Outstanding personal debt is at an all-time high with £1.4 trillion worth recorded at the end of January 2013. It is evident that many of the British public are struggling financially and this has resulted in a spate of panic lending from financial institutions.

In January 2013, the average household had £53,972 of debt (including mortgages) but as they were left with less cash at the end of each month, many more cases of debt and insolvency arose.

Sometimes the only solution for people struggling with these financial issues is to set up a debt management plan. This process can be a complicated procedure with the fine print and offers from competing finance organisations confusing to say the least.

What is a debt management plan?

A debt management plan was introduced in the UK by the Consumer Credit Counselling Service (CCS) in the early 1990s to help with the massive influx of personal lending during the financial boom. It is a structured agreement between a financial company and an individual (or in some cases a business) which outlines how the indebted party can pay off debts which have mounted up over time.

Financial organisations combine all the different debts that someone owes and establishes a mutual agreement which outlines the monthly payments which need to be made.

What about interest?

While the monthly payment becomes more manageable for the indebted party, the interest rate a financial company adds onto this can make the debt run for many more years. Thankfully, with more and more legislation introduced around lending, the government continues to tread lightly on people in debt and this has brought with it some welcoming news.

Now, any first payment with a debt management plan has to go straight into paying off the debt by law. Previously, organisations could take this money for personal gain or interest fees before tackling the core debt figure but legislation has put a stop to this.

Where does paperwork come in?

It is evident that more and more people are in need of financial relief and with this comes a lot of administrational paperwork that can often confuse those in these stressful situations.

CollectaCase help financial professionals with this by providing a check-and-return service. They verify, check and collect all the necessary documents and statements as well as assisting in the collection of standing orders and direct debit mandates. They fully explain all documents to clients and ensure paperwork is completed correctly to minimise the number of errors made.

These simple measures help save time and money while lowering stress levels of those facing the financial pressure of mounting debts.

Sources for client reference: https://www.creditaction.org.uk/assets/PDF/statistics/2013/march-2013-summary.pdf