New finding show that free debt advice gives those in problem debt the helping hand they need to tackle their financial situation, pay off their debts and build money management skills for the future.
The research by the Money Advice Service, shows that within three to six months of receiving regulated advice, nearly two-thirds (65%) of those with debts are either repaying them or have repaid in full. This means that people’s debts are cleared in a way that’s manageable and affordable for them.
Free debt advice helps to improve financial capability by giving people the knowledge and confidence they need to deal with financial difficulties. After receiving advice, 89% check their income and expenses regularly and 85% are more likely to open their post. In addition, 86% had a plan to pay their bills in priority order and 84% keep to a spending plan.
The findings show that resolving problem debt also has a positive impact on other aspects of people’s wellbeing:
- 73% of people feel less stressed about dealing with their finances after advice
- 62% of people are sleeping better
- 63% of people feel their mental health has improved
- 55% of people report better physical health
- 69% of people also said that their relationships improved
- 71% are now performing better at work
For those who are struggling with problem debt, free debt advice can be the make the difference they need to get back on top of their finances. 94% of people who agree to take at least one action follow through with this and over half (55%) take all the actions agreed. Over two-thirds say the advice resolved their problems completely or to a great extent.
Sheila Wheeler, Director of Debt Advice for the Money Advice Service said “High quality advice can have a transformative effect on people’s lives – improving their finances and overall well-being. Increases in financial capability are particularly welcome as is the evidence that people are able to build better relationships with their creditors after debt advice. They also reinforce previous reports from MAS and confirm the earlier assessment by the National Audit Office that MAS commissioning of debt advice achieves value for money.’
A summary of the findings is available here. The full report Debt Advice Evaluation annual report will be published in March 2017.