Gary's News and views
Gary writes a weekly article which appears in the Plympton Plymstock and Ivybridge News in South West Devon. The articles are published here.
Thursday 4 February 2016
HELP WITH OUR DEBTS
It is not just the country (and every developed country) that is riddled with debt. Household debt is also high, an average of £54,000 per household, including mortgages.
Many are spending more than we have coming in and from time to time the chickens come home to roost. When that happens we need somebody we can trust to turn to for advice.
In the debt management sector there are several "fairshare" operators who offer debt management support free of charge. PayPlan, Christians Against Poverty and StepChange are examples of this kind of organisation. Typically they would sit down with the person who is in trouble, go through everything and make a recovery plan. They would then contact all creditors and offer a monthly payment, to help the debtor slog their way through the plan and get back on their feet.
These services are free to the debtor, as the creditors pay the debt management companies a percentage of the debt recovered. It is worth it for them to have somebody helping to bring order to the debtor's life, rather than dealing with chaos. However, some creditors currently refuse to pay in this way.
Not all debt management companies are free. Some charge the debtor, so they might end up paying (say) £70 per month to creditors and £35 per month to the debt management company. This obviously means that it takes a lot longer for the debtor to be free from their debts.
People asking for help from such a company are often at desperation point. They do not spend hours researching the industry to find out who is best placed to help them. If they contact a company that charges them, they probably do not know that there are other companies who will do it free. There are also wide variations in the quality of advice on offer
In a debate in the House of Commons earlier this week, I called for the government to try and bring greater coherence to this shadowy world of debt management advice. I believe that people would be helped if all debt management companies charged the creditor not the consumer. This would help them get back on their feet more quickly and make a fresh start. The government is looking at this.
Debt is part of our modern life. We should all act responsibly, but when we get into trouble, it is important that the best possible help is freely available.
It is not just the country (and every developed country) that is riddled with debt. Household debt is also high, an average of £54,000 per household, including mortgages.
Many are spending more than we have coming in and from time to time the chickens come home to roost. When that happens we need somebody we can trust to turn to for advice.
In the debt management sector there are several "fairshare" operators who offer debt management support free of charge. PayPlan, Christians Against Poverty and StepChange are examples of this kind of organisation. Typically they would sit down with the person who is in trouble, go through everything and make a recovery plan. They would then contact all creditors and offer a monthly payment, to help the debtor slog their way through the plan and get back on their feet.
These services are free to the debtor, as the creditors pay the debt management companies a percentage of the debt recovered. It is worth it for them to have somebody helping to bring order to the debtor's life, rather than dealing with chaos. However, some creditors currently refuse to pay in this way.
Not all debt management companies are free. Some charge the debtor, so they might end up paying (say) £70 per month to creditors and £35 per month to the debt management company. This obviously means that it takes a lot longer for the debtor to be free from their debts.
People asking for help from such a company are often at desperation point. They do not spend hours researching the industry to find out who is best placed to help them. If they contact a company that charges them, they probably do not know that there are other companies who will do it free. There are also wide variations in the quality of advice on offer
In a debate in the House of Commons earlier this week, I called for the government to try and bring greater coherence to this shadowy world of debt management advice. I believe that people would be helped if all debt management companies charged the creditor not the consumer. This would help them get back on their feet more quickly and make a fresh start. The government is looking at this.
Debt is part of our modern life. We should all act responsibly, but when we get into trouble, it is important that the best possible help is freely available.
posted by Gary @ 09:44
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