Is Debt Management the best way?

bazza5070

Hi, advice needed please,

A friend and her OH have found themselves in debt to the tune of £27,000, most made up of unsecured loans and credit cards. They are now at breaking point and approached a company about the possibility of an IVA. They were advised that they had too much equity in their property and were pushed towards a Debt Management Agreement. This works out at around £500 a month and they will end up paying over £10,000 interest! Is this correct and is this the right path to go down, are there any other options.

I have already pointed out to them that if they have enough equity in their property the moral thing to do would be to sell up and pay off their debts, after all they spent it so they should have to carry the consequences. This suggestion did not go down too well.

Any other suggestions please.

P.S. No self righteous ones please as they have already heard all of them from me!!! :rotfl:

ellesbellesxxx

Have they investigated CCCS? Just thinking they ask creditors to freeze interest and make it manageable based on what they can afford

Tixy

Before they make any decision make sure they have spoken to one of the debt advice charities - see here - IMPORTANT - Where to seek professional impartial advice about your debts.

If they cannot afford monthly payments and a DMP is the best option for them then it is quite possible that some or even all of their creditors will consider freezing interest.

Depth_Charge

bazza5070 wrote: »

Hi, advice needed please,

A friend and her OH have found themselves in debt to the tune of £27,000, most made up of unsecured loans and credit cards. They are now at breaking point and approached a company about the possibility of an IVA. They were advised that they had too much equity in their property and were pushed towards a Debt Management Agreement. This works out at around £500 a month and they will end up paying over £10,000 interest! Is this correct and is this the right path to go down, are there any other options.

I have already pointed out to them that if they have enough equity in their property the moral thing to do would be to sell up and pay off their debts, after all they spent it so they should have to carry the consequences. This suggestion did not go down too well.

Any other suggestions please.

P.S. No self righteous ones please as they have already heard all of them from me!!! :rotfl:

Hi

Just to add

If they are not technically insolvent then an IVA or bankruptcy would not be an option and a DRO out of the question anyway due to the same and eligibility criteria.

In these situations (catch 22 in a way) - people are not left with many alternatives other than sell up & clear or an informal arrangement such as a Debt Management Plan.

Not that many wish to sell up for a number of reasons, some of them pretty obvious not to mention sentiment and children etc - also peoples circumstances may be temporary.

The risk with Debt Management Plans is the creditors and where applicable collection agencies may start their antics with CCJs, Charging Orders, Stat Demands etc and nonsensical demands, but they are supposed to follow OFT guidelines regarding offers of payments made in line with accepted trigger figures such as the Common Financial Statement.

If approached in a sensible way either by self managed or with the assistance of a charity / company then interest & charges can be succesfully held (but there can always be exceptions as with anything)

There are free Debt Management Plan providers such as CCCS & Payplan (not a charity) that administer plans free of charge and without any of these somewhat arguably dubious type of up front fee and first 1,2 or three months payment things etc.

All monies paid into DMPs with the above (CCCS & Payplan) or if people administer their own DMPs go towards paying off the debt unlike the fee chargers we see, so its simple mathmatics time really - the creditor recieves more and the debt usually paid off quicker

All the marketing, sales spin and rubbish cant change the above in my opinion and this includes some of the quotes I am sure I remember seeing somewhere - such as - the fee chargers work harder at getting the charges and interest frozen (I think it may occasionally say this on the script (tin) though)