Banks prefer debt management plans
Banks prefer customers to resort to a debt management plan, rather than declaring themselves bankrupt or taking out an IVA.
This is according to debt counselling service Thomas Charles & Co, which has said that banks stand to lose out through bankruptcy and IVAs.
The service's director, James Falla, explained that debt management plans provide banks with much greater returns.
In the event of a person declaring themselves bankrupt, the returns could be as little as ten per cent. If they choose to take out an IVA, the returns would be in the region of 40 or 50 per cent.
"From the bank's point of view, their objective is to get their money back. So their objective is not to solve the debt problem as soon as possible but to get as much of their money back as possible," Mr Falla explained.
The director went on to advise against resorting to a debt management plan.
"The significant downside for the person in debt doing a debt management plan is the length of time it's going to take to solve the problem.
"Generally a person will stay in a debt management plan for about three years before they either give up or they decide to go bankrupt," he warned.
News Source:
http://www.moneyhighstreet.com/ |
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