The Legal Way to Exploit Vulnerable Debtors

June 6, 2011 - PRLog -- Are you in debt? With the national household debt at its all time high, and the average person owes £29,835 (source Which? News). With the recently announced government cuts people are looking to tighten their purse strings and reduce the amount of debt that they have, or at least the minimum payments.

Various schemes such as IVA, debt write off, and debt settlement have been coined to meet this ever increasing demand for debt solution. Some people are in a more desperate situation than others. Their situation means that they would go through any means necessary to get themselves out it, sometimes by leaping out of the frying pan into the fire. It’s a sad truth that often the people who are exploited are the ones who are most vulnerable.

The Citizen Advice Bureau (CAB) is dealing with nearly 10,000 (source Which? news) new debt problems EACH working day. The CAB and other charities simply do not have enough resources to meet all the demands for debt advice and help. This is where private companies step in, and legal exploitation begins.

Let me make it clear that these companies exist to make a profit. The majority of companies in all sectors exist for the same reason. There is nothing wrong with making a profit because if these companies don’t, then there is no point of their existence (consider Woolworths).

Now let me show you how the majority of debt management companies work. Let’s say you have £10,000 debt from various credit cards and your minimum payment is about £500 a month. You decided that you can’t afford this minimum payment any longer. So you go to XYZ debt management company who promises that they will negotiate with the credit card companies to freeze your interest and you would only pay £100 per month in total via the XYZ company. The company will then handle the payments to the credit card companies for you. It’s easy and affordable right?

Right. But this is what XYZ company don’t want you to see. Or maybe you rather not see it yourself. Many of these types of debt management companies charge around £25 a month “handling fee” when the computer does all the work for them in a matter of seconds! This “handling fee” will be charged to you every single month UNTIL THE DEBT IS PAID OFF.

Think about this, you are paying £100 a month towards your debts but only £75 goes to your credit card companies. For every month that you are with XYZ debt management company, they are taking away 25% of the money that could be used to pay off your debt, and put it in their pockets instead for doing a one off job (negotiating with your creditors and setting up a plan). You wouldn’t dream of paying the guy who cuts your grass in the summer over the winter months would you? So why do the same with these companies?

Let’s say it takes you 11 years to pay off your debt using XYZ debt management company. Do you have any idea how much “handling fee” you would’ve paid them at the end of your plan? £3325. That’s right, three thousand and three hundred and twenty five pounds. Think how else you could’ve used that money? What other things could you buy? You could go on holiday for a month! But instead it has gone into the back pockets of these debt management companies who are exploiting your situation LEGALLY. It is daylight robbery.

There are some solutions for you:

1. Charities like the CAB can do debt management plans for free, but they are absolutely swamped with new cases, and to be frank, they don’t have much time to see you. Some people take up to one month to have the initial meeting after their first phone call. When you’re in debt you rather not wait that long! Why should you continue to pay unnecessary interest?

2. Do-It-Yourself (DIY). If you know what you’re doing then you are in a good position. The trickiest bit is the negotiation with the credit card companies- they don’t give up that easily. It can get stressful.

3. Use ethical debt management companies. These companies don’t charge for work that they don’t do. You still save thousands though it will set you back a few hundred pounds. An example of an ethical debt management company is The Purley Way.

Obviously you’re free to DIY and save a few hundred pounds in addition to the thousands, just remember negotiating takes time and experience to get the best results.

At the end of the day, it is your decision on what choice to make. There are certainly plenty. You don’t even have to do a debt management plan if you don’t think it suits you. You can do debt settlement, or IVA, or go bankrupt although seek proper advice before you take any of these actions as the impact is long lasting!

So you have four options:

•   Go with the typical exploiting debt management companies
•   Wait for charities to get back to you
•   Do-It-Yourself
•   Go with ethical debt management companies

Make your choice.

Good luck.

The Purley Way is an example of ethical debt management companies who can provide affordable debt management plans. Visit http://www.purleywayltd.biz to find out more.

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The Purley Way is an ethical debt management company specialising in creating debt management plan for people struggling with debt. We offer free no obligation debt advice and an information pack which contains 11 different ways to solve your debt problem