Debt charity Consumer Credit Counselling Service (CCCS) has revealed it received a record number of calls from people facing financial difficulties in 2009, with a vast majority of debtors owing credit cards or personal loans.
CCCS said in its annual report it received 335,323 calls in 2009, a 26 per cent jump on the year before. Including specialist services and aftercare, the charity dealt with 1.3m calls, 13 per cent more than in 2008.
Just under half of calls (46.3 per cent) were from people facing credit card problems, while 39 per cent of calls were regarding personal loans. Despite the jump in volumes, CCCS chairman Malcolm Hurlston said the charity still had the capacity to deal with the rising number of debtors due to an increasing online presence.
CCCS said the recession is hitting Londoners the hardest. It said that 14.6 per cent of London based clients are recommended to seek bankruptcy, compared to half this number in Scotland. And people in London are least able to repay their debts as they have on average a deficit of £54 in their budget to pay basic living costs, CCCS said.
The average individual asking for help from the CCCS will be in their mid-30s and have outstanding unsecured debts of about £29,000, the charity revealed.
However, in fresh evidence of recessionary pressures CCCS said that less than a quarter of people counselled could afford to go on a plan to repay their debts. And it noted that a third of people had no ability to pay back debts required for a debt management plan or an individual voluntary arrangement so the only advice that could be issued was to increase income.
"It is rare for an annual review to reflect such rapid change. The marked increase in our clients’ inability to repay their debts which suggest that the recession has turned over-indebtedness from an acute into a chronic problem," Hurlston said.
Hurlston yesterday unveiled a token repayment scheme which would allow people to pay creditors just £1 per debt a month towards creditors.
For the first time in its history CCCS will later this year begin a marketing campaign to raise the charity’s awareness, Hurlston revealed to Credit Today.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
With cccs being a charity, how do they fund raise? just a thought as they were great when i needed them a few years ago, not sure how i would of coped back then if it wasn't for having someone on other end of the phone.
I didn't know who they were, it was after a chat to a personal banker in barclays, i got the number and took it from there. I can't fault the work they do, they listen, advise and i dread to think the mess i would be in if they weren't there!
CCCS receive their money from the creditors as far as I can remember, as are Payplan.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
I saw the CCCS chappy being interviewed on GMTV the other morning. I found his comment that for a lot of people contacting the CCCS, there is simply NO SOLUTION to their debt problem, ludricous and sensationalist. Absolutely no mention whatsoever of DMPs, IVAs or bankcruptcy. No wonder people are being driven into the arms of loan sharks if the spokesperson of the CCcS can only offer a "no hope - we're all doomed" message on a national TV platform!
They should have another look at allowances, with petrol due to reach an all time high, food will also go up to reflect the increase in delivery costs and I think these allowances should be reviewed every 12 months, the same as we have to do ours.
If you can't do an IVA or a DMP, then bankruptcy is the only option. Unless your debts are below £15k and you have no assets or disposable income of more than £50 a month, then a Debt Relief Order is an option.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
It seems strange to me that a so called charity receives that number of calls, is recommended by the creditors, has a very high profile and is now going on a marketing campaign but as far as I am aware they only have one IP. They may have more but I did ask and the answer was never given so I am left to assume there is only one IP in the CCCS to deal with over a third of a million enquiries!
I wonder if this £1 a month scheme is a way for the CCCS to try and reduce the numbers of bankruptcies and debt relief orders. Clearly the banks who fund the CCCS would prefer if debtors were able to find new jobs and repay their debts and so would support such a scheme. However, I am not sure it would be the best advice unless the client knew for sure that their situation would improve in six months. I would also like to see if this scheme is signed up to by all creditors including debt purchasers and the debtors must have some legal protection otherwise their homes will have numerous charges registered against them by the time their situation does recover. It may be too late by then and bankruptcy and loss of home will follow.
That's what I found so astounding. Here was an opprtunity to inform millions of people of possible routes out of debt i.e. DMPs/IVAs or even bankcupty/debt relief orders as a last resort. But the only advice offered was no advice - sorry we can't help you.
As stated in Andy's initial post "And it noted that a third of people had no ability to pay back debts required for a debt management plan or an individual voluntary arrangement so the only advice that could be issued was to increase income" !!??
Bankruptcy is always an option. Some people may not like it as they could lose their home or other valuable assets, but it is always there.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Absolutely Jan. It may not be the most palatable solution but it is a solution. Many clients have lost their homes and gone bankrupt but then started all over again without a huge burden of debt to repay forever. As David says all options have to be discussed and the debtor given all the information concerning the pros and cons. Otherwise any conversation with a client is a total waste of time.
We were told initially that BR was our only option - we have equity in our house, although not enough to settle our debts completely. A we love our house it was not an option at the time.
However, if push came to shove, then we would have had to do it.
Bankruptcy will always be there, regardless of who petitions for it.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
I was very interested in this thread as it reiterates the question that I raised in a post a little while ago about whether there is likely to be any new debt solution brought in for people for whom none of the current solutions are suitable or desirable. I doubt that it is CCCS who are saying that there is no solution available for callers, it is more likely to be the caller themselves. For me, like kallis above, I have some equity in my home and don't want to lose it. CCCS would advise me (and I'm sure others like me) that, with limited available income and a high level of debt, my only solution is bankruptcy but I would not choose that route because of my house, leaving me without another solution. Others might not be able to choose backruptcy because of their work or out of a sense of principle about wanting to pay as much back as they can. The solution is there, we just choose not to take it so surely there needs to be an alternative solution.
All of this brings me back to my original posting and the question of whether, especially in the light of CCCS' recent experiences, there is likely to be a 'new' solution brought in that enables people to pay back what they can afford whilst being protected from creditor action. Perhaps an IVA-type solution without a minimum income level, or a DMP with some debt forgiveness and protection from further action?
I also find the 'increase income' solution a questionable and largely unrealistic one - many people are already working full time and taking on additional work may be in breach of their contract with their main employer, not to mention the impact it can have if carried out long term (which I know to my cost) on mental and physical health and personal relationships.
It will be interesting to see what happens with this ever increasing group of debtors and whether any of this will be addressed in the run up to the election.
I think the solution you seek already exists - a neverending DMP. We cannot expect creditors to write off debt in a DMP if there is an asset that you choose not to give up.
To be frank in my whole career I have never not managed to find a solution for a client. Fair enough it may not be an ideal solution for some of them, but I could not contemplate turning a client away without some form of strategy.
