Plans to help people solve their debt problems as quickly and fairly as possible

7
Jan/100

Plans to help people solve their debt problems as quickly and fairly as possible

Debt Management Schemes are designed to assist those who are in debt and are unable to meet their commitments. In these situations finances are assessed and a monthly repayment deal is negotiated with all their creditors which all sides agree to and the debtor is able to maintain.

The consultation explores whether there would be benefits for debtors through:

more consistent operators’ charges
interest and other charges being frozen once a payment plan has been agreed
the opportunity to pay off debts over time without requirements to sell homes or other assets
protection from enforcement procedures from creditors (unless the creditor receives court permission
better advice on the full range of options available to deal with debt problems
changes, if introduced, to existing schemes would also be aimed at assuring creditors that they:
                    receive maximum returns
                    will not need to spend time and money on chasing debts
                    will have clients’ financial details regularly provided to them in a consistent format
                    will be confident that they are receiving the maximum possible monthly instalment.

Taking tough, swift action against firms who fail to operate within the rules and who provide sub-standard services to consumers with problem debt remains a high priority. Later this year, the Office of Fair Trading plans to launch a review of its Debt Management Guidance to obtain a clearer picture of compliance levels within the debt management sector and take appropriate follow-up action.

Other measures to help consumers and homeowners in financial difficulty include:

Changes in eligibility criteria for Income Support Mortgage Interest for homeowners getting Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance or Pension Credit. Where they have a mortgage, those benefits may include an additional element called Support for Mortgage Interest, which assists the homeowner with the interest on their mortgage.
The Homeowner Mortgage Support Scheme enables eligible borrowers to reduce their monthly mortgage interest payments to affordable levels for up to two years, helping them get back on track with their finances if they suffer a temporary loss of income.

Significant funds invested to strengthen the provision of debt advice, including:

£130 million in England and Wales between 2006 and 2011 for free face-to-face debt advice
an additional £10 million last November to support longer opening hours at over 330 Citizens Advice Bureaux
£5.85 million for the National Debtline to increase frontline staff levels by 50

This is in addition to the investment in legal advice available through the Legal Services Commission to help those in need in the current economic climate.
The new self-help debt advice toolkit being developed by the Money Advice Trust and funded by BIS will enable those who can to negotiate debt repayments with creditors themselves with more targeted advice agency support. This will allow debt advice agencies to prioritise their resources better and advice more clients who need in depth help.

Bookmark It