insight
Evidence type: Insight i
Qualitative research is more exploratory, and uses a range of methods like interviews, focus groups and observation to gain a deeper understanding about specific issues - such as people’s experiences, behaviours and attitudes.
Quantitative research uses statistical or numerical analysis of survey data to answer questions about how much, how many, how often or to what extent particular characteristics are seen in a population. It is often used to look at changes over time and can identify relationships between characteristics like people’s attitudes and behaviours.
There are currently a range of debt management options on offer for individuals, the availability of which is dependent on a number of factors, including the type of debt, whether the person in debt has sufficient income to afford repayments and as well as personal circumstances. If an individual has no money to pay off debts and their circumstances are unlikely to change in the short-term, they have limited options for dealing with their debts. If an individual does have sufficient income to repay their debts, then the number of options is wider.
The focus of this study is on informally negotiated debt repayment arrangements including debt management plans and self-negotiated arrangements (either using a self-help model or via a third party agency), and the Debt Arrangement Scheme (a formal scheme) that is only available in Scotland.
This research sought to provide new evidence on peoples’ use and experiences of debt management plans (DMP), self-negotiated repayment arrangements (SNA) and the Debt Arrangement Scheme (DAS) in Scotland, and the sustainability of repayments made while in these arrangements.
The aim of the research was to understand the consumer experience of being in a debt repayment arrangement.
More specifically the research sought to understand:
The results of the research are intended to inform the policies and behaviour of creditors, debt management companies and the debt advice sector in how best to support their customers through debt repayments to help prevent repayment arrangements from failing. The research also seeks to provide evidence for Government policy in relation to a protocol on best practice and the need for a statutory debt management scheme in England and Wales.
The research had both qualitative and quantitative elements, including an online survey and follow-up interviews with a selected group of survey participants.
Affordability: Drawing on all of the evidence from this research study, the key factor determining whether debt repayments were sustainable or not was affordability.
Debt size, repayment amount and work status:
Analysis of the survey data shows that ease of repayment was linked to:
Unexpected circumstances: Unexpected changes in circumstances made debt repayment arrangements more or less affordable. Positive changes in individuals’ circumstances enabled them to increase their regular repayment amount, or to pay off a lump sum and complete their debt arrangement sooner. Detrimental changes in individuals’ circumstances, such as a job loss, relationship breakdown, or household bills going up, made repayment amounts less affordable.
Affordable repayments: Qualitative evidence highlighted the importance of careful budgeting to ensure that repayment amounts are set at an affordable level. Where repayment amounts were set at an affordable level at the outset, on-going repayments were easier to sustain.
Creditor behaviour: The behaviour of creditors and debt management companies influenced the success of repayment arrangements. Survey respondents who found it easy to manage their debt repayments were significantly more likely to say their creditors had been helpful than those who found repayments difficult.
Motivation: The motivation of individuals was not a key factor in whether repayment arrangements were sustained. Interviewees had a strong desire to pay off their debts and see their arrangements through. Even interviewees who were struggling or had failed to sustain their repayments still wanted to pay off their debts.
Methodological limitations:
Relevance:
Generalisability/ transferability:
Sustaining debt repayments: Experiences of people in informal repayment arrangements
Graham Lindsay - Group Director for Responsible Business, Lloyds Banking Group / Joanna Elson - Chief Executive Money Advice Trust