DEBTORS IN DANGER FROM DMP FIRMS, SAYS OFT


A BBC investigation has found that some debt management companies have been holding on to clients’ cash rather than paying it to creditors, The practice has left many debtors thousands of pounds worse off and facing financial ruin.

If a firm goes out of business and client funds have not been kept in a protected account, some or all of the money is likely to be lost and the debtor becomes liable for the shortfall.

The Office of Fair Trading (OFT) has condemned the practice as “totally unacceptable” and has promised a crackdown.

Repossession order

One couple mentioned in the report had to put their house on the market and could face repossession, after responding to a cold-call from a debt management company and taking out a Debt Management Plan or DMP.

That company, Global Debt Solutions, based in Bolton, offered to arrange a repayment plan for £40,000 of credit card debt and loans. However, after having made payments to Global Debt Solutions for several months, the couple found the money was not being handed over to creditors.

Those creditors have successfully taken the couple to court, so they now have County Court Judgements against them. They’ll also have to go to court on their mortgage, so their debt problems have got far worse instead of being solved. It could soon be at a point where they’ll lose their home.

A widespread practice?

Global Debt Solutions, later known as 3 Step Finance, has been shut down by the Insolvency Service, which found that it did not monitor payments properly.

However, it has emerged that other companies have adopted the same tactic of accepting money from people in debt and not passing it on to creditors.

OFT action

A debtor taking out a DMP with a company using this tactic runs a real risk that the company might fail while the funds are in its account.

David Fisher from the Office of Fair Trading is promising action. “We regard the practice as unacceptable,” he warns. “Where we have evidence we will remove a company’s consumer credit licence, which means it cannot operate.

“We will also next month (i.e. June 2011) be issuing stronger rules for the entire sector, which explain what we expect of them.”

That is welcome news but sadly it is already too late for those debtors who are already dealing, or will soon be dealing, with a repossession order for their home.

Conclusion: take impartial advice

I conclude by saying what I always say: before making any important financial decision – including taking out a Debt Management Plan with a commercial company – take advantage of the free and impartial debt advice which is available these days. I stress the word “impartial”, because some advice is advertised as free but is not impartial, i.e. the organisation has a commercial motive for advising a certain course of action.

The advice you’ll get from the three major national charities working in this field – Citizens Advice, National Debtline and Consumer Credit Counselling Services – is indeed both free and impartial.

There are also many similar (i.e. “not-for-profit”) organisations that operate at a local level but check out carefully that they indeed “not-for-profit” before taking their advice. You can also refer to the Resources section of my book “Back to the Black: how to become debt-free and stay that way”; there you’ll find contact details for about 50 advice organisations.

 

WANT TO KNOW MORE?

The full BBC story is at: http://www.bbc.co.uk/news/business-13568152#story_continues_2

My book “Back to the Black: how to become debt-free and stay that way”, is available on the following retail sites:

Kindle Store: http://www.amazon.com/dp/B004PLMAQM

Smashwords store for other e-formats, including .pdf: http://www.smashwords.com/books/view/22886

 

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“BACK TO THE BLACK” AT #29 IN KINDLE STORE

A week ago I announced the Kindle launch of my book “Back to the Black: how to become debt-free and stay that way”, at a promotional price of £0.70 including VAT.

 

(That promo price, by the way, is also being applied to the other e-formats already available in the Smashwords Store.)

 

Today, I was pleased to see that, within the “Personal Finance” category of the Kindle Store, my book is now ranked at #29 out of 3,902 titles. The ranking is “sorted by best-selling”, according to Amazon.

 

Many thanks, therefore, to those of you who have bought a copy and helped put it at #29!

 

 

WANT TO KNOW MORE?

“Back to the Black: how to become debt-free and stay that way”, is available on the following retail sites:

Kindle Store: http://www.amazon.com/dp/B004PLMAQM

Smashwords store for other e-formats, including .pdf: http://www.smashwords.com/books/view/22886

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You can follow me on Twitter: @michaelmac43, or Facebook: Michael James MacMahon.

INTRODUCTORY OFFER FOR KINDLE VERSION OF “BACK TO THE BLACK”

As I write, the experts are dissecting on TV the impact of the Budget just unveiled by UK Chancellor George Osborne. I don’t claim sufficient expertise to add to the acres of coverage it will already be getting. What I do know, though, is that the uncertainties in the economy have already led more and more people into debt.

As I have just uploaded my dealing-with-debt book to the kindle store, and as I feel sure that thousands of people could benefit from it, I want to ensure it gets into the hands of as many of them as possible. I don’t want the price of the book to be a barrier.

For an introductory period, therefore, the kindle version of “Back to the Black: how to become debt-free and stay that way” is available at a launch price of £0.70 (or $0.99 plus VAT). Go to http://www.amazon.com/dp/B004PLMAQM

For the sake of consistency, this promotional price also applies with immediate effect to the multi-format versions, including .pdf, that were already available in the Smashwords store (http://www.smashwords.com/books/view/22886). The price adjustments in both stores are already active.

WANT TO KNOW MORE?

Reading eBooks on other devices

You don’t need a kindle to read kindle-format books! If that doesn’t make sense, what I mean is that if you read eBooks but don’t have a kindle, there is a neat piece of (free!) software called “kindle for PC”, enabling one to benefit from the improved readability of the kindle technology (and it really is) when reading on a PC or any other device. There is also a Mac version.

For a download link, just type “kindle reading apps” into Google.

Book links

To sample or purchase “Back to the Black: how to become debt-free and stay that way”, go to on of the following retail sites:

kindle: http://www.amazon.com/dp/B004PLMAQM

Other e-formats, including .pdf: http://www.smashwords.com/books/view/22886

Note: unlike physical books, eBooks carry VAT (I don’t understand the reason for the difference). The price in dollars is thus $1.14 to include VAT, i.e. British sales tax, even if the book is bought via www.amazon.com . In sterling the £0.70 price includes VAT.

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You can follow me on Twitter: @michaelmac43, or Facebook: Michael James MacMahon.