Debt management enquiries to Payplan increase
An official from the debt management service Payplan has states that the level of debt management enquiries in the middle of January this year soared, as an increasing number of worried consumers faced up to the fact that they may struggle with their finances over the course of this year.
Tight credit conditions, high living costs, and worries about job security may have resulted in the increase in the number of people seeking advice with regards to managing their debts.
John Fairhurst from Payplan has said that whilst some of the people that will seek advice on their debts this year will be able to be helped simply others may be people that have lost their jobs and whilst they may not have a high level of debt as such they may find themselves suddenly defaulting on a range of payments simply because of the lack of income. The agency is now setting up an arrears management service for lenders.
Mr Fairhurst also said: “We had 2500 calls last week because in the past people traditionally would have continued to find credit and refinance. They were not living beyond their means and they never missed a payment. But now the debt merry-go-round is breaking and that has to be addressed – debt isn’t all about being in arrears. In many cases, there is usually a simply resolution to arrears problems, the difficulty is engaging the people who could be in difficulty.”
Fairhurst went on to say: “The number of decent, prime borrowers who are financially at their limit is simply unknown. Many higher income households will be getting jolts this year as income dries up, and these people will not get any help from the Government schemes that are being offered.”
He added: “When we manage a case, it doesn’t break even for two years. New entrants into the debt management sector will have to charge two or three months up front, meaning people are already a few months in arrears when they begin the debt management process. There is a definite worry as more advisers move into the debt management business.”
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