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Andy Davie
Administrator
IVA completed.
10766 Posts |
 Posted - 09 March 2010 : 12:18:04
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Hi
From the Which website
"A quarter (26%) of debt management plans (DMPs) will last ten years or more, according to new research from insolvency trade body, R3
The new research reveals that many consumers are still struggling to clear their debts over a decade after setting up a repayment plan, even though a DMP is meant to be a short-term arrangement between an individual and their unsecured creditors. R3's survey also reveals that 22% of individuals in a DMP say that they were not asked for proof of their income or expenditure before their plan began.
Sales-driven debt advice
Martyn Saville, Which? principal researcher, commented: 'These shocking new figures make it clear that many consumers are still being sold inappropriate debt solutions by commercial debt management companies.
'A debt management plan is designed to help consumers get on top of their debts, usually in the short to medium term. It is certainly not suitable for long-term debt repayment. In many cases, bankruptcy or an individual voluntary agreement (IVA) may have been a more suitable solution, even if it is not as profitable for the debt management company over the longer term.'
'Slaves to debts'
Commenting on the new research, R3 president Peter Sargent said: 'DMPs can play an important role in offering a manageable solution to individuals who are able to pay back their debts. However, the sheer length of some plans indicates that the amount of debt these individuals have is too large for a DMP. By entering into these inappropriately lengthy plans people become slaves to their debts.
'Moreover, our figures show that a third of individuals who are currently bankrupt or in an individual voluntary agreement (IVA) used to be in a DMP. The volume of those who go from DMPs into a formal insolvency procedure suggests that, in some cases, DMPs prolong distress when another procedure would have been more appropriate to start with.'
Which? debt advice
Individuals struggling with debts should seek independent, free debt advice directly from organisations such as the Consumer Credit Counselling Service, National Debtline or their local Citizens Advice Bureau.
Consumers should avoid commercial debt management companies - why pay for a service that is available better and free elsewhere? "
Not sure If I agree with the last point but an interesting read
Regards
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Andy Davie, IVA.co.uk spokesperson and a Debt Advisor
If you need any help or advice about the various debt solutions available please contact me via my website at www.andydavie.com
Author of "Real life IVA stories" and Debt Counsellor of the year finalist 2010 |
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kallis3
Moderator
27 month\s down 33 month\s to go.
United Kingdom
35545 Posts |
Posted - 09 March 2010 : 12:22:43
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It is interesting.
We were told initially that we could not do an IVA as we had too much disposable income and so we signed up for a DMP which would have lasted 20 years.
It was only after looking at another company that we found out we could do one, and we are actually paying less into that than we were the DMP.
Just goes to show that you should shop around before making a decision. |
Buckle your seat belt Dorothy, 'cos Kansas is going bye bye.
27 down, 33 to go.
Jan
xx
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Andy Davie
Administrator
IVA completed.
10766 Posts |
Posted - 09 March 2010 : 12:38:35
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Hi
There is a common view in the press that commercial companies should be avoided like the plague, however the reality is that the free sector can't always give the service level that is required and that some of the better commercial companies can provide better results in terms of freezing of interest than the free sector.
Regards |
Andy Davie, IVA.co.uk spokesperson and a Debt Advisor
If you need any help or advice about the various debt solutions available please contact me via my website at www.andydavie.com
Author of "Real life IVA stories" and Debt Counsellor of the year finalist 2010 |
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kallis3
Moderator
27 month\s down 33 month\s to go.
United Kingdom
35545 Posts |
Posted - 09 March 2010 : 12:43:13
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It was MDC who originally told us we could only go bankrupt. We tried another firm (can't remember the name, and they passed us on to a commercial firm, Hamilton Locke. They were excellent, and it was only the length of time of the DMP that made us look elsewhere.
Our interest and charges were all frozen and we only had contact from creditors every six months to see if anything had changed, and that was it. |
Buckle your seat belt Dorothy, 'cos Kansas is going bye bye.
27 down, 33 to go.
Jan
xx
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MelanieGiles
IP
30800 Posts |
Posted - 09 March 2010 : 13:06:07
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| Debt companies - whether they are licensed insolvency practitioners properly qualified to give debt advice, or commercial companies who hold consumer credit licenses, should give advice about all options, and let their clients make their minds up about what route to pursue. This would then eradicate all potential for mis-selling claims moving forward. |
Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp
See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp |
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Andrew Graveson
Forum Expert
United Kingdom
1023 Posts |
Posted - 10 March 2010 : 10:29:35
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I completely agree with Melanie.
Individuals deserve to receive information about all of the options that are open to them.
How they then choose to proceed is really a matter for them as they weigh up their personal circumstances and attitudes against the impact and benefits of the various solutions.
It's not always easy to defend the debt management industry when there are clearly a number of sales-led rather than advice-led operations out there.
Our experience however is that many people wish to avoid the inflexibility, formality and implications for assets of an insolvency even if it takes longer to clear all of their debt. There are also lots of people who genuinely want to repay all of their debt but who need extra time (by restructuring their monthly payments) to do so.
It's curious read that an IP Trade Association is referencing the fact that many people in IVA's used to be in debt management plans. I wonder how many of these people approached certain major debt help groups (in which a number of IP's work or even run the companies), were recommended a DMP, and were then told a few months later that perhaps they should be switched to an IVA.
Those looking into the possible regulation of debt advice at the moment have had a fair amount to say about the propriety of such "flipping". |
Andrew Graveson
Bright Oak Ltd
Debt Advice & Debt Management Plans
Website: www.brightoak.co.uk
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Edited by - Andrew Graveson on 10 March 2010 10:36:42 |
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kallis3
Moderator
27 month\s down 33 month\s to go.
United Kingdom
35545 Posts |
Posted - 10 March 2010 : 10:45:19
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Have to say that we never experienced that, simply because the DMP company we used didn't do IVA's.
We looked at Payplan purely to change the DMP across as they were one of the 'free' companies and they asked us why we weren't in an IVA and started the ball rolling. |
Buckle your seat belt Dorothy, 'cos Kansas is going bye bye.
27 down, 33 to go.
Jan
xx
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DMPs over ten years
