For richer or for poorer – affluent need debt help too

As the recession takes hold an increasing number of more affluent earners are seeking help with their consumer debts.

Rising unemployment and the housing market slump have been cited as possible reasons why there have been a fundamental shift in UK debt patterns.

Debt advice organisation the CCCS reported the number of their clients in 2008 with incomes over £30,000 had risen by 8.7% from the year before.

Their spokesperson said: “When unemployment triggers a debt problem, the fall in income can leave the borrower struggling to service both mortgage and unsecured balances, while the fall in house prices, and growth in negative equity, takes away the option of selling to clear the mortgage”.

“As over-indebtedness becomes a problem for the more affluent, people who come to us are more likely to have mortgages and to lead complex financial lives.

“As a result, our task in providing best advice is bound to be more difficult and time consuming.”

Financial Assistance

Other organisations, that specialise in giving financial assistance in this area, had reported similar increases in “middle class” enquirers. Experts have commented that financial problems were affecting a wider cross-section of society and were becoming more complicated, and harder to resolve, than in recent years.

Although on average many people seeking help to get out of debt were better off, and actually owed less, they were nevertheless finding it harder to pay off their outstanding balances.

Reputable debt help organisations offer a number of ways to help pay off credit cards, personal loans, store cards etc., including debt management plans, IVAs and Trust Deeds. These programmes enable balances to be rescheduled over a longer period which usually makes them more affordable. Balances are also combined into one monthly payment, made to the debt help organisation, who then distribute this amongst creditors on a client’s behalf. This simplifies finances and makes them easier for a client to manage.

Reputable specialist organisations include Hamilton Locke, The Debt People and Chiltern – all who offer free debt advice.

UK consumers currently have outstanding balances totalling almost £1.5 trillion.

Fees & Information

We cannot guarantee a reduction in interest or charges. If an IVA is not maintained it could lead to bankruptcy. Whilst initial debt advice is free, fees will be charged if a solution is taken out.

Fees related to Debt Management Plans are in two parts;

"Initial Fee" means your first two "Monthly Payments", which is paid by You to "Us". This represents our fee for establishing your arrangement, and therefore is not distributed to your creditors, and can be paid in two separate instalments. Retention of this fee will put you into further arrears.

"Monthly Fee" means the Fee payable for our Services each month. This is an amount equal to 17.5% of your "Monthly Payment" (apart from your first two "Monthly Payments" which is the "Initial Fee"), subject to a minimum payment of £30 for disposable incomes of 0 - £100, and £35 for disposable incomes of £100.01 - £200.

Fees incurred for Individual Voluntary Arrangements are variable dependent upon the monthly contribution to the arrangement and the agreement that is reached with your creditors. Fees are made up of Nominees fees relating to assistance given to prepare your proposal and Supervisor fees which relate to the ongoing monitoring of your IVA. Fees are already included as part of your monthly contribution. The level of fees and the method of payment are both agreed by your creditors at the outset of the arrangement.

A record of your agreement with us will be held on your credit file for up to six years, and your ability to obtain credit in future may be affected.

You are provided a cooling off period of fourteen days from the date the agreement was deemed to commence, during which you may cancel our agreement. Should you give notice to us that you would like a refund of a payment, or payments, (being other than the initial fee) then where no distributions have, at that time, been made by us, or are in the process or course of being made by us, in respect of that payment or payments this will be made in full (i.e. without deduction of our fee of 17.5%).