Free Debt Management Plans from CCCS

Independent Debt Counseling – An Alternative to Consolidation Loans

Feb 21, 2009

Credit Action, an independent UK money education charity, has said that: "UK personal debt at the end of December 2008 stood at £1,457bn, an increase of £50bn."

As people struggle to get to grips with ever increasing levels of personal debt, many have turned to Debt Consolidation Loans or other types of borrowing as a way to manage their financial difficulties.

Debt Counseling

However, a recent article in the Daily Record, a UK tabloid newspaper, has suggested there are better ways of debt management: “Seeking professional advice and drawing up a debt management plan tailored to specific requirements can offer consumers a more comprehensive solution to debt.”

Consumer Credit Counselling Service (CCCS)

The Consumer Credit Counselling Service (CCCS), an organisation that offers free debt counseling describes a Debt Management Plan as: “A simple and effective way to pay your non priority creditors.”

If it’s felt that a Debt Management Plan is appropriate, the organisation will calculate the amount that a person can reasonably afford to repay after taking into account the priority debts. It will then negotiate with the creditors asking them to freeze or reduce the amount of interest, stop charges on the loan and accept a reduced payment until the debt is cleared.

Priority Debts

Priority debts are for example a mortgage or rent on a house, payments due to the Inland Revenue, utility services, council tax payments and may even include the payments on a car if it is deemed essential.

It must be said that while this system works for many, the creditors have no legal obligation to accept this course of action, but if they do, a Debt Management Plan will show on a person’s credit reference file.

There are many other debt counseling agencies out there that charge for their services, all touting for business. There is a school of thought that financial institutions, banks and credit card companies look more favourably on debt management plans drawn up by profit making debt advice agencies, rather than ones drawn up by free, independent organisations like the Citizens Advice Bureau or CCCS.

To go down the debt counseling agency road can be a costly one. Yes they will act in the same way as the independent, charitable organisation and negotiate with creditors in order to set up a Debt Management Plan, but they will take a commission, which may be up to 15% of any regular payment the debtor makes. Consequently it will take longer to repay the debt.

Consequently, the first step on the road to being debt free should always be a visit to the website of one of the independent, non-profit agencies.

Can an Individual Set up a Debt Management Plan?

Anyone can set up their own plan, however, it is perceived by creditors as having less authority and is less likely to be accepted. It is also a hugely stressful process and probably not an option for most people.

Anyone looking for online advice should be aware that there are differences between insolvency regulations in Scotland and England and Wales.

This information is obtained from the reputable sources listed below and is offered in good faith. However, like all financial decisions it’s important to seek appropriate advice.

The copyright of the article Free Debt Management Plans from CCCS in Personal Debt Management is owned by Neil Gunn. Permission to republish Free Debt Management Plans from CCCS in print or online must be granted by the author in writing.