A number of debtors will be contacted over the next few weeks and those who agree to take part will be helped to draw up a debt-repayment programme. If necessary, they will pay an amount to the programme organisers, who will divide this up and distribute it among creditors.
All the money paid by the debtor will be passed on to creditors. The aim is to get creditors to pay 15 per cent of the money recovered back to the organisers to fund their counselling service.
The pilot scheme is being launched in Leeds. It is modelled on a system used extensively in the United States. Several UK lenders, including Barclays Bank, Leeds Permanent Building Society and the store card operator GE Capital Retailer Financial Services, have donated money to launch the scheme.
Counsellors are being trained now and are expected to start work in March. About 100 lenders have agreed in principle to cooperate with the counsellors on debt-rescheduling programmes and to provide funding. Staff at the unit are now writing to lenders to arrange formal working relationships. Lenders will be asked to contact debtors whomay be suitable candidates for counselling.
The attempt to obtain more money from lenders to pay for counselling follows an earlier initiative that has had mixed success. The Money Advice Trust, set up in 1990, has had difficulty persuading lenders to hand over money and in 1991 received donations of only pounds 250,000 against a target of pounds 3m.Reuse content