Debt managers 'brought pain' by Finance News Bulletin

Published: 30/10/06

Like many people who have fallen through the money owing trap door, Paul Ronney consideration he could handle his borrowings"Everything was reasonable until I brreasonablee up with my partner and lost the possibility of overtime at work At that point, I knew I was in trouble and could not make my money owing repayments"Paul, an engineer from Nuneaton, was in for a spiteful shock when he totted up his borrowings

In 2001 he owed a total of £37,000 through loans and praise cards"I did not want to go broke as it could finish in me losing my house, so I responded to a television advert for a firm which promised to gratis me from my debt"What Paul was replying to was a firm which specialises in Individual unpaid Arrangements (IVAs)IVAs are an alternative to insolvency that allows debtors to come to an accord with their creditors

According to the Department of Trade and Industry (DTI), 23,000 people affirmed themselves insolvent in the first quarter of 2006During the history few years, a whole industry has sprung up with firms offering to put up and manage clientele IVAs for a fee, charged to the creditors"They advertise that you will be free of debt in five years, but the budget they worked out for me was ridiculous After all my outgoings they absent me with just £15 a month to use

"What is more, they did not take into account the costs of buying my children Christmas presents The whole thing was cruel," he saysNational Debtline: A free, confidential and independent service funded by the section of Trade and Industry and the credit manufacturing Tel: 0808 808 4000Business Debtline: Provides a free phone debt counselling service for self-employed and little businesses, funded by banks

Tel: 0800 197 6026Consumer Credit Counselling Service: Funded entirely by the credit manufacturing, the service offers advice to persons in debt Tel: 0800 138 1111Citizens Advice: Offers free, independent and confidential recommendation from more than 700 locations throughout the UK Tel: 0207 833 2181"When I told my IVA boss that I had worked double-shifts my monthly repayments trebled overnight"I explained that this was only a very provisional income boost but it took four months before they would reduce my repayments to usual," Paul says

"I found the whole experience very distressing It all seemed to be about squeezing as much money as they could out of me""I asked to decrease my repayments and eventually this was agreed but I did not realise that I would have to pay a series of penalties in the end - to the melody of £100 for each month I poorly paid"Soon after he entered into an IVA, the area of the country in which Paul lives enjoyed a home price boom

"finally, house price growth allowed me to remortgage and offer my creditors a settlement charge, which, thank god, they conventional This freed me from the IVA"Paul is now determined to keep his borrowing under manage and think long and hard before making any radical financial leap"I have learned a valuable lesson and that is to take time with my finances I entered the IVA on the back of an advert

It was a very important decision and I should have taken more time over it, to check whether it was really right for me"In reply to Paul's story, R3, which represents insolvency practioners, including the definite Paul dealt with, said its members are subject to severe regulation and all debtors receive "appropriate" adviceRefused credit Ex's amount overdue 1 Ex's amount overdue

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