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In the first quarter of 2006, only 14 % of CCCS counselling clients were
recommended that bankruptcy was the best way to solve their debt problem,
according to figures released in Debt Dashboard, a quarterly digest of
statistics released by the service to place debt statistics in an economic
context.
This is the first time that counselling recommendations, covering over 1,000
people a week and aimed at offering the best advice in the client’s
circumstances, have been fully analysed and published.
The analysis showed that a high proportion of clients – 10% in Q1 2006 – were
able, after counselling, to meet the contractual repayments on their debts and
only needed advice from CCCS on better budget management.
The most common recommendation from counselling sessions was for the client to
go on a Debt Management Plan to begin repaying their debts.
The most heavily advertised approaches to debt solution – IVAs and consolidation
– were found suitable for only a small proportion of people in debt.
Clients recommended to IVAs were only one in 40 of those counselled and no
consolidation loans were recommended during the quarter.
Although these findings highlight good news for lenders and borrowers, the
average debt of a client approaching CCCS for advice in Q1 of 2006 was £30,167,
a rise of 7.5% on Q1 of 2005.
Commenting on the figures, Chairman Malcolm Hurlston said: “We noticed signs in
2005 that our clients were becoming more savvy and were in better financial
shape to pay off their debts.
"The indications from this latest Debt Dashboard go some way to affirming that
notion.
“It is good news for lenders, as a greater proportion of people coming for
counselling are able to meet their repayments. Likewise it is good news that
most clients feel responsible and are enthusiastic about finding a way to pay
back what they owe.
“There is cause for concern that the heavy advertising of consolidation loans
may lead to inappropriate solutions.
"To avoid the same danger with IVAs, we strongly support the repeated
recommendation of the Insolvency Practices Council that practitioners should be
required to provide written best advice, monitored by their responsible bodies.
“Thanks to investment in staff, efficiency gains and a concerted effort in the
counselling centres, CCCS was able to counsel two-thirds more people (19,000 as
opposed to 12,000) in the first quarter of this year than in the first quarter
of 2005.”
Source:
Getting Paid
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