The average level of personal debt held by individuals living in the UK through loans and credit cards is currently at record amounts and the figure is still increasing as many people continue to borrow more, despite the current economic situation.

Not surprisingly, a large number of individuals have found themselves in financial difficulty and have ended up missing repayments on their personal loans, credit cards and other debts and can easily build up a significant amount of loan arrears.

As the problem worsens, there has been a large increase in the number of borrowers who have placed their finances in the hands of a debt management company, or by taking out an Individual Voluntary Arrangement (IVA) and whilst this course of action can relieve some of the pressure of personal loan and credit card companies sending letters chasing repayments, these can both end up being costly options, as debt management companies will charge a large fee for their services.

But now, the Citizens Advice Bureau has introduced a “self help” system which assists people who are in trouble with their debts to be able to take control of their own financial situation and negotiate settlement and repayment figures directly with their creditors. The system shows individuals how they should go about drawing up an accurate and realistic budget planner, as well as providing draft letters which borrowers should adopt to make offer of repayments on their loan debts. Of those people interviewed, who were needing help with their finances, almost half said that they would prefer to deal with the problems directly with their creditors, rather than go through a third party.

Twenty per cent of individuals using the self help approach managed to get their creditors to accept their offers of repayment, however a further sixty per cent were not so lucky and said that their offers had been rejected. The various advice agencies have said that they need to continue to work together and with lenders to create a consistent approach towards self help debt management.

A spokesman for the Citizens Advice Bureau said “Personal debt in the UK is growing and it now accounts for one in every three problems dealt with by the CAB services in England and Wales. As the current credit crunch and rising food and fuel costs are likely to result in more people needing help managing their finances it’s important that those who want to are and are able to, can negotiate with creditors directly without the risk of being treated unfavourably.”