We were informed today (Thursday 9 September) that HMRC is concerned about this but that they don’t yet have a policy. They did assure us, however, that they are dealing with this urgently and that they will come back to us with guidance as soon as possible. We’ll publish that advice as soon as we get it.

Our concerns are:

• People in IVAs and DMPs who receive underpayment letters are not in a position to repay much, if anything, as their monthly debt repayment to creditors will take up almost all their disposable income.
• People in IVAs and DMPs who receive overpayment letters and get a rebate will be required (in an IVA) to pay a high proportion of that to their creditors or (if in a DMP) would be highly recommended to do so.

Questions and answers on these issues are available in the ClearDebt Community (see links below).

1) I’m in an IVA and have received a letter from HMRC which says I owe them money. What should I do?

2) I’m in an IVA and have received a letter from HMRC saying I am due to receive money from them. Will this have to go to my creditors?

3) I am in a Debt Management Plan and have received a letter from HMRC claiming I owe them money. How will this affect my DMP?

These answers will be updated as the situation develops.

HMRC Income Tax overpayment or underpayment letters – ClearDebt Update. is a post from: ClearDebt Blog a leading UK IVA licensed insolvency services company. ©2010, All Rights Reserved.

Well, we are appalled at the behaviour of the biggest organisation representing creditors in IVAs – TIX: They have decided that a person with Disability Living Allowance (DLA), or who has a dependant family member with DLA, needs to have the whole of that allowance added to their disposable income available for the repayment of debt, unless they can prove where every penny of it goes. The problem is that for many, it just goes on caring – needing to look after a loved one means you have compromised your ability to earn and so DLA becomes a poor substitute for earned income.

TIX’s attitude, in our view, is crass. DLA varies from £17.10 per week to £64.50 per week and is is a tax-free benefit for disabled children and adults who need someone to help look after them, or have walking difficulties. (See the following link: Disability Living Allowance). A person receiving the highest rate needs constant care. Often the allowance pays for specific services. Sometimes it helps the carer have more of a life.

What TIX are demanding is that they can take every penny that hasn’t been allocated to a specific service funded by the allowance. It isn’t enough that the person has already signed away a substantial portion of their family’s earned income for five years, apparently. These are amongst Britain’s most stressed families, in debt AND disabled, or with a disabled family member.

The heart of the scandal is this: People who sign up for IVAs really want to pay as much as they can of what they owe. They sign up for five year’s effort. IVA holders who get DLA are also struggling with the burden of caring for a relative who needs constant care: TIX aren’t just greedy, they are short-sighted too – support these people and they will give creditors a fair return, penalise them like this and their arrangements will fail.

For people who feel they may be entitled to DLA, visit the government’s web page about Disability Living Allowance for further information.

Creditors’ representative TIX making life more difficult for disabled debtors. is a post from: ClearDebt Blog a leading UK IVA licensed insolvency services company. ©2010, All Rights Reserved.

The Daily Mail ran an article on credit card debt the other day, telling people to beware of credit card companies bearing gifts (in this case, 0% interest balance transfers). The article implied that the banks were again aiming to capture unwary consumers and condemn them to a future of debt.

I was surprised by some of the reaction to this – Andrew Ellson, of the Times used Twitter to poo-poo the piece, saying that this was a sign of the banks charging decent interest rates at last.

Maybe.

But, I have another theory. Banks aren’t generous. Banks don’t do anything that won’t make money. Banks know that people with a lot of expensive debt on other credit cards got where they are today by failing to manage their money. Banks know that to someone who can’t pay their Egg card this month that a 0% balance transfer rate is just the lifebelt the guy drowning in debt has been looking for. And – I reckon – they also know that two or three months down the line that person is going to be drowning again and will miss a payment or not be able to pay the minimum (after all, he made a BIG balance transfer, just to get rid of all that interest he was being charged on his seven maxed-out cards).

So, take dear old Barclaycard. Miss one payment… Fail to pay the minimum just once and that 0% goes forever and in comes a typical 16.9% variable. It’s here (point 8) in black and white:  Suddenly, even if you struggle, you are a very profitable customer for Barclays. And don’t tell me they risk these customers failing and thus they are going to help them out. They knew they were taking a risk. They probably have a little man somewhere that calculates this. he told the marketing department what the risk of failure was and how many would just go on paying month after month, even though they couldn’t afford it. Barclays, and the other providers suddenly reviving the 0% balance transfers are, I think, laughing all the way to the bank.

I bet, if you look, you can find examples of promotional rates with nasty stings in the tails for the unwary. Please post them here if you do.

0% credit cards – It’s a trap. Really. is a post from: ClearDebt Blog a leading UK IVA licensed insolvency services company. ©2010, All Rights Reserved.

Why? Because people have just been told that they are, again, going to be feeling the pinch. And they have been told that things are going to be two and a half per cent more expensive, come January. Can’t you see the adverts now? Beat the VAT increase, buy your conservatory/new car/double glazing/next year’s wardrobe NOW!

And they will. In droves. Big things not really needed will be bought on credit between now and midnight on January 3, 2011 (George Osborne has even ensured the retailers get bumper January sales – c’mon everybody – max out the plastic).

And, sometime in the course of 2011 some of these people will realise they bit off more than they can chew. And they will sit on their hands waiting for things to get better. And things won’t get better, not quickly: And the Osborne strategy might well be right, but it isn’t going to help these people. Sometime in late 2011 or early 2012 many of those who bought things they couldn’t really afford, to avoid 2.5% VAT (probably less – I can see a lot of producers/retailers cutting a little bit of margin to share the burden with the consumer – and preserve their market share) will finally realise they have swelled the ranks of the 11% of Britons with debt problems.

And, they’ll still sit on their hands – because that is what people in debt do – right up to the point when the spouse walks out or the CCJ lands on the doormat, or the bailiff calls. Then, they’ll come to us for a Debt Management Plan or an IVA. And we’ll do a good job for them. Thanks George.

There is time to avoid this. And, with more than one in ten of us suffering from debt problems it is time for Vince Cable and his minister, Edward Davey, to get a grip. Force us, the industry, to get our house in order so we do what we do well and the rip-off merchants have no place to hide. Acknowledge that the free sector can’t ever meet the demand for debt help that is out there. Persuade (force?) creditors to treat debt recovery as a co-operative exercise rather than a competitive game. Consumer debt is still the biggest issue everyone is ignoring. And I think the budget means it’s going to get bigger. And that means a stuttering recovery – at best.

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Whoopee! What a great budget for the debt management industry is a post from: ClearDebt Blog a leading UK IVA licensed insolvency services company. ©2010, All Rights Reserved.

The Financial Education Petition is a petition which has been set up by consumer focused websites MoneySavingExpert and Mumsnet. The aim of the petition is to restore legislation to make personal finance education a compulsory part of the curriculum in schools from September 2011 – as part of statutory Personal, Social, Health and Economic education.

We blogged about the importance of a financial education for children back in March and wholeheartedly support this petition to help future generations manage their finances better and have the knowledge to work through their finances if they find themselves in debt.

If this is a cause that you care about, please visit www.financialeducationpetition.com before the 27th May to add your signature.

ClearDebt Supports the Financial Education Petition is a post from: ClearDebt Blog a leading UK IVA licensed insolvency services company. ©2010, All Rights Reserved.

Like most other businesses in financial services, our clients can complain to the Financial Ombudsman Service. They’ve just published  the Financial Ombudsman Service Annual Report.

….surprised to see the number of complaints that had been made about debt counselling services – 163, or 0.09% of all cases

Consumers are being made more and more aware of this service so I’m not surprised that more people are using it – around 25% more this year. But, I was surprised to see the number of complaints that had been made about debt counselling services – 163, or 0.09% of all cases.

Looks like the efforts companies like ours are making to raise standards are paying off.

Ombudsman: Reported debt complaints are less than 0.1% is a post from: ClearDebt Blog a leading UK IVA licensed insolvency services company. ©2010, All Rights Reserved.

My co-interviewee was John Fairhurst from Payplan, a company in the creditor-funded sector – he’s a guy I have a lot of respect for, so, it was a bit disappointing to find ourselves on opposite sides of an argument for a change. But, we did our five minutes with Winifred Robinson and then plonked ourselves down in Caffe Nero in Manchester’s Oxford Road and set the world to rights. Well, almost.

He and I do have a different perspective on some things. Where we don’t differ is for the need for my whole industry to pick itself up and ensure we are offering the quality service clients have a right to expect and that there is some sort of quality mark that ensures consumers don’t get taken in by cowboys.

John, whose advice is paid for by the people you owe money to, thinks this should be done by new laws. I think, working with bodies like the Office of Fair Trading, that the industry should sort itself out. That’s what the trade body ClearDebt belongs to, the Debt Resolution Forum (DRF), is trying to do.

Our piece lasted five minutes or so, which is way too short to deal with all the relevant issues. I think there are some big differences between the creditor-funded and charitable sectors and people like us, who charge fees – and i think you get what you pay for. So, here are all the things I wish I’d had time to say this morning:

• Come to ClearDebt and you get free advice – up to the point where you start paying into either a debt management plan or an individual voluntary arrangement (IVA). Then we charge, but in the case of IVAs, finish the plan and it’s the creditors that, effectively, pay the fees.
• Go to Citizens’ Advice and, most of the time, you get a DIY debt management plan and no help with making distributions to creditors. Worse, most creditors won’t freeze interest and charges on a CAB DIY DMP.
• The Ministry of Justice thinks some creditors are adding the payments they make to creditor-funded debt management companies to peoples’ debts. Not so free after all.
• Why, if the creditor-funded sector is so effective, aren’t the banks and credit card companies offering to allow ethical companies from the fee-charging sector access to the so-called “fair-share” club?
• Why do so many creditors freeze interest and charges on DMPs put forward by companies like ClearDebt? Surely they wouldn’t if they thought we were doing a bad job?
• Why is it that (John’s figures these) the proportion of debt plans written by fee-chargers has gone up from about half to around three-quarters? We mystery shop all the time, and we see that it can often take days to get a telephone appointment to speak to an advisor from a creditor-funded DMP provider – We’d be appalled if we could not pick up the call and give advice there and then. One of the most senior individuals in the charitable sector has said they can only deal with half the enquiries they receive. No wonder our share is increasing.
• All ClearDebt’s advisors have CertDR after their names. They have done 120 hours study and taken three exams with a 70% pass mark in order to do their job properly. This certainly isn’t true of, for example, Citizen’s Advice’s thousands of volunteers, who provide a very patchy service. (I’ve blogged about this before).
• Roughly one in five/six of the schemes we put forward are IVAs (Individual Voluntary Arrangements), not debt management plans. IVAs are, often the best and most certain solution for someone who owes money they cant repay. Anecdotally, we are only passing a slightly higher percentage of our cases as IVAs than the industry as whole. Why then does one of the largest not-for-profit providers say that it only passes 2% – if they are speaking to the same people we are, they should be advising IVAs up to ten times as often as it appears they are.
• Every time someone in debt goes to Citizen’s Advice it costs taxpayers hundreds of pounds (there is a recent National Audit Office Report on this). Perhaps it is also moral and ethical that the people who got into debt – and their creditors – should pay to get out of debt, rather than (especially right now) it be another charge on the public purse?

I am proud of what we do. It was great to have an opportunity to tell BBC Radio 4 listeners a little about what we do. Those who know me will testify I can talk about debt help until the cows come home.

I wish I’d had that opportunity today.

Debt Management Companies: You get what you pay for… is a post from: ClearDebt Blog a leading UK IVA licensed insolvency services company. ©2010, All Rights Reserved.

Labour candidates were most concerned – 20% took a moment to do our poll. Conservatives were the second most caring party (15% response) whilst, of the major parties, the Liberal Democrats came last (just 7% bothered -   around two thirds of Labour’s rate), behind not just the big two but also the Green Party, the UK Independence Party and all independents and other parties put together.

Liberal Democrats came last – just 7% bothered – around two thirds of Labour’s rate

Less controversially, the survey showed a very high level of agreement between politicians of any party amongst those who did answer our questionnaire. Almost all wanted new laws that would help people in debt. And, you can see that a number have taken a real interest in the issue and have responded to our blog on the topic.

So, the message to our 26,000 members, and the 11% of voters who have debt issues, is that a relatively low proportion of prospective MPs see consumer debt as an important issue – but that those that do seem eager to see new laws that will help people in debt.

There is just over a week left to raise the profile of debt issues – and to show the power of people in debt: time for everyone to get tweeting, blogging and using Facebook – using these tools is better than emailing the candidates – because  they are visible to all.

Our Survey

We emailed all the parliamentary candidates we could find (2,631) and, after two emails a few days apart we had, earlier today, 358 responses – that’s 14% of those we emailed. A good level of response we think -  but we would have thought more would have considered the personal debt issues worthy of their time – given that 11% of UK adults are struggling with debt.

When it comes to personal debt problems, Lib Dem candidates appear to care least. is a post from: ClearDebt Blog a leading UK IVA licensed insolvency services company. ©2010, All Rights Reserved.

Using data from just over 16,000 people with debt worries, the research shows that the number of people in debt is increasing, whilst the amount of debt they are in is decreasing.

• Debt concerns up by 13%
• Indebted Britons owe £22,000, would take minimum of 39 months to repay debts
• Harrogate debtors owe most in Britain (£41,667 in credit cards and loans). Shrewsbury debtors would take longest to repay (85 months).

Homeowners with debt worries see equity rise (but debtors in NW London have negative equity of – £70,000, after all debts repaid.

The research by ClearDebt confirms a 13% increase of people with debt worries between October 2009 and March 2010 in comparison to those with money worries in October 2008 – March 2009.  The survey also shows debts owed by these people have declined by nearly £5,000 over the same period. ClearDebt believe that whilst the numbers of people with debt worries is rising, heightened awareness of debt issues means that they are seeking advice earlier in the cycle of debt – which may make it easier for them to resolve the problem.

In 2009 the average British homeowner would have been left owing more than £7,812 if they sold up to repay all their debt, this year they’d have nearly £8,400 left for a deposit on a new home.

CEO of ClearDebt, David Mond explains,

The number of people asking us for debt help has increased by 13% between the two periods (October 09 – March 10 in comparison to the same period in 2008/09). What we are seeing is more people than ever before seeking help but with lesser debts. For me, Britain’s personal debt issues are getting more worrying, not less.

A survey by the Commons public accounts committee shows that 11% of UK voters have serious debt worries. We have pointed out that these funts (financial untouchables – people who are trying to deal with their debt but are still disenfranchised by banks) are being treated unfairly by the financial community: Britain’s debt worries could make a big difference to May 6 election result – if they push political parties to change their views on debt.

ClearDebt list the top ten towns for debt as:

1. Harrogate
2. Halifax
3. Guildford
4. Worcester
5. Inverness
6. Tweed (Galashiels)
7. Shrewsbury
8. Chelmsford
9. Medway (Rochester)
10. Torquay

Notes to editors:

To see the latest blog post by ClearDebt – part of the campaign to get  FUNTS treated fairly in this year’s election, please click here.

Access more detailed data on the ClearDebt UK  Debt Survey.

Further information:
Tel:    0161 968 6825 / 07912 407 532
Email:    andrew.smith@cleardebt.co.uk
Twitter    @Andrew_F_Smith
Website    www.cleardebt.co.uk
Twitter    @cleardebt / @IVA

ClearDebt campaigns for more focus on personal debt by all political parties is a post from: ClearDebt Blog a leading UK IVA licensed insolvency services company. ©2010, All Rights Reserved.

It’s about time politicians took steps to help people who genuinely want to do something about their debt and in my next blog I’ll throw a few ideas into the ring.

For now, however, lets just inject some facts into the debate. I took a sample of 16,056 people from our database of people struggling with debt and looked at how things had changed between October 2008 and March 2009 and October 2009 to March 2010 (that’s the latest data we have).

Bearing in mind this data relates to people so worried about their debt that they come to us and ask for help, the top line is this:

• These people owe (just in credit card debts and unsecured loans – NOT the mortgage), on average, £22,061 (that’s £4,774 less than they owed in 08-09).
• If they were to use all their spare income (that not spent on essentials) they would take on average, 39 months to repay their unsecured debt (that’s unrealistically low – I have had to assume that their creditors are charging no interest).
• Finally, homeowners who wish to repay their unsecured debt from the equity in their home would be able, on average, to do so and still have a surplus of £8,391. That’s a huge turn round from last year – when they had an average negative equity of £7,812.

Now, before you run away thinking that these figures show that things are getting better, think on.

The number of people asking us for debt help increased by 13% between the two periods. So, I think what we are seeing is more people, with lesser debts, seeking help than ever before. For me, Britain’s personal debt issues are getting more intractable – not less.

Things vary widely from town to town, too: Britain’s most indebted place is Harrogate – with average unsecured debt of £41,667, taking 42 months to repay. Six of the ten least indebted places are in Scotland. The least indebted places are London (West Central) and London (East Central) – but I tend to ignore those simply because central London data is so variable (all those bankers bonuses – doncha’know).

Here are our top tens (you can download the data in Google Docs spreadsheet below giving our complete lists of debt data for the United Kingdom)

Google Docs 75 Kb

Dear candidates, we think,wherever you are standing, these will convince you personal debt is an issue that is big enough to make a difference to your vote.

Britain’s voters and personal debt – a wake-up call for parliamentary candidates is a post from: ClearDebt Blog a leading UK IVA licensed insolvency services company. ©2010, All Rights Reserved.