Initiative to improve the situation for debtors

A new scheme to help people struggling with personal debt on credit and store cards as is being trialled by the department for Constitutional Affairs (DCA).

The national initiative to help people deal with their debt problems will be trialled over the next year.

Under the new system Pre-Action Notices (PAN) will be issued as an alternative to court action.

PAN's encourages earlier and more constructive dialogue between creditors and debtors. They ensure the debtor is clear on the amount they owe and give advice as to where they can receive help.

"The PAN will ensure that debtors receive information on the options available to them to avoid court action. It will mean that debt problems can be resolved earlier without the need to go to court," said Baroness Cathy Ashton, the DCA's under-secretary of state.

Some people struggling with seemingly unmanageable debt can improve their situation by taking out a personal loan. By consolidating the spread of debts on credit cards and store cards they can reduce interest rates, monthly repayments and reduce the risk of defaulting.