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|Free debt advice works for both people in problem debt and their creditors|
|Tuesday, 24 January 2017|
New findings released today 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 early findings released today from a major study by the Money Advice Service, show 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; and
· 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.
These positive results have been made possible by the Money Advice Service working collaboratively with debt advice partners across the UK* to work out how to collectively encourage more people to engage with free debt advice. The Money Advice Service has provided these organisations with additional funding of £6.9 million to support an extra 125,000 debt advice sessions to increase access to their services during the busy January – March period and beyond**.
Sheila Wheeler says: “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.
“These results wouldn’t be possible without the hard work and dedication of our debt advice partners. There is important work still to do if we are to ensure that as many clients as possible reach the best possible outcomes and this will be our area of focus over the coming months as we develop our new debt advice strategy.”
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