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Debt management companies: Beware

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No doubt you have seen television adverts, received phone calls or text messages promising to write off your huge outstanding debts at one time or another. If so, you have been the target of a debt management company.

With the average household debt over around the £54,000 mark and the total outstanding personal debt hitting £1.424 trillion, it’s no surprise that a few of us have turned to debt management for help. There are numerous charities and not-for-profit organisations out there, helping those that are struggling to make ends meet. They are able to provide impartial advice on the options available and the best route out of debt.

It all sounds fairly hunky dory. Well, it is until you stumble across debt management companies that charge a fee. They offer similar services to the Citizens Advice Bureau, StepChange (formerly the Consumer Credit Counselling Service) and National Debtline, but instead of providing the guidance for free, they will charge you for it.

Now, I’m not saying that you shouldn’t go with one of these companies. After all, many are legitimate businesses. However, a reputable firm will advise you of any fees they charge at the beginning of the process. If you find a company is not being completely transparent, it’s worth steering clear.

StepChange has warned that “It is a myth that fee-charging debt management companies provide a faster service that the free debt counselling and support that charities such as the CCCS provide”.

Choosing a fee-charging debt management company

It’s important to remember that while it makes more sense to use the service from a free debt advisor, not all debt companies are cowboys. If you would rather contact one of these firms, keep a few things in mind:

• Research: debt management companies receive feedback and complaints, just like any other business. Take a look online to see what other users have to say about the service provided.

• Contact: narrow down a list of potentials and contact them all. The initial discussion shouldn’t involve any fees, but they should inform you about them. See what each company has to say about themselves and your situation to help you decide who to go with.

• Ask: if the company is not willing to part with information on their own accord, don’t be afraid to ask questions. You will be handing over your money to this company, so make sure you’re getting the best possible service.

• Mis-leading names: fee-charging commercial companies should never claim to be a charity or non-profit organisation. If the name of a company suggests it doesn’t charge for providing advice and debt assistance, try to avoid it as if they’re being shifty with their name, they’re likely to be shifty elsewhere too.

Debt management problems

Where to go for free debt advice

If you’d rather take the more sensible option and seek advice from a debt charity or other non-profit organisation, there are plenty of places to turn. Although it can be difficult facing up to debt problems, it’s much more beneficial to get the help you need for free, rather than pay someone else for it.

Here is a list of some of the best charities and organisations providing free, independent debt help and guidance:

Citizens Advice

Website: http://www.citizensadvice.org.uk/

Telephone: 08444 772 020 (Wales), 08444 111 444 (England)

Online help: http://www.adviceguide.org.uk/

StepChange

Website: http://www.stepchange.org/

Telephone: 0800 138 1111

Online help: http://www.stepchange.org/Debtremedy.aspx

National Debtline

Website: http://www.nationaldebtline.co.uk/

Telephone: 0808 808 4000

Online help: https://www.mymoneysteps.org/

Debt Advice Foundation

Website: http://www.debtadvicefoundation.org/

Telephone: 0800 043 4050

Online help: http://www.debtadvicefoundation.org/debt-tools

Christians Against Poverty

Website: https://capuk.org/

Telephone: 01274 760720

Online help: https://capuk.org/i-want-help/cap-debt-help/self-help

Civil Legal Advice

Website: https://capuk.org/

Telephone: 0845 3454345

Online help: https://capuk.org/i-want-help/cap-debt-help/self-help

Payplan

Website: http://www.payplan.com/

Telephone: 0800 2802816 or 020 7760 8980

Business Debtline

Website: http://www.bdl.org.uk/

Telephone: 0800 197 6026

 

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About Jemma Porter

About Jemma Porter

Jemma Porter is an experienced content creator who has written for a number of online publications. A self-confessed penny pincher; she's often found seeking out the best personal finance deals.

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