60% of people sorting their own debts out have their plans rejected

05/11/2008

The "self-help" debt advice system should be reformed, Citizens Advice has suggested.

According to the charity, 45 per cent of debtors want to sort out their problems themselves - and perform the same actions that debt advice firms would otherwise make on their behalf.

However, around 60 per cent of people who try to set up a debt repayment plan with creditors have all their repayment plan offers rejected - and just 20 per cent have them all accepted.

According to analysis from Citizens Advice, advisors should also give debtors more consistent guidance about what to do if they want to go it alone.

Citizens Advice chief executive David Harker said: "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."

EuroDebt director Kevin Still added: "It is encouraging that such a high percentage of people visiting bureaux want to sort out their own debts, but the very high proportion that have all or some of their repayment proposals rejected is testimony to how hard it can be to negotiate effectively with your creditors.

"We feel it would be a tall order for someone with limited inside knowledge to be able to make contact with the right department with the correctly framed proposal… It is often the case that self-management is more achievable after a sustained period on a managed repayment plan."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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