# Pros and cons of Debt Managment Agencies



## frostie (26 Jul 2011)

For anyone who is in financial difficulty, the appeal of these sites you will see on Google when you look for 'debt help' or 'debt advice' could be the answer to your prayers. The fact is that the new 'Irish Government Insolvency Act' does not actually exist!

The majority of debt management companies who offer this service are generally UK-based, and as the industry as it stands is unregulated, outside the scope of any regulatory body in Ireland. What they are offering is a poor alternative of the UK's Individual Voluntary Arrangement.

Be advised, the closest alternative we have here in Ireland is called a Formal Scheme of Arrangement, where a portion of your debt can be written off. The difference is, that where the UK put through over 50000 IVAs in 2010, in Ireland, only 10, yes 10 Formal Schemes were entered.

The reason for this is that in Ireland any FSA must go through the High Court, and there are huge risks involved in even proposing one. If less than 60% of your creditors agree, the FSA will fail and you will probably be declared bankrupt immediately. The cost of an FSA is similar to bankruptcy, up to €30000, sometimes more.

Generally these sites offer this as a hook, to get you to pay up your initial fees first, then tell you that you can only enter a 'Debt Management Plan(DMP).'

Until new legislation becomes a reality in 2012, a DMP is generally the only real solution to dealing with your secondary debts such as credit cards and unsecured loans. But again, beware of the charges you are agreeing to. Most of these companies charge one, two or even three months worth of charges, subject to a minimum of €500 a time. 

The result is that your creditors will not receive any payments until your initial fees have been paid to the management company, potentially up to six months, seriously damaging an already fragile relationship with these creditors.

Look carefully at the small print, ask what the costs of a debt management plan are, as any DMC worth their salt will offer advice free of charge, and only charge you the equivalent of your disposable income for one month as a set up fee. The problem is, that when you have paid a large initial fee, there is less of a reason for that management company to ensure you stay on track with your plan. If you opt out, or run into difficulty further down the line, they are less likely to assist you.

www.frost.ie


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## Luternau (30 Jul 2011)

" 





> "Write off up to 90% of debt - New Government Insolvency Act"





> The fact is that the new 'Irish Government Insolvency Act' does not actually exist!



What is the point of mentioning an act that does not exist? This seems more like an advert highlighting your company's services rather than offering advice or asking a question about the lack of modern debt management remedies in Ireland.


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## frostie (6 Aug 2011)

Luternau said:


> "
> 
> 
> What is the point of mentioning an act that does not exist? This seems more like an advert highlighting your company's services rather than offering advice or asking a question about the lack of modern debt management remedies in Ireland.



I want to make people aware that this act does NOT exist, while others  are advertising that it does. The purpose being that there are  legitimate debt management companies out there, including MABS, who do not charge  excessive fees, and who do not bluff people into taking up the  ridiculaous offers that companies like this make - just google debt  management or debt help and you'll find out who they are. These are the  people giving legitimate companies a bad name - you'll probably have  heard their name on Joe Duffy etc.

I have constantly been on to the financial regulator, national consumer  agency, advertising standards authority, central bank, financial  ombudsman, competition authority et al, yet none are in a position to do  anything about misleading advertising on the web.

The fact is that this misleading advertising, and the industry in  general, is completly unregulated, something which we have challenged,  yet most recently, a bill before the Oireachtas to set down remedies and  codes of conduct etc was blocked in the Seanad by the government, the  Family Home Bill, which had attached, the Debt Advisors Bill.

That is exactly the point I am making - that there are virtually no debt  remedies, except through negotiation through a debt management plan,  and the fact that these guys are offering something that just doesn't  exist is something that the public should be aware of. Some of these  companies offer solutions, and extort money from people in dire need,  only to turn around and tell them after fees are paid that 'no you can't  qualify now to write off 80% of your debt, but you can go into a debt  management plan.' 

It's nothing short of thieving from desperate people, when a debt  management plan was the only option from the outset. Just want to make  sure that the public are aware of it.


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## Bronte (8 Aug 2011)

frostie said:


> . The purpose being that there are legitimate debt management companies out there, including MABS, who do not charge excessive fees, .


 
That is misleading. MABS is free, impartial and is guaranteed to work in the interest of those in financial difficulty.  Why anyone would pay someone, particularly when their problem is debt,  when MABS is free is beyond me.


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## frostie (8 Aug 2011)

Bronte said:


> That is misleading. MABS is free, impartial and is guaranteed to work in the interest of those in financial difficulty.  Why anyone would pay someone, particularly when their problem is debt,  when MABS is free is beyond me.



While MABS is free, and they do excellent work, there is at present a long waiting list for people who are in financial difficulty, to get an appointment with MABS. The approach is also slightly different.

The difference between MABS and commercial DM companies is that while MABS will advise the customer and point them in the right direction, commercial debt management companies effectively take the customer by the hand from point of contact right through to the end of the process, and 'consolidate' the monthly repayments into a single payment, and then disperse the payments to creditors. So instead of managing a number of creditors themselves, the customer, generally does not require any further contact with their creditors.

It takes the stress off the customer, and having examined the customers income and expenditure, the customer can get on with their life, just making sure to pay their ordinary bills, rent/mortgage, groceries etc, and their other debt is taken care of in one payment.

The DM company also deals with any hassle the customer would normally get, eg credit card companies calling them every day. One of the major problems customers have is that despite all the best intentions, they make promises to creditors that they cannot afford to keep. Instead of contacting the customer directly, the creditor has a point of contact who the creditor can contact if there are any problems that may arise. 

Also, because the nature of any debt management plan is flexible, it means that should there be the possibility of a missed payment for example, the customer can contact their management company to liaise with the creditors, instead of having to contact all of their creditors individually themselves and then being cornered into paying extra to catch up on arrears - again money they cannot afford to pay out.

Creditors also accept the role of debt management companies, and the negotiation process is much easier. As the creditor is no longer dealing with the customer, the creditor also understands that they can't badger the customer for more than they can afford to pay, ie putting their debt ahead of another creditor.

Another benefit for the creditor and customer alike, is that the creditor would have expensive debt collection and legal fees, which would ultimately be added to the customers debt, and these are avoided with a managed plan, and in many cases interest and charges suspended, but this can be very difficult for a customer to negotiate on their own.

Commercial debt management works fine in the UK and has done for years, and it is beginning to take off here. With government legislation expected to be brought in by March 2012, commercial debt management companies will be the only way forward, as MABS cannot take on additional staff - it is funded by the taxpayer, and under the same employment embargo as other public sector bodies - the whole new system would be unworkable.

The IMF have instructed the government to get personal insolvency legislation in place by March 2012, and it is expected to closely follow along the lines of the UK approach including debt relief orders, IVAs, administration orders, etc, so commercial debt management will be the future. But the problem is lack of regulation, as stated earlier. There needs to be robust protection for consumers, regulation by the central bank, along with licencing and heavy penalties for DMs that do not follow guidelines and legislation, or take advantage of people in difficulty.


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## Slim (8 Aug 2011)

frostie said:


> While MABS is free, and they do excellent work, there is at present a long waiting list for people who are in financial difficulty, to get an appointment with MABS. The approach is also slightly different.
> 
> The difference between MABS and commercial DM companies is that while MABS will advise the customer and point them in the right direction, commercial debt management companies effectively take the customer by the hand from point of contact right through to the end of the process, and 'consolidate' the monthly repayments into a single payment, and then disperse the payments to creditors. So instead of managing a number of creditors themselves, the customer, generally does not require any further contact with their creditors.


 
In my experience, and I have some, MABS are much more 'hands on' than you suggest and they also have a standing as far as the civil courts are concerned. They will frequently contact creditors on behalf of clients and set up budget plans and negotiate repayments on their behalf.

Having said that, there are waiting lists to see them and companies like yours have some role in society nowadays. I also think you were quite upfront about your commercial links and should not be castigated for pointing out sharp practice by your UK based competitors. I notice that your firm is part of a larger UK based company. Is there any way your parent company can bring these inaccuracies to the attention of your fellow UK debt management companies?

slim


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## frostie (8 Aug 2011)

Slim said:


> In my experience, and I have some, MABS are much more 'hands on' than you suggest and they also have a standing as far as the civil courts are concerned. They will frequently contact creditors on behalf of clients and set up budget plans and negotiate repayments on their behalf.
> 
> Having said that, there are waiting lists to see them and companies like yours have some role in society nowadays. I also think you were quite upfront about your commercial links and should not be castigated for pointing out sharp practice by your UK based competitors. I notice that your firm is part of a larger UK based company. Is there any way your parent company can bring these inaccuracies to the attention of your fellow UK debt management companies?
> 
> slim



I agree with what you say about MABS, but it seems to be a case of "that was then and this is now" probably because of the demands on their time. I am aware that MABS used to do this, but more frequently, we are receiving calls from people who MABS are unable to help. 

To be honest, we have tried every avenue to deal with these rogue debt management companies, whether directly or through the authorities, but ultimately as there is a lack of regulation here, they have no intention of changing their ways. It's working for them! I've also phoned them directly where a number can be found, and researched domain name ownership, but 99% of these use a domain shield to hide the identities of owners, and are registered outside of the EU. It's an extremely frustrating and difficult problem to have addressed.


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## Alwyn (8 Aug 2011)

Hi Frostie, your posts are very informative.

I had dealings with a very reputable DM company in the UK. I got speaking with one of their guys who told me that the establishment over here tried all ends up to cause difficulties for them doing business in this country.  If this is true it is maddness that they would focus on that aspect rather than putting the rogue companies out of business.


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## frostie (8 Aug 2011)

Boomtobust said:


> Hi Frostie, your posts are very informative.
> 
> I had dealings with a very reputable DM company in the UK. I got speaking with one of their guys who told me that the establishment over here tried all ends up to cause difficulties for them doing business in this country.  If this is true it is maddness that they would focus on that aspect rather than putting the rogue companies out of business.



Very true Slim, but what is so frustrating is that not even the Advertising Standards Authority in Ireland can act against this. A huge part of the problem is that there is a serious lack of education in the realms of what debt management actually is.

We actually had a lot of difficulty at the beginning ourselves, even opening a bank account took months through the banks head office, before they understood what it is we actually do. It seems to be the usual thing in this country, that if you go through the proper channels, you are met with red tape and bureaucracy, whereas efforts would be better spent in regulating the industry properly.

Things such as outlining fees charged, terms of business, a code of practice etc combined with a licence to operate from the central bank would be a good starting point, and if a company proposes to operate in Ireland, they should have a registered, occupied office here. It would lend to some form of credibility at least!

As an example, if we wanted to operate in the UK, we would have to have a staffed office there to be able or we couldn't take on a single client, and would also not be in a position to get a licence to operate in the first place. In Ireland, a website with no obvious contact information, telephone number or address, other than a form to submit information for a call back, is sufficient as a presence to allow these companies to trade.


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## Alwyn (8 Aug 2011)

Yes they also mentioned that they had difficulties opening up a bank account etc and some institutions got pretty annoyed with their involvement and kept giving them the run around by requesting regular documentation. 

Funnily enough my mortgage providers were more than happy when I engaged the DM company.  They thought I was being very pro-active!

Most of my debt now, is secured so there is very little a DM can do for me unless I go down the bankruptsy route (which is looking more than likely)


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## frostie (8 Aug 2011)

Boomtobust said:


> Yes they also mentioned that they had difficulties opening up a bank account etc and some institutions got pretty annoyed with their involvement and kept giving them the run around by requesting regular documentation.
> 
> Funnily enough my mortgage providers were more than happy when I engaged the DM company.  They thought I was being very pro-active!
> 
> Most of my debt now, is secured so there is very little a DM can do for me unless I go down the bankruptsy route (which is looking more than likely)




They generally are happy to deal with DMs, as debt management companies do have the experience required to deal with this, and some creditors are more than happy when DM companies get involved, as it can also save the creditor a lot of leg work too. 

I don't know your circumstances, but bankruptcy is rarely a good option - it costs thousands here. You may have other options though, for example in the UK - it's extreme though as you would have to uproot your life and move to the UK, but if the debt is so substantial that you wont really have much of a life under bankruptcy here, it may still be worth considering. Generalised comments I know, but bankruptcy here, even though it was changed to a 5 year term, the terms of getting the bankruptcy discharged are still punitive to say the least. As I mentioned earlier in the thread though, insolvency legislation under the IMF deal has to be in place for March 2012, so there may be some light at the end of the tunnel.


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## netz (9 Aug 2011)

If something appears to good to be true, it usually is. MABS are fantastic, free, and have helped me negotiate with BOS, PTSB and MBNA, getting interest and charges frozen. But best of all, it was me who did it, with their guidance, and that self confidence goes a long long way to positive thoughts. And at least I know that in 4 years, the only debt I will have is my mortgage. If I had gone for DM, and I nearly did in April, I would be in debt for 28 years, paying the company a set amount each week - that adds up to a lot of money over 28 years. Thats how they can reduce your payments by 80% or 90%, your time in debt multiplies by 700%!! For some people it will work, especially for people who have medium to long term loans, and to be fair, I would rather see a private company make some kind of profit which can be put back into the economy, than to keep paying the big back holes which Irish banks have become.


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## frostie (9 Aug 2011)

netz said:


> this agreement stays in place for many years - in my case about 28 years,
> 
> These companies want to sell your debt to third parties ie. debt collection agencies. These agencies "buy" your debts from the lender, usually at less than half of what you owe
> 
> ...



I agree with some of what you say, but you have got the wrong end of the stick about most of this. 

Any debt management plan is flexible, no matter who it's with - you can leave whenever you like - it's not contractual or legally binding. You are right to read the small print, and check out any company online - if they have nothing to hide they should have their actual contact details available, outline their fees and T&Cs for all to see - our website has all the terminology outlined to clarify the fact that you can leave a plan whenever you want, see the t&cs - [broken link removed]

Secondly most people who come to a debt management company like us are already in difficulty with debt collection agents. I do agree that some debt management companies try to get two bites at the cherry though - the Consumer show on RTE highlighted an Irish Dublin-based company who were ripping people off, although the Consumer Show didn't realise that they were also a debt collection company as well - they have since changed their name and rebranded since the show, but are still in operation.

A Debt Management company is completely the opposite of a Debt Collection company, and any management company of decent repute would not get involved in this - we certainly don't, nor do we 'buy' debt and re-sell it - that's insane, because it's a cycle of diminishing returns and certainly not profitable either. There is also a serious breach of trust, conflict of interests, and potentially a breach of confidentiality. 

Strangely data protection doesn't seem to come into it, because again in Ireland, regulation is so weak, that although MABS and DM companies hold confidential financial and personal information, there is no requirement to register with the Data Protection Commissioner!

The point I made earlier was that this 80% write-off might be a reduction in what you make as a payment, but not to the overall debt at all - over the period of the plan, you would chip away at your debt at repayments which are affordable to you, rather than the higher individual agreed rates you have with your creditors, but ultimately the debt has to be repaid in full - there is no quick fix, as the false advertising suggests, however settlement lump-sum write-offs can be done for example if you had a redundancy or insurance payout. As you also stated, if your circumstances improve, you can leave the plan, or maintain and increase your repayments to your creditors, getting you to the end of your plan sooner.

Another fact is that a debt management company cannot just take your money and declare you bankrupt in the UK - don't know what you mean by that.

As stated earlier, they are not coming here, UK companies are operating here. And again the reason for this is that  there is a market for it in Ireland, MABS are stretched, and there is no legislation in place to regualte the industry. If a UK based company is operating legitimately here, and keeps everything above board, then there's no issue.

www.frost.ie


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## frostie (9 Aug 2011)

Sorry netz, don't know where your post went!


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## Bronte (9 Aug 2011)

netz said:


> If I had gone for DM, and I nearly did in April, I would be in debt for 28 years, paying the company a set amount each week - that adds up to a lot of money over 28 years. Thats how they can reduce your payments by 80% or 90%, your time in debt multiplies by 700%!!


 
That's a very good point netz, probably should be put in a key post about what to watch out for when you go to debt management companies.  Glad that MABS was of such help to you, it's good to know for others on here that there is free impartial advice and maybe they have a bit of a backlog but from other's I've heard in really bad cases they take you nearly immediately.  In any case what's a couple of weeks wait in the scheme of things, nothing is going to happen overnight.


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## netz (9 Aug 2011)

frostie said:


> Sorry netz, don't know where your post went!



Sorry Frostie - I edited my original as it was a bit like a novel.....


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## Alwyn (9 Aug 2011)

MABS are doing mammoth work but I cannot forsee them being consistantly pumped with money.  The money is just not there.  I think a lot of people compare DM's with DC's.  I know I did.


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## kaplan (16 Sep 2011)

looks as if commercial debt managers are to be regulated and prevented from handling clients money - which will of course undermine their business model which is based commission driven sales to generate revenues from fees levied on their payment services. Seems to be a few trolls here defending what is labelled a high risk consumer protection business in the UK.


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## frostie (16 Sep 2011)

kaplan said:


> looks as if commercial debt managers are to be regulated and prevented from handling clients money - which will of course undermine their business model which is based commission driven sales to generate revenues from fees levied on their payment services. Seems to be a few trolls here defending what is labelled a high risk consumer protection business in the UK.



I'm sure that if you read my earlier comments you will see that regulation is exactly what is needed in the industry here, to bring the industry up to standard. As for not being permitted to handle clients money, how do you propose that legislation will be passed. Will it be the same thing for solicitors for example, not being allowed to handle client's money?

Debt management in the UK is hardly 'high-risk' and it's very heavily regulated. Licences are required, data protection laws must be complied with, and compliance under the OFT regulations is also required. The reason it has such a bad name in Ireland is the distinct lack of regulation.


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## kaplan (16 Sep 2011)

@fostie debt managers are listed as by the OFT and they are not regulated - they are licensed by the OFT and required to comply with its code. Readers should consider the OFT's compliance review for insight into its concerns which have also been reflected here in Ireland. 

Your point on solicitors is a naive deflection - debt managers are payment service providers and will have to be authorised and supervised by the central bank. They have a [broken link removed] in the UK where the OFT has recently cracked down - see here also and here and here 

Can you point to an independent, objective justification of the business model by a reputable agency? One that is backed up by empirical evidence and facts- not the soft sell rhetoric and marketing hype of relieving people of stress?


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## Mpsox (16 Sep 2011)

Whatever services the OP offers, it certainly isn't cheap. I do wonder about the wisdom of someone deep in debt paying out up to €500 in initial fees and another potential €1200 a year after that. If i was a creditor and was contacted by you, I'd be thinking, if the debtor can afford to pay this company, they can afford to pay me.


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## frostie (16 Sep 2011)

kaplan said:


> @fostie debt managers are listed as by the OFT and they are not regulated - they are licensed by the OFT and required to comply with its code. Readers should consider the OFT's compliance review for insight into its concerns which have also been reflected here in Ireland.
> 
> Your point on solicitors is a deflection - debt managers are payment service providers and will have to be authorised and supervised by the central bank. They have a [broken link removed] in the UK where the OFT has recently cracked down - see here also and here
> 
> Can you point to an independent, objective commercial justification of the business model by a reputable agency?



How can you say they are not regulated, when you post about how the OFT has come down on DMCs who do not follow the rules? 

I agree completely with what the OFT has done, and agree completely with heavy regulation in the industry here. DEMSA and the DRF are consistently working with the OFT to improve not only the image, but also the operation of DMCs in the UK. The UK also has the CCCS which is not-for-profit, as MABS is here.

You seem to be keen to bundle all DMCs into the one basket. My point re solicitors money, is that here you have good solicitors, legitimate solicitors, but you also have the 'bad eggs' who misappropriate client funds. In the UK, reporting procedures are in place to act against DMCs who do this from outside and inside the industry.

Why are you so against commercial debt management? The debtor pays, not the taxpayer. And if someone is taken to court for a debt, they will usually employ a solicitor at a much higher cost, who will deal with the single issue of that debt in the court, whereas reputable DMCs charge very modest amounts of money to professionally deal with every aspect of a client's financial difficulties, including handling the distribution of payments for the client and in most cases preventing the issue getting to court at all.


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## frostie (16 Sep 2011)

Mpsox said:


> Whatever services the OP offers, it certainly isn't cheap. I do wonder about the wisdom of someone deep in debt paying out up to €500 in initial fees and another potential €1200 a year after that. If i was a creditor and was contacted by you, I'd be thinking, if the debtor can afford to pay this company, they can afford to pay me.



If it was the case that creditors did not agree at all, there would not be a business, but the creditor is satisfied that the offer on the table, usually a pro-rata payment according to the amount owed, is all that the client can afford. Half a loaf is better than no bread at all, it means that they are no longer spending money on debt collection measures and legal costs persuing debts which may ultimately prove irrevocable, or too expensive to collect. Most creditors accept the legitimacy of what we do. By the way, in most cases here, with some of the less reputable DMCs, €500 is the minimum payment. To give you an example, our fees average at €220, with approx €30 a month being the normal monthly fee. 

You would need a serious amount of disposable income to end up paying €1200 a year in fees, and if you had this disposable income, you would need to have an incredible amount of debt to be on a plan long enough

We do this from the point of view that if someone can only afford €200 a month, if going with another DMC, the creditors will not get paid for four months. This leaves the client out on a limb for too long, and leaves them exposed to whatever measures the creditor may decide to take. Anyone who comes to us for help, as should be the case with ALL DMCs, should get assistance immediately, and again it is something that we need regulation to support.


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## kaplan (16 Sep 2011)

Debt managers in the UK are not regulated - there is no legislation governing their activities. You have not addressed my question which is your opportunity to demonstrate why commercial debt managers should exist at all. 

*Can you point to an independent, objective justification of the business model by a reputable agency? One that is backed up by empirical evidence and facts- not the soft sell rhetoric and marketing hype of relieving people of stress?*


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## frostie (16 Sep 2011)

Read the thread as to why the practice is justifiable! It works for creditors, who ultimately decide whether or not to accept a repayment proposal, and it works for the debtors, who would otherwise not enter a plan if they could reasonably manage on their own. It gets debts repaid, the person in debt pays for the servicing of their own debts, MABS cost €18million to run last year, and dealt with 18000 enquiries.  This cost the taxpayer €1000 for every person they dealt with! And yet we have people contacting us for assistance, because MABS were unable to assist them. And by the way, I think it's extremely cynical to cite 'relieving people of stress' as marketing hype and rhetoric. When you hear some of the cases of attempted suicide and families splitting up at the coal face of this debate, people we deal with every day, you may be a bit more reasoned in your approach.


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## kaplan (16 Sep 2011)

Enough of the rhetoric and PR spin of relieving people of stress and preventing suicides - it's an exploitative, abusive and manipulative sales pitch to flog debt management plans to vulnerable financially unsophisticated people.

You answer is again a deflection - can you justify with supporting reputable evidence the economic business case for commercial debt managers? You might also indicate whether or not your business has been required to justify authorisation as a payment service provider by the central bank.


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## frostie (16 Sep 2011)

kaplan said:


> Enough of the rhetoric and PR spin of relieving people of stress and preventing suicides - it's an exploitative, abusive and manipulative sales pitch to flog debt management plans to vulnerable financially unsophisticated people.
> 
> You answer is again a deflection - can you justify with supporting reputable evidence the economic business case for commercial debt managers? You might also indicate whether or not your business has been required to justify authorisation as a payment service provider by the central bank.



Financially unsophisicated people? So everyone in debt in the country is financially unsophisticated?

Re Authorised payment service provider, no we are no required to do so, and if you had read the thread you would see that this what we believe is required. We are also not required to register with the Data Protection Commissioners, despite holding sensitive information, again something I do not agree with. Apart from that, you are badgering about a lack of regulation, when I have said from the outset that I want to see regulation in the industry, so that people like yourself with a rigid pre-determined judgement without knowing the ins-and-outs, have nothing further to complain about! What more do you want to hear? 

Lets look at this another way, if you were critically ill, would you spend four months on a waiting list or would you go private? Same thing here, people are in critical need of help with their finances, and nobody is forcing them to use our service, but better that they get help as soon as they can, than sit in the dark as things get worse.

From an economic case, if it works for the creditor as I have shown above, and it works for the debtor, as I have also shown above, who are the only parties concerned here, what difference does it make what your opinion is? I think I've more than answered your questions at this stage.


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## Mpsox (16 Sep 2011)

frostie said:


> MABS cost €18million to run last year, and dealt with 18000 enquiries. This cost the taxpayer €1000 for every person they dealt with! .


 
MABS stats reports say they dealt with 25000 cases in 2010 and that their helpline has taken 30000 calls in the 12 months ending q2 2011. 

I'm not questioning your competence or the need to regulate your industry (badly needed), I just find profiting from others misery distasteful.


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## kaplan (16 Sep 2011)

For an entity only incorporated last April you make quite extensive claims to have relationships with "creditors" by which you probably mean regulated credit institutions. 

Perhaps you might explain why you imply on your website that your company is a member of two UK associations. I note the site says frost.ie is "part of the Frost Group" which is quite a small insolvency practice based in Croydon, London. 

You have not justified your business model yet.


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## wbbs (16 Sep 2011)

Don't want to continue the argument but I think there is a need from something between DM companies and MABS.   In fact I think MABS should charge for their service within reason, there should certainly be some sort of donation system where those that can afford something should pay it.  To simply divide out the cost of MABS per client doesn't really work either because a lot of their clients are long term who will never be able to manage their money on their own, the original clientele that it was set up for, MABS will be part of a team including social workers, cwos etc dealing with a proportion of their clients.

The newer debt problems 'the new poor' as we will call them with mortgage debt, possibly a buy to let as well, who are unable to manage because of the loss of one or more jobs are the ones who are swelling the MABS waiting lists.   Some of these still have income and not much budgeting skills due to never having to do it in the good times, I would sooner see them make a reduction in their eg Sky sub and pay a token amount for the service of MABS.  Obviously for cases where there is totally insufficient income then this contribution should be waived but it would help pay something towards the service or the money could be donated to the svdp or whatever.   Sometime people appreciate a service more if they have to pay for it.


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## frostie (16 Sep 2011)

kaplan said:


> For an entity only incorporated last April you make quite extensive claims to have relationships with "creditors" by which you probably mean regulated credit institutions.
> 
> Perhaps you might explain why you imply on your website that your company is a member of two UK associations. I note the site says frost.ie is "part of the Frost Group" which is quite a small insolvency practice based in Croydon, London.
> 
> You have not justified your business model yet.



Yes we do have very good relationships with regulated lenders and trade creditors. Yes we are part of the Frost Group, licenced insolvency practitioners in the UK recognised by the IPA and Institute of Chartered Accountants in England and Wales, yes we are members of IPA and R3, and yes you have managed to use both google and cro.ie, and yes all of this information as you quite rightly point out is on our website for anyone to see. What are you talking about justifying the business model, it's pretty straight forward. Starting to wonder who's trolling right now!


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## frostie (16 Sep 2011)

wbbs said:


> Don't want to continue the argument but I think there is a need from something between DM companies and MABS.   In fact I think MABS should charge for their service within reason, there should certainly be some sort of donation system where those that can afford something should pay it.  To simply divide out the cost of MABS per client doesn't really work either because a lot of their clients are long term who will never be able to manage their money on their own, the original clientele that it was set up for, MABS will be part of a team including social workers, cwos etc dealing with a proportion of their clients.
> 
> The newer debt problems 'the new poor' as we will call them with mortgage debt, possibly a buy to let as well, who are unable to manage because of the loss of one or more jobs are the ones who are swelling the MABS waiting lists.   Some of these still have income and not much budgeting skills due to never having to do it in the good times, I would sooner see them make a reduction in their eg Sky sub and pay a token amount for the service of MABS.  Obviously for cases where there is totally insufficient income then this contribution should be waived but it would help pay something towards the service or the money could be donated to the svdp or whatever.   Sometime people appreciate a service more if they have to pay for it.



You're right, MABS was originally intentioned for ordinarily low-income families and individuals, to deal with the likes of utility bill arrears and smaller debts etc but demand for their services has mushroomed because of the downturn, and they simply cannot cope with demand caused as a result of the mortgage crisis and credit-fuelled explosion. 

Funny you mention Sky, it's one of the first things that stands out as an issue when we do an income and expenditure, and the first instruction is that they must reduce it - they don't have to get rid of it, but switching to the basic package is €50 a month less. We wouldn't even put it to creditors with €75 a month for Sky, for the simple reason, they wont accept the proposal.

Part of what we also do, because so many people are relatively new to the Social Welfare system is to look into any benefits they can claim, and this can mean the difference of several hundred a month, and the difference between having a disposable income or not, to help them pay their bills, for example, many believe that jobseekers isw the only benefit they can get if they have lost a job, and don't even know about Family Income Supplement. We make sure that they get the full picture, and whatever they are entitled to in order that they can pay their debts.


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## kaplan (16 Sep 2011)

No trolling going on here - you are the one who opened the thread and invited scrutiny. 
When you say you are part of the Frost Group - which, established in 2005, is quite a small company having a net worth of Stg174k on last filed accounts - does this mean you are a wholly owned subsidiary company? Or are you simply a stand alone Irish company some of whose directors and sharholders are also directors and shareholders of Frost Group? What relevence does Frost Groups' membership of the IPA and Institute Chartered Accountants have to the operations of a debt management company in this juridisdiction - I note that Frost Group appears not to be a debt manager in the UK.


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## frostie (16 Sep 2011)

Mpsox said:


> MABS stats reports say they dealt with 25000 cases in 2010 and that their helpline has taken 30000 calls in the 12 months ending q2 2011.
> 
> I'm not questioning your competence or the need to regulate your industry (badly needed), I just find profiting from others misery distasteful.



I have to say that what we do is no different to what a solicitor or any other counsellor etc would get paid for, and it's a professional service. You are right though, and I agree that profiting from others misery is distasteful, but only when it is done in an ethically corrupt way, which if you look at the start of this thread, you'll see that it's exactly what I am warning people about. Ripping off vulnerable people is wrong. Pure and simple, and exactly what I was saying when I started this thread.

[broken link removed]


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## kaplan (16 Sep 2011)

*Debt Manager High Profit Business Model Exposed*

@ frostie/Frost Debt Solutions Ltd here’s a worked example of a debt management plan using your fee structure.

Couple with two kids having a mortgage and three other debts. Their net available disposable income available for loan repayments after paying their mortgage is €500 per month. They owe €25,000 on their three other debts in equal proportion. 

You would charge €500 for selling and setting up the plan and then charge €75.00 per month for the life of the plan which at €425 per month would last 60 months, if all three lenders agreed to freeze interest. If not then the plan would extend out for another 12-16 months. But let’s assume you are as well known to these lenders as you say you are and you manage to agree the repayment schedule. 

The couple will pay €500 for the plan, €25,000 to their lenders and a whopping €4425.00 in monthly fees to you. In short your fees will amount to 19.7% of the amount owing. I’ve been generous as I haven’t included for Vat which would reduce payments to the lenders by €15.75 a month extending the number of months to 61 months in which case you trouser €5075.00. 

*So the larger the monthly payment you "arrange" for, the larger your monthly fee and hence profits. And the larger the debt owing the longer your plan becomes generating even higher profits. *

Can you explain why you think charging such exorbitant fees is fair and reasonable? What happens if the company closes down? How solvent are you to support your ongoing operations? Can you list the lenders with whom you have agreements in place through which they accept payment proposals? How many staff do you employ and where are they located? Is it not the case that your plans are voluntary and lenders can continue with legal debt enforcement actions?

Equating professional legal or accounting services to selling debt management plans is balderdash. Are you saying that selling debt management plans is a professional service? Why? Who are your Irish principals and what qualifications do they have - your website is silent on this. You might answer the other questions posed above as well.


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## frostie (16 Sep 2011)

Firstly, if you think I'm listing all of the information you are asking for here, you are dreaming, because firstly the information would be of use to our competitors, secondly, there are no 'agreements' in place, the creditor decides on each proposal on it's merit and our reputation and trust earned from the companies we negotiate with, is why we are successful. 

The agreements are not legally binding - again read the thread for the umpeenth time - and the creditor is perfectly within their rights to pursue the client on their own but they do not in 99% of cases. If they took the client to court and the income and expenditure was presented, it would not only add to the collection costs to the creditor, but the offer put forward would be considered reasonable by any judge as all of their personal financial circumstances are presented. The companies we negotaite with are also entitled to carry out credit searches to see if other undisclosed debts are present, so it not worth anyone's while to hide debts for preferential treatment.

You can have other experience prior to the formation of a company, and our insolvency practitioners have over 80 years experience between them and have previously worked for KPMG and PWC to name a few. We are an Irish company with directors in both companies, based in Donegal. Frost Group is now a DMC in the UK but the majority of the work comes from liquidations, bankruptcies etc. We also have a network of QFAs who recommend us to their clients.

You cannot also arbitrarily say that a client has €500 disposable income. It takes time to establish this, after an initial consultation free of charge which can take up to two hours without obligation, and time to negotiate the plan in the beginning, which is why there is an initial fee. Unlike MABS which is funded by the taxpayer, when people pay this fee which they don't have to pay with MABS, they immediately show a commitment to clear their debts.

And I believe the fees are justifiable. A persons home is protected as we also deal with their mortgage problems, we investigate what extra benefits they can get to boost their income, we deal with any arrears they have on utilities and hire purchase issues, their unsecured debts are in hand, they don't have to juggle multiple payments, the plan is flexible and allows for unforeseen circumstances in the future, and allows for increased or decreased payments depending on their change in circumstances, the phone isn't ringing off the hook from the three creditors, they have a single point of contact for all creditors, and under terms of agreements made on their behalf, we also carry out 3, 6 and 12 monthly reviews of the clients circumstances. So yes €800 a year for a person in this situation would be a small price to pay to be debt free in 5 years.

VAT is also NOT applicable, and as you seem to have had the whole day on your hands, you can verify this with revenue, although I do have it in writing from them. Facilitation of an agreement on debt is VAT exempt as we do not assume the debt like a debt collection does. I appreciate your concern for the solvency of our company too, but you don't have anything to worry about there. And yes, on those conditions mentioned in general, interest and charges would be frozen with 99% of creditors unless the borrower was extremely reckless and got a 6k credit card for example, and just drew it all out in cash - there's no chance they would freeze the charges on that basis.

Can I ask what your solution would be, as you have plenty of questions, but few answers. Should people wait for MABS to help for three or four months and end up being told that they can't be helped (as has happened many of our clients - MABS is triage at the moment due to their workload), should they go to a solicitor and pay even more, should they go to the bank for debt consolidation loan and pay 18%+ in interest if unsecured, or extend their mortgage term into old age (a loan which would never be granted anyway), should they release whatever equity they have in their home, and again wait until this is refused, should they cancel their life insurance policies to save a few quid and live on grass?

We're open and honest about all of our dealings with clients, as you've got most of this info from our website. I'd appreciate if you'd spend as much time going after the less reputable companies I mentioned earlier - google debt management and they'll appear - and I can guarantee you wont find any of the information readily available from us, as easy to access, and as the thread started, these are the guys I'm chasing for misleading advertising and bad practice.


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## kaplan (17 Sep 2011)

*Debt manager transparency lacking in detail*

_Here's a list of questions you haven't answered yet:_

_When you say you are part of the Frost Group - which, established in 2005, is quite a small company having a net worth of Stg174k on last filed accounts - does this mean you are a wholly owned subsidiary company?_

_Or are you simply a stand alone Irish company some of whose directors and shareholders are also directors and shareholders of Frost Group? _


_Are you saying that selling debt management plans is a professional service? Why? Who are your Irish principals and what qualifications do they have - your website is silent on this. _

_Can you explain why you think charging such exorbitant fees is fair and reasonable? _

_What happens if the company closes down? _

_How solvent are you to support your ongoing operations? _

_F__or an entity only incorporated last April you make quite extensive claims to have relationships with "creditors" by which you probably mean regulated credit institutions. __Can you list the lenders with whom you have agreements in place through which they accept payment proposals? _

_How many staff do you employ and where are they located? _

_
Perhaps you might explain why you imply on your website that your company is a member of two UK associations. I note the site says frost.ie is "part of the Frost Group" which is quite a small insolvency practice based in Croydon, London. _
_ 
What relevence does Frost Groups' membership of the IPA and Institute Chartered Accountants have to the operations of a debt management company in this juridisdiction - I note that Frost Group appears not to be a debt manager in the UK. 
_
_You might also indicate whether or not your business has been required to justify authorisation as a payment services provider by the central bank. _

*Can you point to an independent, objective justification of the business model by a reputable agency? One that is backed up by empirical evidence and facts- not the soft sell rhetoric and marketing hype of relieving people of stress?*


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## frostie (17 Sep 2011)

Try reading the last post

Surprise, no answer to ANY question as yet that I have asked


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## frostie (17 Sep 2011)

kaplan said:


> _Here's a list of questions you haven't answered yet:_
> 
> _When you say you are part of the Frost Group - which, established in 2005, is quite a small company having a net worth of Stg174k on last filed accounts - does this mean you are a wholly owned subsidiary company?_
> 
> ...


troll


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## kaplan (18 Sep 2011)

@frostie
You opened this thread and have been posting elsewhere as a lead generation marketing tool. 

You are declining to answer questions that cut to the heart of your business model which is to sell debt management plans. 

Getting uppity when your thin marketing veneer is stripped bare contradicts your alleged transparency.

Commercial DMP's are high risk consumer products and you have done little to deal with this fundamental aspect of your business. Good at talking up what you would have people believe are the pro's you have failed to deal with questions exposing the con's.


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## frostie (18 Sep 2011)

kaplan said:


> @frostie
> You opened this thread and have been posting elsewhere as a lead generation marketing tool.
> 
> You are declining to answer questions that cut to the heart of your business model which is to sell debt management plans.
> ...



What cons or hidden catches are you talking about? People have to pay for the service? Of course they do. That's not a secret. Can they drop out of it whenever they want, yes. Is there a binding contract, no. "your thin marketing veneer is stripped bare" very dramatic -we hide nothing, it's all on the website in plain sight! 

A debt management plan is not suitable for everybody, and we tell people that, we give best advice and we don't sign people up for the hell of it. If a DMP isn't suitable, we help them in other ways, free of charge in many occasions.

The heading of this thread has also been changed since it began (not by me). It was originally a warning about DMCs who claim to be able to wipe out 90% of people's debts, which I posted, and again if you bothered reading it, you would see that.

If you don't like what we do, that's fine, but we have plenty of very  happy customers who are delighted with how their debts are being professionally managed.

Apart from that, the rules on touting for business were explained to me  by Brendan, but if anyone in debt needs help, and the aspersions cast by kaplan has cast any doubts about the service we offer, they can check it out for themselves and make their own mind up at www.frost.ie Your questions have turned this into a sales pitch as I have been quite rightly defending what we do, and the reputation of our company.


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## kaplan (18 Sep 2011)

Let's get a few things clear here; 

As Frost Debt Solutions Ltd was set up in April this year it can't have a reputation - yet. But it maintains its relationship with lenders (which it won't name) is so established that over 90% are willing to accept its payment proposals. 

It claims it's a member of the "Frost Group" which is a very small insolvency practice based in Croydon having about ten staff and a net worth of c€200k.

Whether Frost Debt Solutions is a wholly owned subsidiary of this very small British insolvency firm is unclear as the company has not responded to this question. 

Nor has the company indicated if it has to be authorised by the Central Bank as a payment service provider. 

And it has not provided any background on its principals or senior staff - yet it claims it provides a professional service.


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## frostie (19 Sep 2011)

Have answered all of these questions already, if you can't be bothered to read the responses previously given, that's fine.


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## Brendan Burgess (19 Sep 2011)

Folks

I think that the issue has been deal with sufficiently at this stage.

If either of you wants to write a Key Post on the topic summarising both sides of the argument, it would be a great help.

Brendan


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