Talk to bank, struggling debtors told

Those who are struggling with their debt should speak to their bank, an official at First Direct has advised.

Sales and service director at the bank Heather Roebuck said this is the most important step to take and added consumers should not "ignore" their problems.

She remarked: "Banks are there to help and I know that some people raise an eyebrow at that, but they are and the last thing we want to do is for customers not to talk to us if they are having any difficulties of any kind. If we know about it, we can try and help them do something about it."

While speaking to the bank may help, for many people the situation may be so bad that no workable agreement could be reached.

One example of this might be where a consumer owes large sums to a range of creditors, of which the bank might be only one.

If the figure tops £15,000, an individual voluntary arrangement (IVA) may be the best option.

An IVA is an alternative to bankruptcy that still constitutes a form of insolvency but does not carry the same level of stigma.

One reason for this is that it can be agreed confidentially with creditors, whereas bankrupts can have their fate publicised by the local press.

An IVA works by agreeing reduced payments with creditors over a period of up to five years, at the end of which, if the new schedule is maintained, any remaining debt is written off. The deal can be established and is binding on all creditors as long as at least three quarters of them decide to accept it.

The warning given by Ms Roebuck over not warning debt echoes that of spokesman for debt charity Christians Against Poverty Alan Watt.

Mr Watt, who runs the organisation's Pontyclun office in south Wales, told the Cynon Valley Leader the "common thread" among those in debt was that people who wait the longest time before seeking help are the ones who tend to end up in "most extreme difficulties".

By James Francis