Charity calls for overhaul of 'self-help debt'

Citizens Advice believes more could help themselves out of debt given the chance

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Tuesday, 04, Nov 2008 12:01

Citizens Advice is calling for an overhaul of the self-help debt system after finding 60 per cent of those who had attempted to negotiate with their creditors were rejected.

Self-help debt advice involves giving clients who are struggling with their repayments the information they need to negotiate an affordable plan with their creditors – an approach welcomed by debt agencies as a way for people to take control of their finances.

But several organisations saw evidence of clients being treated more favourably if they were represented by an advice agency as opposed to undertaking their debt negotiations themselves.

As part of an investigation into the system, Citizens Advice found nearly half (45 per cent) of all the people surveyed for the report wanted to take control of their debt problems themselves by offering a payment plan to creditors.

However, nearly 60 per cent of people surveyed for the report said their offers had been rejected.

Citizens Advice chief executive David Harker said: "Personal debt in the UK is growing and it now accounts for one in every three problems dealt with by the Citizens Advice Bureau (CAB) services in England and Wales.

"We are recommending that a working party consisting of representatives from the credit, debt collection and advice sector should work together to agree a set of proposals for a model of practice for 'self-help' and implement these by 2010."

The report recommends the advice sector develops a consistent way of delivering self-help debt advice and the credit industry changes the way it assesses offers made by customers who use self-help debt advice services.

Both the advice sector and the credit and debt collection industries need to work together to make these changes a reality, the report added.