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Govt figures `may underestimate number of debt management plans`

29 September 2008

Official government figures concerning the number of UK consumers unable to cope with their levels of debt may be too low, it has been suggested.

According to trade body R3, as many as 600,000 people who have taken out debt management plans because their personal finances have become unmanageable may have been missed off insolvency figures.

Such plans are unofficial agreements between borrowers and borrowers under which creditors pay an affordable monthly sum.

Unlike bankruptcy and Individual Voluntary Arrangements (IVA), debt management plans are not included in the Insolvency Service`s statistics.

According to R3 president Nick O`Reilly, such plans can be a good option for consumers who have manageable levels of debt.

Meanwhile, according to research conducted earlier this month by Debt Management Today, during the first six months of 2008, the UK`s total personal debt rose by 6.9 per cent.
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