Rogue Debt Management Plan provider exposed in BBC investigation
The debt management plan industry is worth an estimated £250m and up to 375,000 people across the UK are estimated to be on fee charging debt management plans.
Fee charging debt management companies exist in a largely self-regulated industry and therefore with this in mind and with the extra lure of revenue in a growing market it is easy to understand why corruption is rife.
One such company who the BBC exposed are known as ‘Global Debt Solutions' latterly known as 3 Step Finance and these were recently shut down by the Insolvency Service.
The firm which is based in Bolton in the north west of England, mislead their customers by advising they had been making payments to creditors but in fact had been saving up the payments in order to offer an eventual ‘lump sum full and final' offer to their creditors, a highly dangerous debt remedy strategy.
The BBC report explained that up to an estimated 10,000 people could be at risk with this Debt Management Plan strategy.
An analyst for Trust Deed Scotland, a Scottish based leading introducer of Trust Deeds in Scotland commented "The worst thing that anyone in debt can do is to ignore their debts and stop repaying them.
This form of debt management plan is ill-advised, suicidal and it opens people up to further action against them such as a CCJs, Wage Arrestments, and Charging Orders by creditors.
A regular debt management plan while not always the best solution for those in debt would at least demonstrate a willingness to repay and in most cases avoid these actions.
After speaking to our many clients, some of which have switched over from Debt Management Plans, we are fully aware of the tactics that some debt management plan providers will use and there is very little that a person can do when they have chosen these companies.
While we advise that it is imperative that consumers only deal with debt management companies that have a Consumer Credit Licence, this alone is not a guarantee of quality. We would urge anyone looking at a Debt Management Plan to look at all other debt remedies and to research online the company that they intend to use. "
In Scotland, there is a government approved debt management plan known as a Debt Arrangement Scheme (DAS) and this can be setup and administered by a qualified money advisor from a debt charity such as CAS or CCCS or by a fee charging organisation.
The Debt Arrangement Scheme works in pretty much the same as a debt management plan, except it allows for interest and charges to be legally frozen, compared to the interest and charges being voluntary frozen as in the case of debt management plans.
If you owe more than £10,000 to unsecured debts in Scotland and you are struggling to repay, you may qualify for a Protected Trust Deed.
A Trust Deed allows you to write off part of your debt and is repaid over a typical period of 36 months. At the end of the 36 months any unsecured debt left over will be written off.
The amount that you offer to repay your creditors when you enter a Trust Deed is based on what you can afford to repay, therefore you may qualify for a Trust Deed but if not there may be another alternative such as a Certificate for Sequestration or Debt Arrangement Scheme.
Fee charging debt management companies exist in a largely self-regulated industry and therefore with this in mind and with the extra lure of revenue in a growing market it is easy to understand why corruption is rife.
One such company who the BBC exposed are known as ‘Global Debt Solutions' latterly known as 3 Step Finance and these were recently shut down by the Insolvency Service.
The firm which is based in Bolton in the north west of England, mislead their customers by advising they had been making payments to creditors but in fact had been saving up the payments in order to offer an eventual ‘lump sum full and final' offer to their creditors, a highly dangerous debt remedy strategy.
The BBC report explained that up to an estimated 10,000 people could be at risk with this Debt Management Plan strategy.
An analyst for Trust Deed Scotland, a Scottish based leading introducer of Trust Deeds in Scotland commented "The worst thing that anyone in debt can do is to ignore their debts and stop repaying them.
This form of debt management plan is ill-advised, suicidal and it opens people up to further action against them such as a CCJs, Wage Arrestments, and Charging Orders by creditors.
A regular debt management plan while not always the best solution for those in debt would at least demonstrate a willingness to repay and in most cases avoid these actions.
After speaking to our many clients, some of which have switched over from Debt Management Plans, we are fully aware of the tactics that some debt management plan providers will use and there is very little that a person can do when they have chosen these companies.
While we advise that it is imperative that consumers only deal with debt management companies that have a Consumer Credit Licence, this alone is not a guarantee of quality. We would urge anyone looking at a Debt Management Plan to look at all other debt remedies and to research online the company that they intend to use. "
In Scotland, there is a government approved debt management plan known as a Debt Arrangement Scheme (DAS) and this can be setup and administered by a qualified money advisor from a debt charity such as CAS or CCCS or by a fee charging organisation.
The Debt Arrangement Scheme works in pretty much the same as a debt management plan, except it allows for interest and charges to be legally frozen, compared to the interest and charges being voluntary frozen as in the case of debt management plans.
If you owe more than £10,000 to unsecured debts in Scotland and you are struggling to repay, you may qualify for a Protected Trust Deed.
A Trust Deed allows you to write off part of your debt and is repaid over a typical period of 36 months. At the end of the 36 months any unsecured debt left over will be written off.
The amount that you offer to repay your creditors when you enter a Trust Deed is based on what you can afford to repay, therefore you may qualify for a Trust Deed but if not there may be another alternative such as a Certificate for Sequestration or Debt Arrangement Scheme.