RUNCORN, England — Consumers have an abundance of options in modern times when picking out a credit card, deciding on a mortgage and choosing which loan products are right for them. Individuals also encounter a variety of organisations promising to help if they've spent too much and are deep in debt. With so many debt counselling agencies offering assistance with debt problems, one might think one organisation is just as good as another, and that finding the right solution to deal with all their debts is an easy task. According to Steve Rhode, chairman of the not-for-profit group Myvesta UK, just the opposite is true.
"Not all debt management organisations, be they charitable or commercial, offer the same level or range of services. Most will not actually intervene on behalf of consumers with secured or priority debts such as mortgages or utility bills. Indeed, the majority of 'debt help' organisations simply don't offer a debt management service that will include secured or priority debts," Mr Rhode said. "Organisations, be they commercial or charitable, that offer debt management services should be more transparent to consumers about exactly what type of debts they are willing to take on board as part of a debt management plan."
Mr Rhode said that some debt assistance organisations turn individuals away who don't meet their requirements.
"Many consumers that need help with more complicated priority debt issues are effectively 'fobbed off' with a self-help pack by supposedly helpful groups if the debt situation involves difficult, time consuming priority debt work or if the majority of a person's creditors are not unsecured lenders," Mr Rhode said. "At Myvesta we don't think that approach is reasonable and we certainly do not discriminate about the types of debts we will assist consumers with."
According to Mr Rhode, consumers often solely choose a debt management organisation based on the issue of fees.
"Consumers would be mistaken to select one organisation over another simply because one claims to offer services for 'free'. The offering of free services alone is not an indication of the quality of service on offer or the type of debt help and intervention that a particular organisation is actually willing to provide. Debt is debt, regardless of whether the debt is unsecured debt or not. Organisations offering 'free' debt help should intervene with all types of debt problems."
"At Myvesta we offer a not-for-profit hybrid approach including free intervention services for those individuals that cannot afford to make fee contributions for debt help and intervention and fee-based programmes to those individuals that can. This is fairer, more transparent and allows us to be completely independent from creditor influence."
Mr Rhode said, "Having learned from our many years of assisting people in the United States we understand the fundamentally flawed nature of the 'free debt management plan' argument. In the US, debt counselling organisations that used to be very vocal about offering services for free have 'egg on their faces' because they now all charge fees to remain in existence. As American credit card lenders began to reduce funding to these organisations and also tie their funding contributions to the level of collection performance, those US agencies had to start charging fees to consumers to stay in business. Their claims to be independent from creditor influence have also been shredded. As a result, their focus moved away from assisting consumers to pleasing creditors and they were basically turned into collection agencies for the creditors. We don't want to see that happen in the UK."
With debt levels reaching historic highs in the UK, Mr Rhode recommends reaching out for assistance at the earliest moment and doing some research to find the right organisation to help resolve your situation.
"If you've waited until you're thirty minutes from bankruptcy to seek help, you've lost out on many good options and solutions available," Mr Rhode said. "The key to finding a quality, inclusive solution for your debt issues is to search as early as possible for options and then realise that shopping around for the right organisation to help you just makes good sense."
