token payment plan (TPP) stepchange
What is a "reasonable period of time" when making token payments?
To keep it short and sweet, there is no time limit.
If you think that can’t be right, let’s go back to what the Token Payments are all about by visiting the FCA Handbook….
Not in the mood to read? We got you covered. You can just listen instead by clicking the YouTube link at the bottom of the page.
FCA Handbook Section 7.3.5 (3)
Section 7.3.5 (3) accepting token payments for a reasonable period of time in order to allow a customer to recover from an unexpected income shock, from a customer who demonstrates that meeting the customer existing debts would mean not being able to meet the customer priority debts or other essential living expenses (such as in relation to a mortgage, rent, council tax, food bills and utility bills).
Token Payments are based on what you can afford. It’s as simple as that. If you are still experiencing financial difficulty and you’re paying what you can afford, continue to pay the token payments. There is no time limit on how long a person can experience financial difficulty.
"Just checking in"
However, as a reminder, creditors and debt collectors are advised to contact you about your payment plan at least once every 12 months to see if it is still affordable. You may also find that they send you another income and expenditure to complete.
If your circumstances haven’t improved, you can let the creditor or debt collector know and state that you want to stay in the current plan. Since there is no timeframe for your financial situation to improve, there is no timeframe for your plan to change.
Budget planner.
Do you know how much you have left at the end of each month? Do you need to send an income and expenditure to a creditor? We've got you covered. Our budget planner provides you with a simple and free way to view and track your spending.
The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.