make a decision as to whether to lend to you. This would leave a footprint on your credit file, but only on the credit reference agency they use for underwriting purposes.
 
PaydayUK is a member of the Consumer Finance Association and their guidelines state:
 
“Make sure you understand if there are additional charges should you fail to make a repayment on time. You need to know how much these costs are, and how they will affect your circumstances. Again, if your lender does not make this crystal clear – look elsewhere!”
 
Having looked at the site and having read the ‘payday loan conditions’ and ‘our charges’ pages on the site I am unable to confirm what the penalties are for not keeping up with repayments, though the site generally looks fairly compliant. I note there is a loan deferral option, but it is unclear what the charge for this is.
 
QuickQuid offers a variable rate based upon your risk profile – this ranges between 819.12% and 2,222.46% with repayment up to 2 payday cycles. You can extend your loan a maximum of five times, which are when things get really expensive.
 
The typical APR on Wonga is 2,689% and I note that you have borrowed well in excess of their first advance figure of £400. Wonga do have a section about failed payments and their charges and accrued interest on their site.
 
Payday loans are absolutely the final stage before taking professional debt advice. You may have other debts to pay, some of which may be priority creditors. I note that Wonga promote service for borrowing money to pay priority creditors like council tax. If you are at that stage then you need a debt solution. The relatively low level of debt involved may govern what solution is best for you.