Debt Management Plan

UK residents have a strange connection with debts because whilst they can't do with a large amount of debt they also struggle with not having the ability to do the things that available credit offers. The British are likely to rank high as being the most impulsive when it comes to shopping. When times were good and we were enjoying the booming economy, people went on spending and spending. 

Many people will spend until such time that the credit cards are used up and there is no other option but to begin the arduous task of dealing with their debt. One option to helping people dealing with debt is a debt management plan. Debt management is a debt solution were by a company will speak to your creditors on your behalf to stop any interest and charges and agrees an affordable amount to be paid each month/week.

The first priority of debt management is to help borrowers pay their debts. In some instances some companies will advise people that they can pay a certain amount of money and then ask creditors to write off a the remained. This practice is called "debt consolidation" however no one except the creditors can guarantee a fee will be offered or accepted. If you are offered this option from anyone other than your creditor then please be wary how an external company can offer this solution.

Credit Action Debt Statistics

New debt statistics have been released by creditaction.org.uk and the new stats are as follows;

• 331 people every day of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 60 seconds during a working day.

• Total UK personal debt at the end of June 2011 stood at £1,451bn. The twelve-month growth rate remained unchanged at 0.8%. Individuals currently owe nearly as much as the entire country produced between Q2 2010 to Q1 2011.

• Total lending in June 2011 rose by £0.4bn; secured lending decreased by £0.1bn in the month; consumer credit lending increased by £0.4bn (total lending in Jan 2008 grew by £8.4bn).

• Total secured lending on dwellings at the end of June 2011 stood at £1,241bn. The twelve-month growth rate remained unchanged at 0.7%.

• Total consumer credit lending to individuals at the end of June 2011 was£210bn. The annual growth rate of consumer credit increased 0.3 percentage points to 1.8%.

• UK banks and building societies wrote off £9.5bn of loans to individuals in the 4 quarters to end Q1 2011. In Q1 2011 they wrote off £1.89bn (£866m of that was credit card debt). This amounts to a write-off of £20.71m a day.

• Average household debt in the UK is ~ £8,064 (excluding mortgages). This figure increases to £15,507 if the average is based on the number of households who actually have some form of unsecured loan.

• Average household debt in the UK is ~ £55,803 (including mortgages)

• If you add to this the March 2010 budget report figure for public sector net debt (PSND) expected in 2015-16 (excluding financial interventions) then this figure rises to £106,418 per household.

Today in the UK

• 1,577 Consumer County Court Judgements (CCJs) were issued every day during Q1 2011 and the average judgement amount was £3,118.

• Citizen Advice Bureaux dealt with 9,072 new debt problems every working day in England and Wales during the year ending March 2011.

• The average cost of raising a child from birth to the age of 21 is £27.50 a day

• 100 properties were repossessed every day during Q1 2011

• 36 new people became unemployed for more than 12 months every day during the 12 months to end May 2011

• 1,578 people reported they had become redundant every day during 3 months to end May 2011

• £251,500,000 is the amount that the Government Public Sector Net Debt (PSDN), including financial interventions, will grow today (equivalent to £2,911 per second)

• £144,660,000 is the interest the Government has to pay each day on the UKs net debt of £2276.0bn (which includes financial interventions). This is estimated to rise to £182m a day in 2015-16

• 220 mortgage possession claims will be issued and 160 mortgage possession orders will be made today

• 382 landlord possession claims will be issued and 265 landlord possession orders will be made today

• The UK population is projected to grow by 1,205 people a day over the next decade

• 24.1m plastic card purchase transactions will be made today with a total value of £1.182bn.

• 7.3m cash withdrawals will be made today with a total value of £478m

• The average car will cost £16.08 to run today

• It costs £67.80 on average to fill a car with a 50 litre tank with unleaded petrol.

Different Routes Out Of Debt

There are a number of routes a person can take in order to receive the help needed to get out of debt. In this article we will discuss these different options. Debt problems exist across the UK with millions of people in debt and thousands struggling to survive, so what is the best way to help those in need of financial help?

Since the recession began in 2008 we have continued to see an increase in the number of debt advice/management companies throughout the uk. Some of these companies will provide a free service to those in debt and some will charge a fee. Debt support can be provided by telephone based companies and some will be face to face but what is best for those who need debt help.

Citizens Advice Bureau which is a Government funded help service offering face to face help for a range of problems including debt. The charity has seen a rise in cases over the past 2-3 years. The increased demand for help from the Citizens Advice means they are dealing with a new debt enquiry every 6 minutes. Budget cuts along with demand means receiving debt advice can be difficult. A report by The Government Department for Business Innovation and Skills questioned whether a mix of telephone, internet and face to face debt help would be best due to the demand.

Telephone - A friendly option which gives people the chance to receive help quickly and have a solution which is customised to their needs. Certain organisations such as charity debt advice will be free to call and so will not be putting the client into further debt. However by speaking on the telephone it is not as personal as speaking to a person one to one which many people prefer.

Internet - This option is one that is continuing to grow and is a great solution for those who like the anonymity of the web. Advice can be provided without even speaking to anybody however this can be time consuming and difficult to understand for people in debt.

Face to face - This option gives people the chance to speak with someone who can take all the information into account and also give back a quick solution. However, this requires the person in debt to either travel to a meeting point and can therefore cost money. Alternatively the debt advisor will have to travel and to meet the individual which can again be costly.

There are three types of debt support organisations and these are broken into;

Debt Advice Company - When a person pays a company for their advice or for helping to manage their financial needs. This can be seen as a quick route however telephone based charities can offer a similar, impartial service. The debt advice company may favour a particular debt solution as it makes them more money. Also, the debt advice company may charge you for their service.

Government Funded Debt Advice - When the Government funds an organisation to offer debt advice. The best two examples of this would be, National Debt Line and Citizen's Advice Bureau. Any help or advice from these centres are free however may not be as quick an option due to having limited funding.

Creditor Funded Debt Advice - The best example of this is CCCS who are a charity funded by creditors for the work they carry out. This is also free to the person in debt.

There is many options available to people whether it is how they wish to communicate or who they wish to deal with. Speak to several debt advice companies before making a decision. Never pay for debt help and ensure the company you are dealing with has a consumer credit licence.

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