Government must investigate debt solutions, says charity

The government should investigate the solutions offered to people struggling with unmanageable debt.

The call has come from the Money Advice Trust, the charity that runs National Debtline, amid worries that hard-up folk are ending up in problem debt with no way out.

Joanna Elson, chief executive of the Money Advice Trust, said: “Debt problems vary widely and we need to ensure that an appropriate debt solution exists for every single person struggling to repay what they owe.

“No one must be allowed to fall through the cracks of a system that has grown in a piecemeal fashion over several decades.”

The Insolvency Service closes a consultation today on Debt Relief Orders– a debt solution available for people with low incomes, few assets and relatively small debts. The Money Advice Trust wants the criteria for people using the orders to be widened to kick-off a government probe.

“The kind of debt problems we are seeing on the frontline of debt advice is changing dramatically – and officialdom needs to keep up,” said Ms Elson. “Making Debt Relief Orders available to a wider range of debtors would be a good start, but we need a full independent review of the whole debt solutions landscape.”

Yesterday the debt charity Step Change revealed that problem debt is hitting the UK economy to the tune of £8.3bn.

Social costs mount up because of the damage debt causes to family life, mental and physical health, productivity and employment prospects and costs to the welfare state, the NHS, local government and other agencies.

Ms Elson said: “Free advice provided at the earliest stage possible is the best way to limit the damage that unmanageable debt is causing, both to our lives and our economy.”