UK debt problem is underestimated

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).