StepChange #debtmyths

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  • System
    System Posts: 178,077
    Photogenic Name Dropper First Post
    Community Admin
    The myth:

    New government legislation can write off your debt” #debtmyths

    The reality:

    We all see adverts from dodgy debt management companies that promise to write off 80%, 85%, 90% or even all your debt in one fell swoop. If it sounds too good to be true then it probably is.

    These adverts are usually referring to formal (or statutory) debt solutions; in England and Wales this means individual voluntary arrangements or bankruptcy and debt relief orders. Often the promise of this “new legislation” is a company dangling a carrot to try and tempt you into a discussion so they can try to make money off you.

    Have you ever been tempted by a promising debt repayment offer to only find it wasn’t what it seemed?
  • StepChange_James
    StepChange_James Posts: 861 Organisation Representative
    edited 30 November 2012 at 4:03PM
    The myth:

    “Self-employed people rarely struggle with their finances” #debtmyths

    The reality:

    We recently commissioned research from Bristol University looking into employment and debt. Their findings showed that the finances of self-employed people are actually more vulnerable than people in employment. While working for yourself may seem like a dream come true, it can become a nightmare if you can’t bring in enough money and end up using credit to survive.

    Have you ever had a business that has led to a personal debt problem?
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • Great thread thank you for this.
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  • Thanks for the one about self employment. My income is terrifyingly variable, I get no sick pay, no holiday pay, and if I need to take an afternoon of to attend a medical appointment it can cost me my entire day's income (my contact hours being from 4pm till 6.30pm), making it oddly cheaper to often go private for medical stuff than use the NHS.
    I love my job, and I bring in enough (just), but it's frightening how fragile my income actually is compared to a PAYE job with a contract and benefits.

    In our house, when things break, we just pretend they still work
  • Another myth about debt that the CCCS / Step Change could do with busting is that taking out a DMP means that the bank have to stop interest and charges.

    They do not.

    Banks don't treat customers on DMPs any differently from those dealing with it themselves and therefore will only freeze / lower interest and charges in certain situations - having a DMP makes no odds as to what the bank will do.
  • StepChange_James
    StepChange_James Posts: 861 Organisation Representative
    Another myth about debt that the CCCS / Step Change could do with busting is that taking out a DMP means that the bank have to stop interest and charges.

    They do not.

    Banks don't treat customers on DMPs any differently from those dealing with it themselves and therefore will only freeze / lower interest and charges in certain situations - having a DMP makes no odds as to what the bank will do.

    Hi Stuffthemattress,

    Thanks for posting, that’s a good suggestion. We always make it clear to our DMP clients that their creditors don’t have to stop interest and charges on a DMP. We regularly speak to people who’ve taken advice from elsewhere and have been given the impression that a DMP guarantees their interest will be frozen, which can lead to them being very disappointed if it doesn’t happen.

    I’d say that we find the majority of the time creditors are willing to stop or reduce interest. The biggest factor tends to be if they can see that there is a genuine debt problem and the payment being offered is reasonable. This doesn’t guarantee a payment will be accepted but it certainly improves the chances.

    Kind regards

    James
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at Need to Sleep

  • Interesting stuff.

    One question, how much did the rebranding of CCCS cost? Do you think this was good use of this money?
  • Can we keep this thread on the topic of debt myths please folks.
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  • System
    System Posts: 178,077
    Photogenic Name Dropper First Post
    Community Admin
    The myth:

    A doorstep debt collector can come in and take my stuff #debtmyths

    The reality:

    The idea of some beefy guy in a bomber jacket coming into your home and taking all your possessions is something that causes many of our clients sleepless nights. However the reality is very different. A doorstep debt collector is not a bailiff and they don’t have the power to enter your property.

    The truth is that doorstep debt collectors have very little actual power. They can knock on your door and ask for a payment but they don’t have the power to come into your property, and can’t take your things away.

    It’s fairly rare that creditors send doorstep debt collectors because it’s expensive to send someone from one house to the next and they often don’t collect very much money. If a doorstep collector does pay you a visit it’s better to not pay them anything and tell them you’re getting debt advice.

    If you have debts that have gone to bailiffs then the rules are different. We’ve got a blogpost about dealing with bailiffs.
  • Former_StepChange_Rachel
    Former_StepChange_Rachel Posts: 252 Organisation Representative
    The myth:

    Your student loan will be written off if you go bankrupt #debtmyths

    The reality:

    No matter what kind of student loan you have, you can’t get the Student Loan Company to write it off through insolvency. This means whether you go for an IVA, DRO or bankruptcy, your student loan won’t be written off. There are instances where they’re wiped but not through insolvency. There’s more information on this over on the main site.

    If you’re a student and would like a bit of help with managing your finances then you might want to check out our student debt guide, stuffed with useful information about dealing with your finances.
    I work as a debt advisor for StepChange Debt Charity (formerly CCCS) and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy

    If money worries are keeping you awake, read Paul's success story at [url="http://www.needtosleep.org]Need to Sleep[/url]

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