Did you know that when out for dinner in a party of four, it’s highly likely one of you will have a mental health condition.

Recent stats from Royal College of Psychiatry tell us:

• One in four people has a mental health problem
• One in four people with a mental health problem is also in debt
• Debt may be a cause and consequence of mental health problems
• One in two adults with debts has a mental health problem

Since working at ClearDebt some three and a half years, I have quickly come to understand the emotional issues connected to money worries; I have witnessed client testimonials sent to us talking about the relief felt when we have been able to help make a difference to someone’s debt and their path to repaying it.

Mental capacity issues and the debt industry

Identifying mental capacity is a key issue for the debt solution industry and for the Office of Fair Trading who recently published their “Mental Health – OFT Guidance for Creditors” paper. The connection between Mental Health and debt has quickly established itself as a matter to be taken seriously and for those talking to people in debt it’s often been a “taboo” subject.

Debt Resolution Forum training on mental health and debt

I and other members of ClearDebt staff attended a pilot training scheme provided by Debt Resolution Forum (DRF) and presented by MIND. The aim of the training was to help us bto be more aware of the mental health conditions people can suffer from and how to communicate best with people in these circumstances to make sure they feel comfortable with the conversations they may be having with us. The training also helped us understand the importance of being able to confirm the caller we are speaking to has the mental capacity to understand the information being discussed and the implications of any solution we explain.

In today’s society, when debt, mental health and well- being are so interlinked, providing the correct debt advice can no longer be enough. It’s vital we’re now also able to connect to the people we’re talking to and to pick up on any other “stresses” in their life which may affect their understanding of what we are saying and to do something with the advice we provide. The way in which we communicate with clients suffering from mental health conditions should be flexible so that processes can be adapted to fit in with their needs.

What I learnt from the training

The mental health training was truly inspirational – a wake up call for those of us who either haven’t yet known someone with a mental health condition or do know someone with a mental health condition but have never taken the time to truly ask or appreciate the affect this may have on them and their life. We understand, as professionals in this industry, the heartbreak and strain money worries can bring to someone – and to their family; I hope the training by DRF is just the beginning of an industry wide change which means that debt advisors have the ability to provide for people with mental health conditions as equally as we would anyone else.

Today’s personal insolvency figures, released by the Insolvency Service, show that bankruptcies fell, year on year, by nearly a third (28%) whilst Individual Voluntary Arrangements remained stable, growing by 4.5% between Q4 2010 and Q4 2011.

Commenting, Andrew Smith, director of external affairs at debt resolution company, ClearDebt, said:

People are reducing debt at the moment and many are unable to enter a scheme like an IVA because they are unemployed. So, in a year where personal insolvencies have shrunk by nearly 6%, it seems suprising that IVAs have grown slightly: We believe this is because IVAs are now being arranged at much lower levels of debt than formerly. It used to be that an IVA was impossible to do for someone who owed less than £15,000. Now we understand half of the top ten IVA companies arrange IVAs for people with unsecured debts of £10,000. ClearDebt regularly puts them in place for people who owe down to £8,000.

We believe that IVAs are now eating into the market formerly taken by informal debt management plans – although there is evidence that these are growing too, and at lower debt levels.

For further comment on the insolvency statistics please contact either:

Andrew Smith – Andrew.Smith@cleardebt.co.uk, 0161 968 6825, 0791 240 7532

or

Sally Hardiman – Sally.Hardiman@cleardebt.co.uk 0161 968 6815

Further to the success of his blog on Lloyds, Creditor Liaison Team Leader, Chris Brown, takes a moment to put fingers to keyboard and finally, tell us how it is.

Starting a Debt Management Plan

Photo credit to Pat Pilon

It’s a common experience for many of our debt management clients, that the first few weeks of a plan can be the most difficult. Contact from creditors does not stop overnight and it is during this time that we write to creditors explaining our client/s have chosen to enter into a debt management plan. In order to progress with the plan, we ask creditors for information regarding what is owed to them and then await their replies…and in some cases we can be made to wait for an unreasonably long time while the contact to our client persists.

We understand how stressful this time can be for our clients, so we work as quickly as we can to deal with your creditors and get the process moving; our team are always looking for new ways to make this process as fast as possible but as you’d expect, there are a few obstacles in place to slow us down.

Some creditors are easier to contact than others

Obtaining information from Barclays, for example, can be like trying to get military secrets out of North Korea. We get a standard pre-prepared response which outlines their resolve to shun western conventions such as helpful call centre staff or debt management departments who use email. Instead we are given no other option but to send our correspondence in the post and wait for Barclays to sort, read and reply to our query.

We have hundreds of clients with debts to Barclays but despite this, they are unwilling to re-evaluate their procedures and consider allowing us to call them so that we can move our Debt Management Plans forward as quickly as possible.

Scripted answers to our queries

Another stumbling block for our team is speaking with non UK call centres. Some staff at companies such as Capital One and Blair, Oliver & Scott are trained to only answer certain queries with pre agreed scripts. This can often be like talking to a badly programmed robot whose owner didn’t install the basic logic software correctly. I could go on more about this issue but I suspect many of you reading this will also have experienced similar problems and so share my frustration.

Photo credit to Douglas County History Research Center

Using data protection to slow down the process

We take the protection of our clients’ personal information extremely seriously and expect creditors to do the same. However, recently there have been a couple of creditors who appear to be abusing the Data Protection Act, making obtaining information and setting up payment arrangements as slow as possible. Capital One, for example, reject on a daily basis countless letters of authority (which permit us to speak on our clients behalf) claiming that the signature does not match the one they have on their records.

It’s as if they have somebody with a magnifying glass, who spends their day rejecting our authorities on the basis that the first letter is angled forward 45 degrees rather than the 46 degrees the debtor used on the credit agreement.

We applaud creditors who are moving with the times

Despite these problems, a vast majority of creditors and collectors are now accepting payments by BACS (Bankers’ Automated Clearing Services) which is much quicker than cheques. And a growing number of creditors (Allied International Credit, Moorcroft, Apex and JD Williams but to name but a few) are also now communicating with us by email, eliminating the need to wait for their letters in the post.

Each day our team is trying to communicate with creditors and grow relationships so that we can improve the processes – for you – our clients. We’re finding more logical, time and cost efficient methods of progressing a client’s Debt Management Plan with as little inconvenience and stress to either party.

Have your say

If you have any ideas which you feel creditors could consider to improve the process of Debt Management Plans, then why not have your say here too? Consider your thoughts carefully as we value your feedback and we will use some ideas to put forward to creditors as we develop our relationships with them.

As the date of ‘Blue Monday’ is calculated, we offer you some simple steps you can take to lessen the blues.

The January blues have suddenly become a lot more specific, being at their most vivid on 16th January according to a formula used to calculate the most depressing day of the year. This takes into account the weather, the distance from Christmas, the level of individual debt and failure of New Year’s resolutions; ‘Blue Monday’ is decided.

The outlook becomes even worse when you think about the large gap between most people’s December and January payday, combined with the delivery of active credit card users’ January statements.

The current economic climate means that ‘Blue Monday’ is going to affect more demographics than ever before – youth unemployment over a million, house repossessions forecast to rise again, to name but a few bleak statistics- it could feel that these January pressures are reaching their peak.

The outlook isn’t all doom and gloom though and there are steps you can take to put you on the right track.

Budget

Set an agreed amount to spend at the start of each month. Try to put aside a little bit each month as a contingency plan for any emergencies that may arise.

Plan Ahead

Christmas, birthdays and anniversaries come but once a year yet they still catch people out. Plan ahead for set dates and what specific gifts you have in mind and your monthly budgeting could be much more successful.

Preparation

Buy in bulk in the supermarket but only if it’s a necessity. Use the calculator on your phone to price up whether a bulk buy really is good value for your money. A box of 12 light bulbs for example probably isn’t needed. However, buy one get one free on an everyday item will be worthwhile.

Save

Whilst you spend. If as a habit you use the same supermarket for the majority of your shopping, look into loyalty cards or reward schemes they offer- it could greatly reduce your weekly spend.

If you’ve tried all of the above and you’re still struggling, we can offer specific advice on your debts and offer solutions please give us a call on 0800 019 2095 or complete our call-back form now

New year, new start! That’s how you might think many people across the UK have started 2012. But it appears, if you think this, you could be wrong.

According to a poll by First Direct, the biggest financial worries of the year in 2011 were not saving enough and not paying off enough debt – that sounds like a catch 22 to me.

Other worries are quoted as spending too much on a partner, lending or borrowing money from family, or, paying for an expensive holiday.

So whilst we enter the early stages of January 2012, I have to ask, what were your biggest worries in 2011 and where do you think 2012 might lead you?

For some, I hope it will lead to being debt free – to being more financially aware and confident in budgeting more effectively. For others, it might mean sleeping easier at night, carrying out the weekly shop without breaking out in a sweat or even finding the courage to stay away from the shops and cut down on the non essential spending.

We’d love to know your “financial new year’s resolutions” so leave a comment and your ideas could inspire others who might not be feeling so positive about their opportunities for 2012. Alternatively you can share your positive thoughts on the ClearDebt facebook wall or via twitter to @cleardebt and @jax76.

We’re giving away a £25 voucher for the most thoughtful comment submitted so share yours now!