The National Audit Office (NAO) research showed the Government’s free debt counselling agencies struggled to cope with the number of consumers from Northern Ireland and the rest of the UK requesting advice during the year to July 2009. There was an estimated 28% increase in consumer enquiries with some people forced to wait for more than a month for advice, and others turned away completely as a quarter of agencies had to stop taking queries due to of lack of resources.

Debt in Britain had reached £1.46 trillion by the end of last 2009 forcing the government to commit £143million funding to offering additional debt advisory services during the recession. The Citizens Advice Bureau is likely to receive the lion's share of the funding for it's for face-to-face meetings which cost the agency an average of £265 per person. Phone advice from National Debtline costs less than a fifth of that per person.

Amyas Morse, head of the NAO, said: “Demand is outstripping capacity and the Department needs to look at ways of reaching even more people; it must establish a coherent framework for delivering the Government’s wider strategy for tackling over-indebtedness.”

Kevin Still, Director of EuroDebt, commented in the research by saying that:

“The charity sector does an excellent job in supporting individuals facing financial difficulties, but the reality is that there just isn't the resource for them to help everyone. The National Audit Office Report suggests that at least two debt agencies are refusing to take on new clients and others have waiting lists of up to 6 weeks for a face to face appointment.

“Often the individual and families who most urgently need help are those with the higher levels of debt.  So the longer they have to wait for help, the greater the problem gets. 

“The other issue that is highlighted by the findings of the NAO report is that the model used by the charities is well proven to have less acceptance from creditors. The voluntary organisations focus on a self-help approach to debt management.

"These keep the onus with the individual on managing the relationships with their creditors and, unfortunately, this often means that they are less successful in getting interest frozen on outstanding debts or stopping debt recovery activity.

“We firmly believe that there is a place for both types of debt advice organisation. It is not uncommon for EuroDebt to refer people with very low disposable income to their local CAB. But the primary goal of EuroDebt is to act fast to help consumers take a responsible position with their creditors, especially where they have multiple credit cards and loans. We do this by notifying the unsecured lenders that the individual has entered a Debt Management Plan.”
 
Katharine Kimber, Head of the Debt Litigation department at Wilson Nesbitt solicitors in Belfast, commented that "Those facing serious debt issues in the current climate are well advised to seek help at an early stage to try to enter into arrangements with their creditors.  Whether this is done directly with the creditor or formally through an IVA, creditors are likely to be more co-operative where genuine effort is made to address debts based on a full and frank financial disclosure."
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