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Factors Behind Debt Management Plan Advice Needs |
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There is much confusion about what the factors are behind the increase in UK debt problems. Those that provide debt management plan advice have been interested to review CCCS statistics about the causes for debt problems experienced by their clients. CCCS themselves are a major UK debt charity who themselves provide debt management plan advice. Being unemployed can be financially disastrous for many people. About 25% of the people studied by CCCS can trace back their need for debt management plan advice to not having a job. While still not working a debt management plan may not be useful, but debt management plan advice sources can point people towards other possible solutions including a debt relief order or bankruptcy. For those that get back into work after accruing debts while unemployed, specific debt management plan advice may well lead to the suggestion of using a DMP or another more formal debt solution. Reduced income is the second major problem cited by around 25% of people. DMP advice may be increasingly relevant in this situation as there could be money to repay debts albeit insufficient disposable income to do so at the full contractual repayment rates. Those engaged in debt management plan advice would conduct a fact-find with their client to ascertain whether spare cash exists from which a debt repayment plan can be designed. 15% of debt difficulties are traced back to a lack of budgeting or over-commitment. Basically this scenario encompasses persons that have found themselves in a position, perhaps through a lack of forethought or structured budgeting, where they cannot keep up with debt repayments without having to borrow more elsewhere. Debt management plan advice can nip this problem in the bud and prevent the situation escalating to the point where formal insolvency methods like an IVA or bankruptcy become necessary. As with reduced income, the provider of debt management plan advice would be looking to see whether some capacity to repay debt remains. Separation leads to one in ten debt problems seen by the CCCS. Due to the “joint and several liability” issue on joint loans it’s vital that each ex-partner seeks their own independent debt management plan advice as the actions of the other may seriously affect their financial position. As couples splitting up often find their collective expenses increasing, for example requiring two homes, the ability to repay debt can be seriously harmed. DMP advice providers often deal with the aftermath of conflict connected to joint debts where in fact only one party had access to the borrowed funds. There are many other factors that can lead to the need for debt management plan advice. Irregular income, failed businesses, childbirth or pregnancy, bereavement and retirement can all be factors. DMP advice should not be delayed any longer than necessary once it’s clear that there is a debt problem. During a gap prior to seeking debt management plan advice, total debts often increase which can easily lead to less attractive resolutions options later being required to deal with what will have often become more serious financial problems. |
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