Wednesday saw a press release by the Consumer Credit Counselling Service regarding fee charging debt management companies.  The press release extolled the virtues of free debt management, and cited price comparison website moneysupermarket.com as supporting their views.

Moneysupermarket.com's article in question is an unbiased and highly educational one, and one that MRA Debt Help support fully.  The CCCS press release touched on a couple of comments by the price comparison site, without acknowledging the entire story.

The original article provided a structured and informed breakdown of the pros and cons of free debt management vs fee charging debt management.  The article highlights the obvious benefits of dealing with a free debt management company, whilst also reminding consumers of the different benefits of using a fee charging debt management company.

Moneysupermarket say -

"Unfortunately, many of the free advice agencies are facing significant backlogs as debt problems mount, with CAB claiming to deal with an average of 7,241 new debt problems every working day and people in some areas having to wait up to three weeks for an interview.

By contrast, fee-charging debt management companies can often deal with problems quickly and the advantage they offer is that they administer payments for you - you pay your money over to them and they pass it on to your creditors. You will be charged a fee for this service - typically in the region of 15% of your regular payment. However, some debt management companies may be able to negotiate better terms with your creditors which could mean the fee is worth it."

MRA Debt Help do charge a fee for administering your debt management payments, and  maintain that our services are a worthwhile investment.  Our negotiation rates are an indicator of our worth to our debt management clients.  It is not uncommon for us to achieve a discount of over 50% to make a full and final settlement towards our clients debts. 

MRA Debt Help would NEVER recommend a debt management plan to a client who would not benefit fully from our services, and as such have referred many clients to the CCCS, National Debtline and local CAB offices when their services would be better suited.

There are fee charging debt management companies in the industry that sadly take huge sums as upfront fees.  MRA Debt Help take one initial monthly payment to cover our costs in setting up your debt management plan, and 1.765% of your debt per year, spread over your future monthly payments.  MRA Debt Help fully support moneysupermarkets warnings to steer clear of debt management companies that wish to charge more than this.

Other unscrupolous debt management companies may try to charge you for debt advice.  MRA Debt Help will NEVER charge for debt advice.  All of our debt help and advice is FREE, we only make administration charges for our debt management plans. 

You can be assured that if MRA Debt Help are prepared to help you, then we firmly believe we can offer you the fastest, most effective way to become debt free. 

News broke yesterday of the struggle faced by Debt Advice Charitites to cope with demand for their services.  The Times and The Telegraph both ran stories with information from the National Audit Office about the Free Debt Management Charities.

In the report, the National Audit Office revealed that some Britons struggling with their debts are waiting up to a month for debt advice from the charities, leading to opposition MP's calling the government led initiatives "a triumph of bureaucracy over practicality".

MRA Debt Help are proud of our speed and skill at providing debt advice, and our unique position in being able to negotiate early settlements.  Unlike the free debt management charities, we are able to offer you free debt advice from the very moment you contact us, whether it be online, by telephone or face to face.

Very often when people come to us with debt problems, we have to act as quickly as possible in order to offer the best possible solution for them.  Waiting a month for debt help is often a luxury our clients do not have!

If you are struggling with debts and want free debt advice NOW then call MRA Debt Help on 01424 777156 or fill in our budget form.

How did I miss this!  Back in August a blog called 'online debt consolidation' published a post about making the most of the Car scrappage scheme.  All sensible so far then, if someone is going to give you £2k for a car thats only worth a few hundred, then it makes sense.

Thats where the sensible comments stop though!  All the time I've been writing this debt management blog, I never would have thought I'd see a supposed debt consolidation advice website suggest that someone go and buy a BMW, and remortgage their house, just to take advantage of the car scrappage scheme!!!

The first thing that struck me was that a debt based informative site would suggest spending money on a new car.  I di some research, and the cheapest 3 series BMW is currently £22155 otr.  So, they are suggesting that people suffering with debt problems, paying off debt management plans or living with IVA's should go and blow £20k on a car.  Brilliant.

I then looked at the 'benefits' of spreading the cost of the car by adding it to your mortgage.  So, to start with you've got your £2k scrappage money, so we'll take that off.  £20155 to add to your mortgage then.  Lets have a look at how much that would cost If we remortgage over 25 years, and get a pretty good rate at the Nationwide at the moment of 4.5% APR.

Borrowed - £20155

Timescale - 25 years

APR - 4.5%

Monthly repayment - £112.03

Interest - £13453.41

Total paid - £33608.41

In a nutshell, it would cost you £13453.41 over the period of your remortgage to save yourself £2000 in scrappage.

Doesn't sound so brilliant now, does it!  Most of our debt management clients, and people that come to us for debt advice understand that when times are tough, and the debts are building, buying a brand new BMW isn't really on the agenda.  But there are some that would fall for this ever so slightly flawed advice.

If you are struggling with debts - don't buy a BMW, call MRA Debt Help to speak to one of our debt

Debt Management plans could hold the key as more and more Small business owners across the UK are resorting to personal insolvencies to keep hold of their businesses.  CreditPal and the Forum of Private Businesses have both corroborated official figures that suggest the trend.

Credit Cards, personal savings and loans from friends have all been used by small businesses to keep their company afloat.  This has lead to a rise in personal insolvencies, due to the business owners being unable to keep up repayments on the personal debts taken out for business reasons.

41% of those surveyed by the Federation of Small Business said that they had used personal savings to fund their business, with 43% using overdrafts and 21% using personal credit cards.

15% of business owners had sacrificed family holidays, and many have raided pension funds in order to make their debt repayments.  Free debt advice from MRA debt help would point business owners in the right direction, and offer a suitable means of getting out of debt.

The OFT has been working recently to clear up some confusion over the difference between 'Debt Write-Off' companies and 'debt management' companies.  At MRA Debt Help we have had lots of enquiries asking if we can write off your debts.  The simple answer is no - and we'd be concerned if anybody told you they could. 

Debt Write-Off companies claim that under sections of the consumer credit act 1974 they can prove that your debts are unenforcable and have them written off.  Unfortunately, this is not the case.  The wild claims are simply untrue, as stated by the Office of Fair Trading - and the High Court! 

Recent cases in the High Court have shown that if a customer requests a true copy of their credit agreement, it does not have to be an original, or even a photocopy.  Debt management clients should be aware that any compnay claiming that they can write off your debts based on the copy of the credit agreement may be misleading you.

The OFT have also reinforced that if a credit agreement is deemed unenforceable, then the lender will be restricted in the activities it may undertake.  It may still request payment and or record any arrears or default with a credit reference agency.

If you are struggling with your debts then a debt write off company may charge you a large proportion of your debts for a service that may or may not be legal.  MRA Debt Help can offer free debt advice, and inform you of the best debt solution for your circumstances.

Did you wake up feeling better off today?  Yesterday, the Office of National Statistics (ONS) revealed that the UK is now officially out of the recession - our longest since records began in 1955.  But what does it actually mean to those of us struggling to pay back credit card debts and debt management plans?

There have been many opinions banded about on financial and debt blogs over the last 24 hours as to the accuracy of these figures, but we wont go into that now!  The economy rose by 0.1% in the last quarter of 2009 according to the ONS, but this was not enough to stop the Gross Domestic Product (GDP) figure dropping by 4.8% over the whole of the year.

But how should debt ridden Britons react to the news?  One thing we shouldnt be doing is scrapping those debt management plans and running out to spend our credit card limits!  We may be officially out of recession, but if you are currently unemployed it is not necessarily a white light at the end of the tunnel.  Some analysts are still even predicting unemployment to rise throughout 2010. 

You also might think that the end of the recession could make things cheaper; improving your disposable income.  Unfortunately this may not be the case.  Taxes such as VAT and Income tax could still rise in 2010, affecting consumers across the UK.  Seeking debt advice is crucial for 2010 if you are currently struggling to make your debt repayments. 

Inflation is another potential hazard for our debt management clients.  It is already above the official target, and if it continues to rise then it could lead to people with debts they cannot afford to pay due to increase in living costs.

In summary then, the end of the recession may not be as rosy as Gordon Brown would want us to believe, but with free debt advice from MRA Debt Help, and some sensible budgeting it could work for you.

One piece of advice we often give top our debt management clients is to keep track of your credit report.  You'd be forgiven for thinking that this is to monitor your debt management plan, or to see how your creditors view you, but there is a much more important reason to make sure you're up to date with your reports.

Credit card fraud, among other types is on the rise.  Without wanting to sound like a Daily Mail columnist, there are instances where fraudsters have been able to take out credit in their victims names and run up large debts.

Keeping track of your credit reference file can highlight any irregularities, such as new debts, unauthorised credit checks etc. 

It's not just debt management clients that can benefit from this though, with fraud being a potential problem for anyone.

Its not all doom and gloom though!  You're credit file is available from the 3 main credit reference agencies - Experian, Equifax and CallCredit. 

Experian also offer the 'CreditExpert' service, which is an extension of your credit report.  The CreditExpert service offers free ID fraud alerts by text  or email. 

CreditExpert also has a section offering advice on your credit report and how to improve it.  CreditExpert is a subscription based service, however they are currently running a 30-day free trial!

The UK Cards Association (UKCA) yesterday sent a response to a consultation document by the Department for Business, Innovation and Skills.  The consultation document was entitled "Review of the regulation of Credit and Store Cards".

This may sound long winded, but the report, and susequent reply hold some very important proposals for Credit Card customers, whether they are involved in a debt management plan or not.

The UKCA replied to all four points discussed in the report, and gave some encouraging answers.

The four main points were:

• Allocation of payments to credit card debt
• Unsolicited credit limit increases
• Minimum repayments
• Repricing of existing credit card debt.

The UKCA responded with pledges to ensure an imporvement on all four points.

Allocation of Payments to Credit Card Debt

The UKCA has proposed that any payment towards credit card debts above the minimum payment be directed towards the most expensive debt first. 

For example, currently a credit card company can make the payment towards a 0% APR part of the debt first, letting the portion of the debt that has a high interest rate (say 14.9% APR)  increase.  This would mean that the total debt may not decrease at the highest rate possible.

The new proposals would put an end to this, and hopefully decrease the number sof people looking for advice on debt managment plans.

Unsolicited Credit Limit Increases

At the moment, a credit card company can increase your credit limit without telling you.  "But that sounds good to me!"  I hear you say.  Unfortunately not. 

There are many cases where the customer has been struggling with their debts, and the increase in their credit limit has encouraged them to 'rob Peter to pay Paul'.  This is a common problem that we have found among people asking for debt advice, and we call them 'revolvers'.  The customer pays off one debt with another and their debt snowballs!

The new proposals would again put a stop to this practice and hopefully reduce the number of revolvers!  Customers will be offered a 30-day opt-out period for any credit limit increase.

Minimum Repayments

Paying off your credit card debts with the minimum payments is expensive and long winded.  Credit Card companies don't like telling you this because it increases their income.  Under new proposals, the credit card companies will have to tell you this as well!  Making payments above the minimum payment will make a bigger impact on reducing your debt.  If you are struggling to make the minimum payments then contact MRA debt help and one of our debt counsellors can give you free debt help on the most suitable way out of debt for you.  

Repricing of existing credit card debts

Some customers, even those with an enviable credit rating and payment history, have found that they have had their interest rates hiked up - even though the base rate has dropped!  Under the new proposals, Credit Card companies will not be able to do this. 

Hopefully these proposals will make 2010 alot easier for customers on the cusp of needing a debt management plan!

2 sets of debt management statistics were released this week, showing a stark contrast between the viewpoints of consumers struggling with unsecured debts.  The Association of British Insurers (ABI) and Shelter, the housing charity both released their figures this week.

The ABI took a positive approach to debt management for the start of 2010, saying that 42% of people struggling with debts intend to pay off their unsecured debts faster than before.  This figure is up from 34% this time last year.  This was an encouraging statistic, especially when in the same report over 30% of people thought that the current economic conditions would worsen in 2010!

If you are intent on becoming debt free as soon as possible then contact MRA Debt Help, where one of our debt counsellors can offer you free debt advice.

In contrast, Shelter have found that up to 1m homeowners could be using their credit cards to pay their mortgage payments.  This is not only an expensive way of keeping up with your mortgage payments, but in extreme situations not meeting your credit card payments could end up with you facing a charging order on your property.

In some circumstances a debt management plan could help, by reducing your outgoings to unsecured creditors and helping you to budget properly.  This in turn can help you meet your secured loan and mortgage payments. 

A recent report on guardian.co.uk has revealed that the number of people in the UK seeking debt help from illegal loan sharks has risen by 22% - to over 200,000 people.  The research was conducted by the Financial Inclusion Centre. 

Over half of the illegal loans by loan sharks are taken out over the Christmas period.  The research found that more than 100,000 of the poorest families in the UK will struggle to pay back a combined debt of £82m to illegal loan sharks.

The total amount borrowed by people with debt problems from loan sharks is £29m, but the high interest rates - an average of 825% - mean that they will end up paying nearly 3 times that. 

It is often people at the end of their tether, with poor credit ratings that use illegal loan sharks.  They often already have a large amount of unsecured debt and are trying to make repayments towards it.  If you have found yourself in this situation, then call MRA Debt Help, where one of our debt counsellors can find a cheaper, easier (and legal!) way of managing your debts.