Tuesday, 20 February 2007

Debt Counsellors.co.uk use Survey to sell IVAs.

The Debt Counsellors - a commercial operation owned by Debt.co.uk plc - have released their Annual UK Debt Survey.

Debt Counsellors asked people seeking help for their debt problems about their attitudes towards bankruptcy and according to their press release they are claiming that the results show that there are still people who do not realise the risks involved in going bankrupt.

They quote the fact that 34.4% of respondents said bankruptcy was nothing to be ashamed of but, if we turn these figures around, this means that 65.6% of the debtors answering the question felt that they would be ashamed to be bankrupt.

Given the frequent criticisms of feckless debtors using bankruptcy as a 'lifestyle choice' to avoid paying their debts, surely this is the more remarkable finding ?

The press release also highlights the fact that 7.6% of respondents were under the misapprehension that they would not be putting their home at risk by going bankrupt. Isn't this finding remarkable for the opposite reason ?

Reverse the figures and it seems that a staggering 92.4% of the debtors surveyed do know that their home could be at risk if they declared themselves bankrupt.

The press release headline says that the survey highlights lack of awareness among debtors when, on a closer reading, it really seems to show that the majority of debtors are painfully aware of the consequences of bankruptcy and probably better informed than the general population. It would be a fair guess that 92.4% of the general population probably couldn't even spell 'bankruptcy' correctly let alone know its consequences.

The way that Debt Counsellors present the results of their survey may suffer from its intellectual dishonesty but its real purpose is to bolster the business of selling IVAs as an alternative to bankruptcy. There is no money to be made by actually counselling bankruptcy as the more appropriate choice for some debtors.

The press release even quotes a senior counsellor with The Debt Counsellors who emphasises that bankruptcy is a situation that should be avoided if at all possible. There is no doubt this is good general advice but the counsellor blows the gaffe when he says that "bankruptcy can often be avoided in, even in serious debt cases, through debt solutions like the IVA."

Well, they would say that wouldn't they ?

Which - thinking laterally - all brings to mind the Autumn 2005 Insolvency Practitioner's Association Student Bulletin which included a report from the Examiner for the IP's Certificate of Proficiency in Insolvency (CPI) exam.

In the article, the examiner referred to what he called the 'bread and butter' exam question on the advantages/disadvantages of IVAs vs bankruptcy and commented that some candidates would have fared better if they had given more thought to the layout and clarity of their answer.

Maybe Debt Counsellors could be persuaded to apply the same principle to their press releases and advice on bankruptcy.

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