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02.05.2017

Scots Choose To Go Private To Deal With Debt Problems

Scots go private to deal with debt problems

New figures released by the Scottish Government show that Scots struggling with their finances are choosing to go private to find solutions for their debt problems.

In four of the five years between 2011 and 2016, the statistics released by the Scottish Government show that private debt firms were the largest providers of the Debt Arrangement Scheme, which aims to help consumers with their debts, outperforming the free debt advice sector.

This is despite firms in Scotland delivering the Debt Arrangement Scheme being under a requirement to inform debtors they can obtain free services from local authorities and Citizen Advice Bureaux.

Bad advice can cost, regardless of the price

For many it may seem counter intuitive that people in debt are paying money for help, rather than paying it towards their debts, but it’s not that illogical when you consider people are accustomed to paying money for financial services, whether it’s in the form of credit card or personal loan interest.

Also in a country where consumers have embraced the digital technology revolution, it makes sense that they are now embracing firms that use it. People want services that are accessible from their laptop or phone; with the idea of taking time off work being illogical to them when they have credit card or loan payments to make. People want to deal with their debts in the same manner they got their credit in the first place.

There is also a growing realisation amongst many consumers, in country obsessed by home ownership, that their finances and credit ratings are important. Consumers understand that bad advice, even if free, can cost them more.

Should you pay for debt advice?

At Creditfix we do not believe people should pay for debt advice. We also appreciate that people want a professional service that they can contact when it suits them. They also want to speak to fully trained advisers who advise them on their debt problems in a non-judgemental and confidential manner.

We would strongly advise people not to pay for debt advice.

Is there a role for private firms then?

Private firms are essential in helping people with their debts, and as has been illustrated by the Scottish Government statistics, they are the largest providers of debt solutions in the UK.

However, the provision of free debt advice is different from free debt solutions. The reality is once a consumer has taken advice and chosen a route to deal with their debts, the administration of that solution can take several years. During that time, there is a cost of doing so.

In relation to Individual Voluntary Arrangements and Protected Trust Deeds, however, these costs rarely impact on how much the consumer must pay, which is the key factor that must be considered when choosing to go private or use a free service.

Our clients pay what they can afford and our fees are agreed with the people they owe money to, meaning ultimately, it is the creditor who pays for the service. The important point is once all the payments have been made, the remainder of the debt is then written off.

Individual Voluntary Arrangements and Protected Trust Deeds are now the largest formal debt remedies in use in the UK, and Creditfix is one of the leading providers of both. Our model for paying for these services is the same as that used by the only debt charity that provides them. In that sense, we are the same.

What is key for us is the services we provide must continue to meet the expectations of our clients. We work hard to invest in our staff and our digital services to ensure a pleasant journey for all our customers and to keep down our costs, ensuring greater returns for creditors.

For us no price can be placed on best advice, but there is always a price that has to be paid for bad advice.

If you need more information about the options available to you in dealing with your debt, you can always speak confidentially with one of our friendly advisors on 0808 2085 198.