Debt charities deluged by debt-stressed consumers

Debt solutions provider, EuroDebt, said the report from the National Audit Office which indicates that some debt advice charities are struggling to cope with consumer demand for help is set to be a major consumer issue.

“The charity sector does an excellent job in supporting individuals facing financial difficulties, but the reality is that there just isn’t the resource for them to help everyone”, said Kevin Still, director, EuroDebt. The National Audit Office Report suggests that at least two debt agencies are refusing to take on new clients and others have waiting lists of up to six weeks for a face to face appointment.

“Often the individual and families who most urgently need help are those with the higher levels of debt. So the longer they have to wait for help, the greater the problem gets,” said Still. “The other issue that is highlighted by the findings of the NAO report is that the model used by the charities is well proven to have less acceptance from creditors. The voluntary organisations focus on a self-help approach to debt management. These keep the onus with the individual on managing the relationships with their creditors and, unfortunately, this often means that they are less successful in getting interest frozen on outstanding debts or stopping debt recovery activity.

“We firmly believe that there is a place for both types of debt advice organisation. It is not uncommon for EuroDebt to refer people with very low disposable income to their local CAB. But the primary goal of EuroDebt is to act fast to help consumers take a responsible position with their creditors, especially where they have multiple credit cards and loans. We do this by notifying the unsecured lenders that the individual has entered a Debt Management Plan.”

EuroDebt notifies unsecured lenders that borrowers have entered a Debt Management Plan. Eurodebt said this involves no further borrowing and in the majority of instances lenders agree to freeze interest & charges, meaning that recovery activities stop, the debt balance will begin to reduce at a rate based upon the negotiated reduced payments to creditors and the consumer can begin to take control of their finances again. Payment proposals are presented to creditors in a consistent manner and all the figures quoted in the income and expenditure analysis will have been verified through a home visit, it said.