advice centreOne of the debt charity StepChange’s  advisers moved on earlier this year. His farewell blog post was very informative: a good example of the advice that’s available regularly on their blog. I am sure he – and StepChange – will not object to my quoting it.

“Six truths about debt I’ve found from working at StepChange Debt Charity” (Matthew Cooper)

Truth 1: Creditors will generally accept your best offer of payment

Provided that they are convinced it really is your best offer, I’ve usually thought this to be true. But Matthew’s evidence in support of the theory is amazing: only one proposal rejected … out of 300!

“My job was to give advice on debt solutions and draft the actual individual voluntary arrangement (IVA) documents for clients. I drafted around 300 IVA proposals in about two years. All but one of them were accepted by creditors. I learned that if you make your best offer to creditors they’ll generally be willing to accept.”

Truth 2: Debt can happen to anyone

That’s something I found when researching stories for my book ‘Back to the Black.’ Matthew confirms this:

“While working as an IVA drafter I heard many stories of how people ended up in debt. In most cases debt problems are caused by life-changing events such as unemployment, relationship breakdown, accident or illness.”

Truth 3: Bust out the budget

Here’s the painful part, when you move out of the “denial” phase and start to analyse your financial position. Some humourist once said “A budget is a mathematical confirmation of your suspicions” … but it’s surprisingly true that knowing the worst is less stressful, compared with suspecting the worst but not being sure. Then, when you have an accurate picture of your current situation, you can start to draft a budget (maybe a few versions for different scenarios: see my book) that’ll help you decide what to do next. Matthew says:

“In my time here I’ve helped a lot of clients to put together a budget; as someone who is keen on budgeting I was sometimes amazed that some had never put an accurate budget together before. Over the years I’ve seen the clients who paid careful attention to their budgets be successful in repaying their debts. I now spend at least an hour a week looking over my budget to make sure I stay on track. An emergency fund is also a vital part of a budget, whether you have debts or not.”

Truth 4: Credit isn’t necessarily bad

“I’ve learned that credit isn’t necessarily a bad thing in itself and, like most things in life, it can even be good in moderation. It’s vital not to over-commit yourself though and you should be prepared as your life can change at any time. Despite their bad press creditors aren’t all bad either, as long as you’re honest about your situation. As a charity we want to help the ‘can’t pays’ rather than the ‘won’t pays’; creditors tend to share this attitude.”

That’s an interesting statement right there at the end: the “can’t pays,” as he puts it, are the group that StepChange exists to help; and they are the group with whom creditors are more likely to negotiate reasonably.

Truth 5: Never pay for debt advice

Matthew says:

“I’ve also learnt that there is genuinely no need to EVER pay for debt advice. Our advisors are brilliantly trained and highly knowledgeable and will always strive to give the best advice for your personal situation. We’re not for profit but we are for giving best advice.”

Truth 6: My colleagues are great at helping people in debt

I’ve never spoken to those colleagues personally; my own crisis was back in the ‘90s. However, judging by the quality of the info on their blog, I would support that statement 100%. So I’m sure Matthew won’t mind if I repeat in full his plug for his colleagues:

“I’ve made some great friends while working for the charity and together we’ve served a great common cause – ‘free debt advice’. My colleagues are knowledgeable, committed, ethical, funny and warm and they treat people who contact us with a great deal of empathy and never judge them. It’s time for me to hand over to another person to take on my role now. I hope they enjoy it and learn as much as I did during my time with this great charity.”

Citizens Advice was the charity that helped me with my debt crisis, largely because they had a Bureau near me where I could have face-to-face meetings. However they are a generalist advice charity, whereas StepChange is a debt specialist.

And judging by their blog, an excellent one.


For Stepchange’s “Moneyaware” blog, click HERE.

For info about my book “Back to the Black”, click HERE.


In my last post I talked about a claim that over-60s are particularly hard-hit by debt nowadays. The claim originated from a report from the charity StepChange, which was picked up by the “This Is Money” website.

I’ve just seen an endorsement of this statement from someone else with financial credibility. Peter Hargreaves is Chairman of financial service provider Hargreaves Lansdown and he writes in their monthly magazine as follows:

“Most of the industrialised world is enduring interest rates lower than inflation.

“There are material implications for savers, especially for people who rely on their savings for income. The problem is further aggravated for the retired, as their personal rate of inflation is probably greater than the published figure.

Official figures take into account many items which have come down in price but which are discretionary purchases. These include consumer durables such as PCs, cameras and other hi-tech gadgetry.

On the other hand staples and essentials – food, power, water, council taxes (??) etc are all increasing in price, meaning that retired people on fixed pensions or dependent on income from their investment capital are the hardest hit by the current situation.”

Hargreaves makes a good point. I have often written that we should not get too hung up on the official inflation rate, because that is an average, based on a “basket” of goods and services. We might not need or want to spend money on all these items in the “average” way, so our own personal RPI (retail price index) is what counts. But he stresses that for older people (and I am one of them) their personal RPI might well be above the official figure.

That’s true; I haven’t bought a PC or a camera lately but I have definitely noticed energy and food getting more expensive. Some of those cost increases I can mitigate by changing my buying choices; but some of them I can’t.



1. To read the full article by Peter Hargreaves, click HERE.

2. To read the StepChange story from This is Money, click HERE.

Editor’s note: StepChange was formerly known as Consumer Credit Counselling Services, one of the three national independent debt advisory organisations, so they know whereof they speak.

Photo Credit: Public Places via Compfight cc


In my book “Back to the Black”, I talk about the psychological effects of being in debt. In fact Chapter 2 is entitled “Mind Over Matter.”

I was pleased to see that this important issue was covered in a recent article by Simon Read in “The Independent” (17 March 2012). I’ll take the liberty of paraphrasing:


Being in debt is a depressing experience.

“A trouble shared is a trouble halved”; but the annual report of Consumer Credit Counselling Service (CCCS) shows 25% of those in debt don’t share their troubles with friends or family.

It’s understandable that people don’t want to discuss their debt problems. They’re embarrassed that they might be judged.

Admit the problem; don’t delay

However, admitting you’re in financial trouble is the first step towards solving the problem.

CCCS also revealed that 45 per cent of people delayed seeking advice for more than a year after they started to worry they had a debt problem. Many of them had probably carried the worry alone.


Many tragic suicides are caused by the worry of debt (and for every suicide there are ten attempted suicides). If those people had been able to talk about their problems, who knows what kind of future they may have had?

Talk to someone

Don’t just worry about debt. Instead look for a way to deal with it. There are many people and organisations that can help.

Help is at hand

CCCS (and the other debt advice charities: see below) are on hand to help.

All of them can help those in debt find ways to put their finances back on track.

Friends and family

Just talking to friends and family could be a good first step on the way to coping with the deep anxiety that money worries cause.


I had intended to add some thoughts of my own to this; but I think that the article says what needs to be said. I’ve just added information about organisations that can help; see below.






Citizens Advice (“The CAB”)

 Free advice provider; registered charity. Funders include central and local government, charitable trusts, companies and individuals.

Face-to-face interviews and telephone advice available at local Citizens Advice Bureaux (CABs). Find your nearest bureau in the phone directory, or search at

E-mail advice available at some CABs

Advice line: 0844 499 4718

Online help also available:

CCCS (Consumer Credit Counselling Service)

Free advice provider; registered charity. Supported almost entirely by the credit industry.

Telephone counselling 0800 138 1111

Online help

National Debtline

 Free advice provider; registered charity. Part of the Money Advice Trust, (see below) funded by a mix of private sector donations and Government grants.

Phone advice and free factsheet orders: 0808 808 4000

Credit Action

Money education charity, in partnership with CCCS (see above). Free online advice provider, plus the Spendometer (see Chapter 8), Money Manuals and other resources:

Their “Money Advice Map” signposts to local debt advice centres:






AdviceUK (to find a local money advice centre)

020 7407 4070


Debtors Anonymous (worldwide community with telephone & online meetings)

… and to find contact details for local meetings inUK:


Mind (charity & helpline that helps with mental health problems)

0845 7660 163


Samaritans (confidential emotional support)

0845 790 9090


Saneline (support for mental illness)

0845 767 8000


Shelter (free housing advice helpline)

0808 800 4444


For the “Independent” article in full: LINK


For info about my book “Back to the Black: how to become debt-free and stay that way” (paperback and eBook): LINK



I appear to be stalking Simon Read of The Independent. If so, that’s because payday loans are again in the news and this is a story and a cause he has taken up and because he writes well on the subject.

The latest twist in the story: research by Shelter (a UK housing charity) reveals around seven million people are turning to credit to try to keep a roof over their heads.

A million use payday loans to cover rent or mortgage

In the past year alone, almost one in seven of those – i.e. just under one million people – have resorted to payday (i.e. emergency) loans to cover rent or mortgage payments.

The Independent has warned that payday lenders are cashing in on the struggles of millions who are unable to borrow from mainstream lenders and those companies charge interest rates of up to 5,000 per cent.

The impressive Campbell Robb, CEO of Shelter, said that this “… shows the extent to which millions of households across the country are desperately struggling to keep their home.

“Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable. It can quickly lead to debts snowballing out of control and to eviction or repossession and ultimately homelessness.”

 What’s the alternative?

I cannot disagree with anything that’s been said above. It’s a sad state of affairs and I’ve no doubt payday loan companies in general are cashing in on the misery, despite what was said by the boss of Wonga to Simon Read and which I reported in an earlier post. There have been calls for these firms to be outlawed. But for the people who feel they have no alternative, what will they do if that happens?

Anyone in debt crisis who consults an adviser at one of the debt charities – such Citizens Advice or National Debtline or CCCS, here in the UK – would probably be told to avoid payday loans. But I wonder how many of the million people mentioned in Shelter’s report have actually talked to such an adviser.

I know that these resources are stretched; and as the charities reply to some extent on grants from the public sector, they may well become even more stretched because of spending cutbacks.

Need for financial advice

I don’t know the full answer – and of course it’ll be different in every case – but wider access to free, impartial and high-quality financial advice must be part of it. What’s more, financial education has to have a higher priority than it does now.


For the Simon Read article (4 Jan) click here:

For information about my book “Back to the Black”, click here:






A BBC investigation has found that some debt management companies have been holding on to clients’ cash rather than paying it to creditors, The practice has left many debtors thousands of pounds worse off and facing financial ruin.

If a firm goes out of business and client funds have not been kept in a protected account, some or all of the money is likely to be lost and the debtor becomes liable for the shortfall.

The Office of Fair Trading (OFT) has condemned the practice as “totally unacceptable” and has promised a crackdown.

Repossession order

One couple mentioned in the report had to put their house on the market and could face repossession, after responding to a cold-call from a debt management company and taking out a Debt Management Plan or DMP.

That company, Global Debt Solutions, based in Bolton, offered to arrange a repayment plan for £40,000 of credit card debt and loans. However, after having made payments to Global Debt Solutions for several months, the couple found the money was not being handed over to creditors.

Those creditors have successfully taken the couple to court, so they now have County Court Judgements against them. They’ll also have to go to court on their mortgage, so their debt problems have got far worse instead of being solved. It could soon be at a point where they’ll lose their home.

A widespread practice?

Global Debt Solutions, later known as 3 Step Finance, has been shut down by the Insolvency Service, which found that it did not monitor payments properly.

However, it has emerged that other companies have adopted the same tactic of accepting money from people in debt and not passing it on to creditors.

OFT action

A debtor taking out a DMP with a company using this tactic runs a real risk that the company might fail while the funds are in its account.

David Fisher from the Office of Fair Trading is promising action. “We regard the practice as unacceptable,” he warns. “Where we have evidence we will remove a company’s consumer credit licence, which means it cannot operate.

“We will also next month (i.e. June 2011) be issuing stronger rules for the entire sector, which explain what we expect of them.”

That is welcome news but sadly it is already too late for those debtors who are already dealing, or will soon be dealing, with a repossession order for their home.

Conclusion: take impartial advice

I conclude by saying what I always say: before making any important financial decision – including taking out a Debt Management Plan with a commercial company – take advantage of the free and impartial debt advice which is available these days. I stress the word “impartial”, because some advice is advertised as free but is not impartial, i.e. the organisation has a commercial motive for advising a certain course of action.

The advice you’ll get from the three major national charities working in this field – Citizens Advice, National Debtline and Consumer Credit Counselling Services – is indeed both free and impartial.

There are also many similar (i.e. “not-for-profit”) organisations that operate at a local level but check out carefully that they indeed “not-for-profit” before taking their advice. You can also refer to the Resources section of my book “Back to the Black: how to become debt-free and stay that way”; there you’ll find contact details for about 50 advice organisations.



The full BBC story is at:

My book “Back to the Black: how to become debt-free and stay that way”, is available on the following retail sites:

Kindle Store:

Smashwords store for other e-formats, including .pdf:




A recent news item (Channel 4 News, I think) flagged up a potentially alarming problem that’s been caused by the recession. (Yes, that’ll be the recession that the experts say is now officially over. Try telling that to someone who has lost their job.)


What’s the problem? According to a report by the charity Shelter, there’s been a large increase – possibly 50% in a year – in the number of people using credit cards to pay their mortgage or rent.


Does this affect owner-occupiers? Or tenants? Or both?


According to the BBC website, the Council of Mortgage Lenders (CML) suggests that the problem has been sensationalised by the media. That may be true. It would not be the first time. I should point out the obvious, however: the CML’s concern is only for mortgages. What Shelter describes may well be more of a problem for tenants than for homeowners. Mortgage rates are exceptionally low at present, so it’s less likely that an owner-occupier will have difficulty meeting housing costs, other things being equal. Also mortgage payments are normally taken on a direct debit, the CML says.


The reduction in housing costs caused by low mortgage rates has not yet been mirrored in reduced rents (why not?? Logic tells me it should be). Therefore, other things again being equal (which they never are) a tenant is more likely to be tempted to solve a short-term cash-flow problem by paying the rent with a credit card.


Is the story true?


“In the current climate”, I would not be surprised if there has been an increase in the number using cards. But has the increase really been 50% in a year? That’s massive. What they say, if you read the various reports, is that it’s gone from 4% to 6% and that is indeed an increase of 50%.


Firstly, you’d have to ask how big was the sample; obviously they didn’t interview everyone in the country (well, they didn’t ask me, anyway). And secondly, here’s a bit of a giveaway. Last year’s survey calculated the number of households, rather than individuals, that fell into this category. However, “the figure for households has not been calculated this year”, according to the report. So are we comparing apples with oranges, to make a point?


So is it safe to pay with a credit card?


Back to the question at the top of this post; is it safe to use a credit card to pay your rent or (less likely) your mortgage? The answer is a cautious yes, but only under certain circumstances. Credit cards do not have the astronomically high interest rates of payday loans, but the principle is the same. IF there is no alternative, and IF you are 100% sure you can pay off the card in full before the interest kicks in (you have 4-6 weeks to do that) then fine. If not, then as I have said many times before … get help from one of the debt advice agencies (for example Citizens Advice, or Consumer Credit Counselling Services, or National Debtline) and put together a plan. If you don’t, you could find yourself on a slippery slope.


I’ll be following up this story. “Watch this space”, as the saying goes.






Here’s a piece on the website of Shelter, who produced the original report:


And here’s an item about the story on the BBC website:




My book “Back to the Black: how to become debt-free and stay that way” is now available to sample or buy, as a multi-format e-book, at:



In my book “Back to the Black: how to become debt-free and stay that way”, I tell the story of my own brush with bankruptcy in 1999. At that time, my then accountant recommended that I should file for voluntary bankruptcy.

Why I didn’t go bankrupt

In the event, I did not take the bankruptcy route, for a variety of reasons. One of those reasons was that I had some occupational pensions (of the “money purchase” type, not final salary) accumulated over the years. If I had become bankrupt those pensions might well have been vulnerable.

How the law has changed to the benefit of debtors

However, the law has changed: pensions are now to a great extent protected in a bankruptcy.

According to HM Government’s Insolvency Service, any private pension fund you have built up cannot generally be claimed as an “asset” if the bankruptcy petition was presented on or after 29 May 2000, as long as the scheme was approved by HM Revenue & Customs.

What to do

If you are considering bankruptcy, first read Chapters 8, 9 and 10 of my book, in order to review the pros and cons of the alternative routes “back to the black”. Chapter 9 deals with bankruptcy and IVAs (Individual Voluntary Arrangements) . Then, if you still plan to consider bankruptcy, take professional advice: either from one of the non-profit advice services (for example Citizens Advice, Consumer Credit Counselling Service or National Debtline) or from an insolvency practitioner. There is a checklist in Chapter 9 of my book about how to go about selecting the right insolvency practitioner for your particular situation.

Want to know more?

My book “Back to the Black: how to become debt-free and stay that way” is available on the Smashwords site. To sample (first 20% free) or to buy at only $3.99, go to

HM Government’s Insolvency Service’s publications can be found at


Earlier this year, during an interview on Heart FM, I was asked about payday loans: would I advise anyone who was especially cash-strapped (for example as a result of Christmas), to take out one of these loans? This is a tricky matter: anyone considering any such loan must have exhausted all other possibilities.

Payday loans, usually for sums up to £1,000 ($1,500), are known to carry very high interest rates. Those rates could be affordable if it’s the only game in town AND if the loan really is repaid quickly, i.e. on payday, but if it’s rolled over then the problem starts. However, they are marketed as being instantly available, which of course is very attractive when things are tight.


So the attractions are:

• Instant availability, even if you have a poor credit record
• Lack of bureaucracy, with a simple application method
• The fact that it’s cash: a cheque is less useful if you have to pay it in to a bank account with a maxed-out overdraft, though of course cheque / cash converter shops have foreseen that problem.
• The fact that it’s local, with a collector who probably lives near you.

If there is no alternative, and if the sum borrowed is repaid at the next payday, then paying that interest (high rate but small sum) is better than having to default on the mortgage or a credit card bill.


The problem arises, of course, if the sum isn’t paid quickly. Then, of course, it will become more and more difficult to repay, because of that very high interest rate. I could publish a table showing how the sum owing would build up at those very high interest rates: but that would be very depressing for you and for me.

Should you do it?

In the radio interview I said that if anyone was in a situation where they saw no alternative solution, then they should take the loan, provided they immediately got help from one of the debt advice charities, for example the CAB (Citizens Advice), or CCCS (Consumer Credit Counselling Services), or National Debtline, or one of the many local “not-for-profit” debt advisory services, and put together a plan. Step one of that plan must be to repay the payday loan as a first priority.

I still stand by that advice.

Those interest rates, by the way

In order to check my facts after that interview, I found a website that lists the top 5 payday loan providers (the “top 5” ranking is by “rough estimate of lender’s approval rates”). I found the APRs of these lenders varied from over 990% to over 2300%. Eye-watering stuff, if you can’t repay quickly.

For extra info see the MoneySavingExpert website, for example this post: . That article talked about interest rates (APR) “up to 1500%”. As you can see above, I found some rates to be even higher.

Credit Unions: an alternative

Credit unions are an alternative and much cheaper source of short-term finance that people in this situation could look at: an alternative, in fact, to high-street lenders as well as to payday loans.

The local one here in Bristol, for example, is at; they offer loans from £100 to £7,500 ($150 to $11,250). Their website says: “By law credit unions cannot charge any more than 2% per month on the reducing balance of a loan. This represents a maximum interest rate of 26.8% APR (Annual Percentage Rate), and that is the most you will ever pay on your loan.”

Worth checking out? 26.8% sounds better than those payday loans.

Taking advice

If you are in debt, and whether or not you are considering a payday loan, I always bang on about the need to get help as soon as possible. That should preferably come from an independent, impartial (i.e. not-for-profit) advice service such as the local CAB (that’s the Citizens Advice Bureau, for the benefit of any readers of this blog who are not in the UK) or CCCS (Consumer Credit Counselling Service) or National Debtline. Then you need to formulate a plan with the help of that advice, and inform the creditors that is what you’re doing and ask them to freeze interest while that’s happening.

Many creditors will agree to that, but if you don’t ask you don’t get. Many debtors spend too long in denial and they don’t communicate with their creditors, which makes the situation worse. I know: I was one of those.

In fact my book’s subtitle could even be “Learn from my mistakes”.

Christmas is coming!

At the top of this post I mentioned Christmas. This is a good time to say that one way of avoiding payday loans is to cut down spending. Don’t cut down on the fun but do cut down on the presents!

As I say in my book: “Christmas is not an emergency.” (it comes every year)


“Back to the Black: how to become debt-free and stay that way”, is now available as a multi-format eBook at Smashwords to sample (view or download the first 20% free) or to buy at only $3.99. Go to: