Stepchange general questions

Actually, despite the confrontational nature of the post, it raises a very valid point, and one which stepchange might like to respond to..

Stepchange, PayPal etc are free services, and excellent ones at that, but they are run by people, and people not computers make judgement calls. Do all three charities tend to give the same advice on the same situation? Or would it be prudent to advice people in difficulties to seek advice from more than one charity before making any formal agreements?
And do each charity have a preferred method of repayment? I have heard that payload tend towards IVAs whilst stepchange tend towards DMP, so is that a myth that needs busting? Or is that actually a little bit true?
I'm saying all of this with the greatest of respect to all of the charities' work, you all do a fantastic job. But there may be more than one way to skin a cat with some (all?) situations, and this might (should?) be addressed

StepChange_James wrote: »

The myth:

Overspending is the main cause of debt problems #debtmyths

The reality:

It’s easy to think that people who get into financial difficulty have got there because they’ve been daft with their money, frittering their cash on handbags and plasma screen TVs.

However the reality’s very different; the main causes of debt are job losses or pay cuts. We've an infographic that shows the difference between the perception and the reality: http://www.stepchange.org/infographics/causesofdebt.aspx#.ULY1t4dg95o.

Do you think people with debt problems are unfairly judged to be bad with money?

Hi Stepchange, just wanted to add to this a little to this one. I have in the past worked as an examiner for the insolvency service part of which involves really getting to the root course of a persons bankruptcy through examination of their whole financial history. There are really 2 questions involved in the above "what caused the build up of debt in the first place" and "what caused the insolvency" which often get conflated together which is why the myth perpetuates. on the first case it is spending in excess of ones income that causes most people to be in debt and it is important that people realise that because if they dont they put themselves in a position to become insolvent if they have a change of circumstances, Whilst it is true that most people do not just continue spending until they go bankrupt by building up a large debt by overspending they leave themselves vunverable. There are many people out there right now who could be tipped over the edge by a small change in circumstances.

The second question regerding why people actually go bankrupt is as you say often because of that life changing event, loss of job, marital split etc but people out there now need to look at their finances and ask themselves could that happen to me, is it wise for me to be spending more than my income now, what can i do to reduce my overall debt level even thogh i can manage the repayments at the moment because these tipping points often come without warning

DI

Hi Stepchange, just wanted to add to this a little to this one........................................ Whilst it is true that most people do not just continue spending until they go bankrupt by building up a large debt by overspending they leave themselves vulnerable. There are many people out there right now who could be tipped over the edge by a small change in circumstances.

I would like to add, quite often the original debt was relatively small....the oversized amounts which lead to a build-up, often come from excessive interest, and penalty charges.....some of which can seriously exceed the original amount of the debt.
This contributes to the 'downward debt-cycle',until a point is reached where the debtor can no longer fund basic living expenses, without obtaining further credit to do so.
Debt, in itself, moves from 'avoidable [& controllable]'....to 'unavoidable'..

As individuals, we are no different to giant corporations....or businesses.

We exist, financially, on a 'cash-flow' basis.

Just like Rover, sometimes cash-flow hits a crisis.
Sadly, few of us have the financial or business acumen of the high-flying CEO's of this world...but eve they go under!

The second question regarding why people actually go bankrupt is as you say often because of that life changing event, loss of job, marital split etc but people out there now need to look at their finances and ask themselves could that happen to me, is it wise for me to be spending more than my income now, what can i do to reduce my overall debt level even though I can manage the repayments at the moment because these tipping points often come without warning

DI

I wholeheartedly agree with the above.....but...try and convince an 18 year old just starting work, that they should save for a pension, or a 'rainy day?'

What sort of opinion of ourselves would we expect to receive, if when someone announces they are 'getting married'....and we respond , 'are you sure about this? Are you prepared for divorce, property settlements, etc?'......or..'are you aware there is a greater chance of being run over by a bus, than the marriage surviving, till death etc?'

I've been married three times....[not all at once, though!]....each time, the last thing on my mind was, how long it would survive?

I have, in the past, been [almost] made redundant from a State-run industry [that's privatisation for you]. I worked in a job where the consensus was, 'a-job-for-life'.....ie, job security.

No such animal any more....

I work in a job, where, 10-15 years ago, we were promised a guaranteed pay progression.....based on skills and experience.

The skills and experience were undoubted..... the promised pay progression? Scotch mist! [that's the Civil Service for you!]

Unfortunately, we cannot impart the required cynicism into the under-50's that allow for the para above from DI.


After that, it's all about damage-limitation!

StepChange_James wrote: »

Hi Depthcharge,

We don’t have entry criteria for Debt Management Plans, when we give debt advice we look at all the available options and recommend what we think suits that persons situation the best. Of the people who approach us for advice, less than 1 in 5 are suitable for a Debt Management Plan (DMP) and we’ll support these people with whichever solution suits them best.

If someone’s finances change after they’ve had advice from us they can call us back up and we’ll give them fresh advice based on their new situation. If a different solutions suits them better then we’ll advise them on this.

We aren’t currently operating a token payments scheme.

Kind regards

James

Hi James

Thanks for the reply

Could depend on your definition as suitable for a debt management plan I suppose.

If someone has a monthly amount of disposable income that would take them 15 years to clear their debts would you take them on under your standard DMPs where payments are distributed to creditors etc or would you refer them to self help or elsewhere.

Do you take people on in a debt management plan then irrespective of the level of their debts or their disposable income (including token offers) or how long the plan would take to conclude, hope you see my points given your previous claims.

Im pretty sure I read in a parliamemtry report somewhere that the token offer scheme was going to be rolled out in the latter part of 2012, I could probably find the link if I looked.

If I was to refer people to you for a debt management plan then I would need to know the above, I ask this as I was under the impression that 10 years was around the timescale that CCCS liked to adhere to and the minimum monthly disposable income figure was around the £100 mark.

PS - It is likely that I will be meeting with one of the representitives from Stepchange in the not to distant future about issues such as the above for potential referral purposes etc so I will likely gain all the relevant information first hand.

Maybe catch you later

Hi

I signed upto a DMP with StepChange a few years ago via National Debtline and I'm pretty sure that I had to have £100 a month surplus to be accepted.

It's the best thing I ever did and only wish I would of known about the help available when I was much younger, rather than letting things get out of control.

In my opinion research research research is the best way forward when you have a lot of debt. Knowing how to deal with creditors and not to be intimidated by them really helps, ie knowing your rights.