How your DCM Money debt continued to rise

Andrew Smith analyses and comments on the state of the personal finances of the DCM Money client book after their recent bankruptcy.

We’ve been dealing with former DCM Money debt management clients for more than a month now – and now the urgent calls from individuals have calmed down ( a bit) we’ve taken a look at the database to see what we could learn about the business Apex DCM was running (until it went into administration on March 2, that is).

Apex DCM trading as DCM Money Solutions

What follows has to be taken with a huge pinch of salt: First of all, the data we have relates to 1,036 customers who either had a current DMP with Apex DCM or who had stopped paying into their plan sometime prior to the company going under.

DCM Money customers

We know that around 500 clients did complete their plan with Apex, so the figures here all relate to the plans where clients were still paying in or where clients had already stopped making payments – presumably because they felt they weren’t working for them.

We know that some clients had been paying into their plan for years – and that some people’s DMPs had run for only months – so it’s very difficult to make more than very general conclusions.

DCM Money Solutions reduced debt by 3%

First, our database shows that, when they initially approached Apex DCM, the 1,036 clients for whom we have details owed their unsecured creditors a total of  £31,897,427.

DCM Money total debts

The total of latest confirmed balances (which might have been after some time in a plan – or just after Apex had confirmed initial balanced with creditors) was £30,925,079.

DCM Money balances

So, for these debtors, Apex DCM had reduced balances – often after years of payments, sometimes after only a short while, by only £972,348.

That’s 3% of initial balances. We would expect to see that a significant majority of the individual debts would have decreased in value.

3% of DCM Money balances paid off

OK, when clients first go into a fee-charging debt management plan it is likely that – for a few months – the total debts will continue to rise.

However, over an entire book of debts, sometimes including plans that have been going for years, we would expect to see that a significant majority of the individual debts would have decreased in value.

balances up and down

In fact, in the case of the Apex DCM book, 57% had either increased or stayed the same. 18% had gone up.

The balances that had risen had gone up by, on average, 12% – the balances that had fallen had gone down by just over six per cent.

DCM Money clients have larger than average debt

On average, Apex DCM clients owed £30,789 in unsecured debts when they entered their plan. Here at ClearDebt, the DMPs run by our debt management company, Abacus, have average initial balances of around  £24,000 – so Apex DCM clients had higher debts, which usually means they probably have higher incomes than they average too – a fact borne out by the average monthly payment into their plan of  £231 (our average is £190) :

Apex were taking 10% as their monthly fee – so the average clients had funds available for distribution, monthly, of £208. In fact, Apex were sending, on average, £127 to creditors and retaining £81, every month, for the fund to provide for full and final settlements.

Missing 75 thousand pounds

So, by rights, Apex DCM should have been putting away, for their clients,  around £75,000 per month. That’s something we are sure the administrators will be looking into.

Average debt repayment:  20 years

For us, what seems quite telling is the time it looks likely it would take Apex DCM to repay their clients debts. The average Apex DCM client, assuming all interest and charges were frozen would see their debts repaid in just over 20 years (but we can’t say what effect, if any, negotiating full and final settlements would have had on this).

Average debt repayment

Using the free debt management plan ClearDebt have offered Apex DCM clients, they will be debt-free, on average, after just over 11 years. However, a very high proportion of Apex DCM clients (roughly a third of the ones we’ve spoken to) are suitable  for Individual Voluntary Arrangements (IVAs): most of those will be debt-free (if they make all the payments) after 5 years.

If you have been affected by the collapse of DCM Money, you can share your experiences and discuss your case with a qualified advisor on a special community thread here: ClearDebt reveals debt data from Apex and DCM Money client database.

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Comments:4

  1. i was told i would be debt free in 5 years its about 10 years and my debt has gone up,i had one debt which increased by over 4 thousend pounds due to no payments being made,and i had to goto court due to dcm not paying them i have a charge on my house and i think some of my payments were taken out twice and only one payment received by creditor,i hope that at some stage i will be able to see my file,ivan

  2. we was also told that we would be debt free in 5 years but it’s been about 7yrs now we kept on getting letters from our creditors stating no payments had been made, we also had an early settlement offer from 2 of our creditors which we sent of to dcm apex to pay but they failed to do so, which caused our debts to increase with added interest. Our debts has now increased.

  3. We now find that we have paid £140 a month to DCM for DEC,JAN,FEB and MAR, a total of £560 before we were advised to cancel our DD. What grounds are there for expecting any recompense for these payments?

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