Date: Tuesday 7th September 2010
Location: Bright Oak Ltd, Cardiff
Interviewee: Phil Corfield
1. Could you tell us a little about your company?
Bright Oak is a medium-sized company that provides general advice on debt and specialises in providing debt management plans. Our attention is concentrated upon delivering the high-quality client service that is all too often lacking in this industry.
2. What geographical area do you cover?
England , Scotland, Northern Ireland and Wales.
3. Who regulates you? How does that protect your clients?
Bright Oak has opted to commit itself to standards over and above the minimum set out by the Office of Fair Trading. Companies that provide debt advice and debt management plans are subject to meeting the rules set out by the Office of Fair Trading in their Debt Management Guidance. In addition we have chosen to commit ourselves to a higher level of standards via our membership of trade association The Debt Resolution Forum. Bright Oak’s Andrew Graveson is a Director of the Debt Resolution Forum. Clients are protected via our observance of rules concerning advice quality, client cash handling and case reviews. Unlike many debt management companies Bright Oak also maintains full professional indemnity insurance coverage.
4. What actually happens when someone contacts your company to ask for advice or help?
Firstly we take the time to carefully listen to the situation and concerns of the person who has got in touch with us. Too many debt companies are quick to start to ask questions without having taken the time to fully understand what has led to the call in the first place. Once we understand the background and the concerns of the individual we will start to work with our client to produce a record of the financial circumstances being considered. This typically includes details about the amount of debt owed, income and expenditure details, and details about significant assets etc. With this record of the hard financial facts, combined with our understanding of the personal circumstances, we can provide our client with details about all of the options that are open to them. This will also include summarizing the benefits and drawbacks of each solution as they would apply specifically to this individual. This gives our client the information and understanding required for them to make a positive and educated choice about how to best deal with their debts.
5. What are the most common concerns of those that contact you?
Many people are naturally worried about whether their creditors will accept reduced monthly payments. We’re able to reassure people that in the vast majority of cases creditors will work positively with people who have got into debt difficulties but who are now doing their level-best to deal with the situation fairly. Many people also ask us whether their creditors will freeze the interest and charges that are racking up on their debts. In a debt management plan creditors don’t have to do this, but the great majority will in fact make concessions to help people repay their debts in a restructured fashion where appropriate. Another common question relates to whether legal action might be taken against them if they don’t carry on with the full debt repayments. A debt management plan cannot in itself prevent all risks of legal action, but getting fair affordable repayment agreements in place is one effective way to minimise the risks of such action in the future.
6. Debt Management Plans can be confusing. How do you ensure your clients understand the process?
The simple answer to this question is that we’ll talk to our clients for as long as it takes to ensure they understand how the whole process works. To this end any client will have a single point of contact (at any particular stage of the process) to ensure that they can get answers to any questions that arise quickly and easily. In addition to talking things through with clients we back-up the really important information in writing to ensure that clients have a record that they can refer to immediately if necessary.
7. In your experience will a Debt Management Plan affect someone professionally?
There are generally no professional implications for an individual entering a debt management plan. This is in contrast to some of the more formal debt solutions such as bankruptcy or an IVA which will cause employment problems for some people. It should be remembered though that creditor action remains a possibility which can have implications for someone’s credit rating. Anyone with a job that is subject to background checking, including checking their credit file, will want to look into such issues before going ahead. In practice we have police officers, soldiers, financial advisors, bank workers, lawyers and accountants amongst our existing clients. So long as matters are handled correctly a debt management plan can, for some people, reduce professional risks rather than increase them.
8. How does your fee structure work?
Our fees are based upon the monthly amount being paid into the debt management plan. The first type of fee is the Initial Fee which covers the set-up of a debt management plan in the early stages. Where someone is paying less than £250 per month our Initial Fee would normally be two monthly payments. Where someone is paying more than £250 per month our Initial Fee would normally be one monthly payment. After the Initial Fee has been paid there is an ongoing Monthly Management Fee. This covers ongoing creditor liaison, distributing payments to creditors and periodic reviews of the arrangements. This is usually 17.625% of the monthly payment though it is subject to a minimum of £25 per month and a maximum of £100 per month. The remaining amount of the client’s monthly payment is being distributed to their creditors. Details of proposed fees are provided in writing to each client in advance of them ever signing up to our service or paying anything to us.
9. Are Debt Management Plans suitable for everybody?
Definitely not. There are several solutions to unmanageable debt and in some cases options like IVA’s or even bankruptcy may be more appropriate. We advise our clients about all of the options open to them and the benefits and drawbacks of each. Our aim is to equip each client with the information they need to make the best decision for themselves.
10. How often do you recommend other solutions?
Very often. We are clear that debt management plans are not the right solution for a lot of people. We’re equally clear that they can be appropriate and useful in many circumstances also.
11. Do creditors freeze interest and charges?
We cannot guarantee that interest and charges will be frozen; this decision belongs to creditors rather than to any debt management company. However we do find that the vast majority of creditors will agree to freeze interest and that others will offer to reduce the interest being charged on accounts to help the debtor repay what is owed. This subject should be seen as a process rather than something that will happen immediately for every creditor. For example some creditors will want to see that an account has been in arrears for a fixed period prior to offering to freeze interest. Good debt management companies will be able to tell you specifically, creditor by creditor, what the likely reaction to your potential debt management plan will be.
12. Is legal action ever taken by creditors against your Debt Management clients?
It’s not frequent but it can and does happen from time to time. Clients with a significant amount of assets (generally equity in their home) are probably most exposed to such action as a minority of creditors may seek to “secure” the unsecured debts via the use of “charging orders”. This is a subject we are careful to discuss with clients who have such assets prior to a debt management plan starting. Very often such legal action is actually a defensive measure by the creditor rather than being aggressive. They may be concerned that an individual may decide to go bankrupt in the future and by “securing” their debt they may improve their position should such a situation arise.
13. After a Debt Management Plan has started what ongoing contact is there between you and your clients?
Each client will have a single point of contact at Bright Oak who is available to them by phone or email should there be anything at all that they wish to discuss. That point of contact will also update the client with any developments relevant to their plan. This will include creditors accepting arrangements, any difficulties with particular creditors etc. Twice a year we review a clients circumstances to ensure that a debt management plan remains appropriate for them and to help keep creditors up to date with circumstances. Keeping creditors informed is extremely important in maintaining agreements with them.
. 14. Why did you decide to get involved with this website?
We’ve long been involved with a number of public forums connected to debt and have found them to be an outstanding resource for those with questions or concerns. We hope that this website will provide a very specific resource for anyone who is specifically interested in debt management plans or who has a question related specifically to a debt management plan. That focus is unique on the web and we very much look forward to playing our part in delivering the answers and information that people are looking for.
If you would like Bev and her team to help you decide how to deal with your debt please use the contact form below or call via the free phone number provided. Bev can also answer your questions on the Debt Management Plan Forum.
Please fill in the form below and Phil Corfield will get back to you very shortly.