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.
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.
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.
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.
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.
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.
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).
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.