I think that for most people most of the time; if an IVA is available it will generally be the best choice (compared to a DMP).
According to the industry information I've been given an average DMP lasts just under two years. I think this overall average stat hides two very seperate worlds of DMP's.
Drop-out in the first few months of DMP's can be fairly significant. This particularly occurs at highly sales-led DMP companies where clients rethink their options soon after starting.
After the first few months drop-out levels tend to be pretty low. A good DMP at an affordable and fair (to all parties) contribution level for a committed individual tends to work in the long-term.
Debt Management is not regulated to the same degree that IP's or mortgage brokers are. There are no exams or qualifications required to run a debt management company. A consumer credit licence is required. To obtain that those running the DMP company will have to be considered fit and proper by the Office of Fair Trading so to do. They are subject to visits and audits. The OFT also responded to weaknesses in the industry in 2001 with guidance for debt management companies:
http://www.oft.gov.uk/shared_oft/busine ... oft366.pdf
A failure to adhere to this guidance could result in the loss of a consumer credit licence and therefore business closure. Two years later the OFT reported a 70% reduction in complaints about DMP companies.
The Debt Management sector might benefit from further controls because the actions of a minority of rogues can and does give the industry a bad name. There are good companies and organisations working in this part of the debt solutions industry, and there is some control/regulation. I think anyone considering that a DMP is their best or only option should choose who will help them very carefully.
Andrew Graveson
Independent Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk
