Hidden Debts of 600,000
Taking out a debt management plan can be a good debt solution if you need help to manage debt, and if you find it a struggle to make payments to your unsecured creditors. But new research shows that these figures are being missed off the official Government insolvency figures.
According to trade body R3, which represents insolvency professionals, around 600,000 people who have taken out debt management plans are not included in the Insolvency Service’s official statistics, because a Debt Management Plan is classed as an unofficial but formalised agreement between debtor and their unsecured creditors.
R3 are pushing the government to have these hidden debts included in official figures, as their recent reports suggests that four times as many people are in a debt management plan, compared to an IVA. Twice as many people are in a debt management plan, compared to those who have declared bankruptcy.
President of R3, Nick O’Reilly said: “A DMP (Debt Management Plan) is an informal alternative to an IVA or bankruptcy which works to clear someone’s personal debt without the formal implications of the official arrangements”.