When somebody is in debt they typically avoid the subject and decide against answering the door, telephone or opening their mail.
This 'head in sand' syndrome is to be expected, however it can cause longer term problems and in the end will only make the situation worse.
When the first step is reached and a person agrees they need debt help it's the first encouraging sign they are ready to deal with their debt, and one of the hardest situations for people to reach.
Nobody wants to be in debt and unfortunately when debt becomes unmanageable it can be difficult to admit.
How to deal with debt After a person admits they need debt help they will follow a similar pattern, typically looking for debt help and advice from a number of different places.
Initially they may look at the newspapers, speak to friends / family, check a directory or two or even phone a leaflet or two which has come through the post.
Whatever way a person decides to deal with their debt they have a decision to make- do I want to speak to a for profit company or a not for profit charity? We've listed the differences between a for profit company and a debt charity when deciding who to contact for help.
Making the decision There are a number of differences with a charity compared with a for profit company.
How is it funded For profit debt companies will be owned by people who want to make a profit.
This means the owners will be investing their own money with the intention of making money.
The charities receive money from donations, creditors, the government or directly from helping with the solutions.
There are a number of for profit companies focussed on providing accurate debt advice despite being financially focussed.
The owners interest As previously mentioned, the owners of a for profit debt company want to make as much profit as is possible.
This can sometimes be considered to compromise their position when giving independent advice.
To be a director of a charity the majority of the board decision makers are not allowed to earn any money for the services they offer.
This means that the charity is not focussed on turning profit for the benefit of directors.
Type of debt advice If you would like face to face advice then the citizens advice or local council would be the only charities offering this service.
Due to the demand it can take up to 6 months to see an advisor face to face with a charity and some people prefer to speak to a for profit company for face to face advice.
The for profit company will most likely charge for their service.
Telephone and internet advice can be provided immediately by a charity free of charge or by a for profit company who may decide to charge.
Regardless of the organisation you choose be sure to check they have a consumer credit licence and the advisors have the appropriate qualification to dispense debt advice.
What are the available solutions Some for profit companies will only offer one debt solution - a debt management plan.
This solution is an informal agreement with your creditors designed for short term repayment of all of your debt.
Typically a debt management plan will last for up to 12 years.
Companies that only offer debt management plans will usually only offer the one solution - regardless of the length of time the solution would last.
Research has found that a number of people are in long term (over 25 years) debt management plans with for profit companies.
Charities offer a wide range of debt solutions and are committed to providing the right advice for the client.
Some charities will also offer solutions in-house.
The available debt solutions for people in debt should include, general debt advice and money saving tips, debt management plan, debt arrangement scheme, refinance, IVA, Trust Deed, bankruptcy, sequestration, debt relief order, certificate of sequestration or LILA.
In Summary There are a variety of options for people in debt.
It's essential to get the right level of support and guidance from a company who cares.
If you wish to pay for advice then ensure you check a number of companies to guarantee you are getting value for money.