Lenders criticised for debt repayment plan refusals

08/06/2009

Card and loan lenders are not meeting debtors half-way in renegotiating repayment rates, a newspaper investigation revealed today.

The Times claimed that many financial firms are passing customers straight on to debt collection agencies rather than putting in place a debt repayment plan - which in turn protects people from rate hikes and extra charges.

This means that borrowers struggling to meet their monthly bills have been left unable to negotiate lower bills, putting them at higher risk of receiving a visit from bailiffs.

Lenders are within their rights to refuse to negotiate a debt repayment plan for any customer.

Speaking to the newspaper, Alex MacDermott, a creditor liaison officer at Citizens Advice, commented: "Creditors do things differently and have different minimum payment levels."

He added: "It would make a big difference if all creditors stuck to an industry standard and treated customers fairly, for example by stopping adding to the debt through interest and charges."

Also commenting on the newspaper investigation, Kevin Still, director at EuroDebt, said: "According to recent estimate from a YouGov survey, the number of individuals who are currently in a formal Debt Management Plan (DMP) has risen to 700,000 with a rise of 17 per cent in the seven months to February 2009. This reflects consumer experience in trying to self-manage, where their repayment offers are routinely rejected by creditors and their appointed agencies."

He added: "Citizens Advice Bureaux have been highlighting the need for better collaboration between lenders and debt advisors, which EuroDebt fully support. Our experience is that by presenting information in a structured manner to all the creditor hardship departments after an independent face-to-face meeting with a EuroDebt debt advisor results in very high acceptance rates and freezing of interest and charges. We deal with over 3,700 creditors and collection agencies."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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