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Beware of 'Informal debt consolidation'
So called 'specialist' advice could prove costly and inadequate.
The are several organisations that advertise in the National newspapers that pose as 'specialists' advising that if you owe over around £8,000 or more, they "can reduce your debts without the need to borrow". These 'specialists' will offer services and assistance; but beware! Most of these 'specialists' are intermediaries with no relevant qualifications and their advice could prove costly and inadequate.
Particular care should be taken when considering any propositions which promote 'debt consolidation' or ' debtor-creditor arrangements ', sometimes with consultancy agreements stipulating fees which people are expected to guarantee. The UK Insolvency Helpline's panel of professional advisers are qualified, regulated and accountable.
The average person can rely on our advice when considering personal obligations under the 1986 Insolvency Act and any restructuring of businesses. A "specialist" solely registered under the Consumer Credit Act as a Debt Counsellor need not be qualified, and is not registered or accountable under the relevant insolvency legislation. If in doubt please contact us for advice.
Recent example - Individual who entered into 'Informal Debt Consolidation'
Mr Jakes was a taxi driver who lives in the North of England. Mr Jakes had been struggling with credit card debts and personal loans of £16,000. Whilst reading one of the National tabloid newspapers he came across a firm of "Debt Management Specialists" who Mr Jakes rang in good faith. Within a week Mr Jakes was visited by one of their salesmen. Mr Jakes was advised to pay £250 per month for the next six years and that the first five payments would cover their fee.
Mr Jakes realised something was wrong when he was contacted by one of his creditors who told him that although they had been informed of the offer, they had not agreed to it. He immediately cancelled the arrangement and made a complaint. This method is called an "informal arrangement" which has to be agreed by 100% of all creditors in order for it to work. It is an unregulated procedure that we strongly advise against. Mr Jakes then contacted the UK Insolvency Helpline. We arranged an IVA for Mr Jakes. His debts were reduced to £9,600 and the interest was halted.
Mr Jakes entered into an IVA at £200 per month for four years which was agreed by his Creditors. This affordable monthly solution was based on Mr Jake's disposable income taking into account; rent, living work expenses.