This is a guest post
by Sara Williams, a Citizens Advice Bureau advisor who also blogs about debt at
the Debt
Camel website.
Has someone called you saying you can get government help
with your debts? Or that there is a law that means you can write off 80% of
your debts? If you have problem debts, this may sound like just what you need,
a welcome lifeline… but you have been cold-called by a commercial company who
wants to make money out of you.
So are the calls a scam?
They aren’t a simple con trick – you aren’t being sold a
worthless investment or being tricked into giving away your bank account
details. But you are being deceived into thinking that the government is
offering this debt help, it is definitely not the government phoning you.
Sometimes the caller can be very convincing. I saw a client
last week who had been phoned and told she was about to be transferred onto
Universal Benefit and the government wanted to help her sort out her debts
before this happened. Now I knew none of this was true for many reasons:
Universal Benefit doesn’t exist, the correct name is Universal Credit; our
local area isn’t in the next set of areas to be moved over; only simple cases
are being moved anyway this year, which hers wasn’t; and no-one is being
offered debt help before the move to Universal Credit. But she had heard about future
welfare benefit changes and so it all sounded plausible to her.
Do these “government schemes” exist?
If you can’t afford to make your debt repayments, there are eight
possible alternatives in England and Wales: Debt Management Plan (DMP); Debt
Relief Order (DRO); Individual Voluntary Arrangement (IVA); bankruptcy;
administration order; asking a creditor to write off a debt; and offering a
full and final settlement. These are covered by laws, regulations and codes of
practice – so there is a grain of truth in saying that there are “government
schemes to help with your debt”.
However, a firm cold-calling you is going to try to persuade
you to sign up to one of two options: a DMP or an IVA. Those are the only
options where they can charge fees. In a
DMP they are hoping to charge you a monthly fee, often between £30 and £50, for
many years – that adds up to a lot! In an IVA, there can be thousands of pounds
in fees. Your caller may saying they are offering “free advice”, but that
advice is going to be to choose a debt solution which charges a lot in fees.
The telephone caller may not even mention the other six debt
options, or they may not properly explain them because they don’t want you to
choose them. If you have money problems, the last thing you need is someone
selling you something which isn’t what you need!
As Joanna Elsom, CEO of the debt charity Money Advice Trust
says, “This kind of marketing only serves
to make an already stressful situation more difficult, and can lead to
financial problems becoming much worse thanks to the high fees and charges that
these companies impose.”
Say NO to cold-callers and YES to free, unbiased debt advice!
One of the worst things about these unwanted calls is that
if you give them any information about your debts, they are very likely to sell
it on to multiple companies. You then get pestered by even more aggressive
marketeers, which this
newspaper article calls “an unattractive
trade in people’s misery”. The best thing is to say you don’t want to talk
to them and put the phone down. However sympathetic they seem, these people are
not on your side.
To get free, unbiased advice without any hard sell about
which debt solutions might work best for your family, look at the organisations
listed here: Where
to find help with debt. And if a DMP
is the best option for you, they will help you set one up with no fees at all,
so all your monthly payments go to reduce your debts.
