More people are arranging a debt management plan (DMPs), making them the most popular option for those who wish to clear debt, a counselling service has reported.
The Consumer Credit Counselling Service (CCCS) said in the second quarter of 2008, there have been 50 times more DMPs arranged than Individual Voluntary Arrangements (IVAs), another solution to debt problems.
DMPs differ to IVAs in that they are not legally binding and the entirety of the debt must be repaid. People with more severe debt management problems may opt for an IVA which can write off some personal debt.
The charity’s report also indicated creditors are comfortable with IVAs, with 100 per cent of IVAs proposed accepted by those owed money.
For people with debts that cannot be paid back at all, bankruptcy may be an option. However, according to ClearDebt – which can help with DMPs, IVAs and bankruptcy – it “is often the last resort and is usually applied when no meaningful alternative can be offered to creditors”.
By Morwenna Kearns