The Money Advice Trust and Money Advice Service have today published research into the experiences of people in debt who negotiate with their creditors.
The research, carried out by the University of Bristol’s Personal Finance Research Centre, provides insight into the factors affecting successful self-negotiation. It also looks at the roles played by the advice and creditor sectors in supporting people to deal with their debts.
Every year hundreds of thousands of people in financial difficulty engage with their creditors directly, a process sometimes referred to as self-negotiation. Some do this alone, using tools and information publicly available while others use the assistance of a debt adviser, for example to help them produce an income and expenditure statement to share with creditors.
Self-negotiators: The Experiences of people in Debt who Negotiate with their Creditors outlines the value of this approach in giving people the support, confidence and knowledge to tackle their debts themselves.
The research outlines a number of factors that influence successful self-negotiation, including:
- the types of debt people have,
- the amount owed relative to available income, and importantly,
- peoples’ motivation and capacity to deal with their situation.
Communication is also highlighted as crucial. In the study, when communication was good, people stood a much better chance of reaching AN agreement with their creditors. When communication was not quite right or the wrong channel was used, the process became lengthy and far more challenging.
The research also shows there are opportunities for greater partnership working between advice services and creditors to make the journey easier for people who choose to deal with their debts in this way.
The study drew upon the experiences of self-negotiators who received support from National Debtline and looked at the outcomes they achieved.
Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline, said:
“Supporting people in debt to help themselves is central to the Trust’s approach to debt advice and has been for the last 25 years. We already know a lot about the people we help at National Debtline through our regular client surveys. This research highlights the factors necessary to ensure that the journey for those people who deal with their debts themselves is a successful one.”
“We look forward to using these findings to continue our work with the advice sector, creditors and the Money Advice Service to improve outcomes for people in debt.”
Colin Kinloch, strategy and innovation manager, Money Advice Service said “High quality advice and great resources help provide the confidence and capability people need to take action to deliver the changes they want in their lives. When people seek out the resources the advice sector offers or get in touch with an adviser directly the support they find needs to encourage a positive attitude, improve money management habits and help them resolve their financial difficulties.”
“This research reasserts the diversity in experience of the population that the advice sector exists to serve and helps underpin our commitment at the Money Advice Service to user-centred service design as an essential element in helping people with debt problems reach the best possible outcomes.”
Professor Sharon Collard, research director, Personal Finance Research Centre at the University of Bristol said “This research adds to the advice sector’s knowledge of clients by providing insights into the factors that can make or break people’s self-negotiation with their creditors. The research is an important reminder about the lived experience of people trying to deal with problem debt themselves: it can be messy, time consuming and stressful.”
“As well as getting problem debt under control, the other positive legacies of professional support for self-negotiators include better money management; new attitudes to consumer credit; and enhanced self-negotiating skills they can use on their own behalf or for others.”
A new Wiseradviser e-learning course for debt advisers on supporting clients to self-help has also been launched.