1stop Finance Shop Web Blog

The Debt Counsellors, debt advice organisation, produced a report to heighten public awareness of the problems associated with debt management programmes.

The total personal debt in the UK exceeded £1.28 trillion as of the third quarter of 2006.  This is increasing by £1 million every four minutes. While reports by the Bank of England show that the country’s alleged ‘mountain of debt’ is not as formidable as most people believe, many consumers are searching for ways to reduce their debts.

Debt management programmes are preying on the vulnerable. This is most common in debt management companies where the finance company takes control of the consumer’s debts. In turn, they deal with creditors in return for a monthly fee, fees for late and missed payments, and extra fees if the consumer takes a part-time job, or participates in overtime.

The Debt Counsellors’ Debt Management Report stresses that consumers need to seek professional debt counselling advice before signing these agreements.  Many of these programs, including IVAs, compound the debt problem.

John Porter of The Debt Counsellors explains: “Debt management programmes can appeal to people struggling with bills but some deals work out more expensive in the long run than the original debts because of higher interest or longer repayment periods.”

The Debt Management Report explains the dangers of debt management programmes and offers alternative solutions to serious debt problems.

Porter adds: “We strongly advise anyone considering a debt management programme to get professional debt help first. The Debt Counsellors give free, confidential advice on debt problems and can explain all the options available.”