New proposals have been revealed by the Citizens Advice Bureau on how people struggling with escalating bills could be aided through an overhaul of the self-help debt system.
The report ‘With a Little Help from My Friends’ sets out a way for people to regain control of their finances and set up affordable repayment plans with creditors.
Self-help debt advice involves giving people, who are able to take on negotiations themselves the initial advice, information and support they need to draw up a realistic budget.
However, the report was written after Citizens Advice, members of Advice UK and the Institute of Money Advisers saw clients were being treated more favourably if they were represented by an advice agency as opposed to undertaking their debt negotiations themselves.
The CAB report, which was written on behalf of the money advice sector, highlighted that the current problems with self-help debt advice services are down to a number of factors.
This includes the large number of self-help debt advice services currently on offer, and an inconsistent approach to self-help by the advice sector.
Now the CAB are recommending a working party consisting of representatives from the credit, debt collection and advice sector should agree on a set of proposals for a model of practice for ‘self-help’ and implement these by 2010.
This approach is welcomed by advice agencies as a way of empowering more people to take ownership of their finances.
The report also revealed that 60% of people surveyed for the report who wanted to take control of their debt problems themselves had their offers rejected by their creditors.
The survey was carried out in England and Wales, however Citizens Advice Chief Executive David Harker said personal debt across the UK is growing.
“As the current credit crunch and rising food and fuel costs are likely to result in more people needing help managing their finances it’s important that those who want to and are able to can negotiate with creditors directly without the risk of being treated unfavourably,” he said.
In October Pricewatch published shocking figures issued by the Citizens Advice Bureau in Northern Ireland which revealed that debt was spiralling across the province.
Between April and June 2007, the advisers dealt with 829 new debts, with £2,038,054 being owed.