Why debt consolidation is not the answer

I deal in debt management for customers of my Bank and I do not disagree with the sentiments and comments within the article. However, there is a clear benefit to our customer(s) IF strict control is maintained and they are supported with knowledgeable guidance too. Whilst there may be the opportunity that customers seek additional credit in the future or try to use an unknown or un-used card/re-use a card they had consolidated - the management between the Bank and its customers is paramount, to instil in the individual(s), the pitfalls of over-extending themselves once more. The control my department prescribes my colleagues and I have to take when working with a customer, causes us to confirm the 'boundaries' clearly at the outset, to ensure that when we have completed our fact-find and assessed affordability (always paramount and without affordability being evidenced, the exercise cannot progress), then we explain that the cards we are consolidating are destroyed. We control the repayment of those cards from the loan drawdown and insist upon sighting the closing statements within 4 weeks, to prove the account is closed. As you state, simply receiving a cut card means little, as a new card could be ordered at a later date. Once the customers are aware of the 'mechanics' for support and have bought in to the agreement, it is explained to them that in providing this assistance they have this opportunity to make a fresh start (a 'get out of jail free' card in some circumstances, if you will) and without rigorous budgeting on their part to ensure the situation does not recur 'X' months later, they have to be mature about managing the position as it is NOT the Bank's job to be a parent to them. Customers have been provided with credit and must therefore bear the responsibility jointly with the credit company, in being wise with its use. Therefore, once the exercise is complete, my colleagues and I will monitor the account for a 3 month period before transferring it back to the branch for the customers to 'look after themselves'. Naturally, if the customer elects to commit financial suicide and create more debt, then there is limited opportunity for the Bank to stop them....since we do not reside in a military/police state, but instead, a democracy. The Bank can provide such support and does in so many ways, however, this is not good enough media as naturally, everyone thinks that Banks and other financial institutions will forever, need a good kicking, so they never report such news. Like the old saying...'dog bites man' (not news) / 'man bites dog' (THAT's news!). The compliments and thanks that my colleagues and I receive is certainly a great appreciation, but its not newsworthy for the media to show how we are helping, so instead they find ways to say how we are all (and yes, they paint us all with the same brush) are money-grabbing parasites, but they fail to tell the public that we want to help. The underlying reason (and I'm not seeking to hide this at all) is not only to assist the customers and retain them for the future where we can earn interest from their deposits, but to ensure that we gain repayment of the capital we invest in them, plus interest. I believe the industry average for bad debt is somewhere in the region of a few pence in the £1 on an unsecured basis. That's bad business. Good business is to assist where we can (that regrettably, means that not every customer is able to be assisted, if the financial predicament they are in does not reflect the affordability to help them get back onto a strong path) to ensure we maintain that customer. Who knows, they may learn well from the experience and become a stronger person in the future and that can only be a benefit to themselves and all those with whom they come into contact. That has to be good, doesn't it!

It is a matter really of changing your habits and perception of money and what it can buy. If you consolidate your debts into one payment and then continue to spend like there is no tomorrow; there won't be one. It is better to consolidate debts and get them under control than default on debts. I spent a little extra in December but came out of it debt free and although I can afford what I want not; I buy what I need and continue to invest and save. It's the money saved in the past that makes me debt free now and it's today's investments that will mean a better future.

I hope the Greek, Italian, UK, American governments, well the whole world apart from China and Canada read this article