Scottish Newspaper Notes Bankruptcy Exploitation Of Debtors

A recent article in a Scottish newspaper focused on the bankruptcy exploitation of residents in debt. Credit union representative was particularly outspoken regarding high fees and improper advice provided by organizations in business to assist debtors. Providers of debt management plans (DMPS) were also mentioned in this article. However, most of the blame was focused on insolvency practitioners.

Credit unions can suffer due to a personal insolvency situation like an IVA, trust deed, or sequestration. Therefore, it is not surprising that they would bring the mentioned issues to light. Many credit union representatives believe that commercial debt solution providers give advice based on their own commercial interests, not those of clients. This is a typical argument because some DMP providers charge a fee, while others do not.

These firms were not the only targets of credit unions in the article

Spokespeople for the entities claimed that insolvency practitioners exploit debtors. Though there are undoubtedly some unscrupulous practitioners and debt management companies (DMCs), not all are this way. However, most creditor organizations believe that DMP providers and insolvency practitioners provide a valuable service. Both creditors and debtors benefit from using an experienced, professional entity or individual.

Many DMCs and insolvency practitioners are members of trade associations that have high standards. The Insolvency Practitioners Association periodically reviews debt management firms to ensure the advice these entities provide meets their high standards. Debt experts are expected to discuss all debt management options available so clients can make well-informed decisions. People in debt should find the firms and insolvency practitioners that pass quality inspections with flying colours rather than fly-by-night entities that are trying to make easy money.

Advice about handling debt is not always easy to take

Many people become frustrated when their debts begin increasing and they fall into a cycle of using credit to cover daily living expenses. As they slip into a downward spiral, many people attempt to manage the situation themselves. Eventually, creditors stop offering new loans or credit cards and the individual is left with difficult decisions like whether to pay the credit card bill to get more fuel for the car or make the mortgage payment to avoid losing the home.

Inevitably, a very important expense will go unpaid

At this point, many people are desperate and turn to a professional debt management provider. The health of the debtor may be suffering at this point, as many people become physically ill or cannot sleep due to the stress created by being in debt. Some debtors are not thinking clearly and select the first DMC they find, which may not be a reputable one.

People in debt should take a more cautious approach by comparing DMCs to find one that is reputable and charges reasonable fees, if any, and explains all debt solutions. They should also begin handling their debt before the situation affects their health. Delaying or avoidance will only worsen the situation, resulting in larger financial worries, increased pressure from creditors, and health issues that can become permanent.