UK debt problem is underestimated

By MoneyhighStreet Staff. Published on September 26, 2008 This post currently has no comments.

Big decision
Many more Britons who are in need of debt relief than has been suggested by official figures, it has been claimed.

In a study conducted by R3, which represents debt professionals, it was discovered that 600,000 people have taken out debt management plans (DMPs) as they look for a solution to their financial problems.

However, official figures do not measure DMPs and instead focus on individual voluntary arrangements.

As a result, the figures do not reflect how true extent of the problem, according to R3 president Nick O’Reilly.

He said: "A DMP is an informal alternative to an IVA or bankruptcy which works to clear someone''s personal debt without the formal implications of the official arrangements.

"This can be a good option for individuals who have manageable levels of debt. However, there is cause for concern that these informal arrangements have the potential to turn into a ''life sentence''."

Consumers who are struggling with a debt problem are urged to consider potential solutions such as debt consolidation loans and or an individual voluntary arrangement (IVA).