Debt management companies are on the increase. It is a growth industry which is never short of customers who are struggling to get a grip on their debts. Unfortunately many turn to these companies which advertise to help sort their debts out, and pay a hefty fee for the service. Often the fees are structured so the debtors do not even realize how much they are paying, and the advice they receive is often geared to prolong the debt in order to prolong the continuation of the fees the debt management company receive. It is estimated that the average debtor pays 17.5% of their repayments to creditors in fees to the companies which ‘help’ them.
However there is no need for debtors to be taken in like this as there are organizations which can work with individuals to give debt advice for free. Some are registered charities and some are funded through contributions by the credit industry which often refers their genuine debtors to them. Often times consumers have very little financial know how and are in beyond their depth coping with mortgage or rent arrears and out of control credit card debt. Some need impartial advice whilst others require the basics of devising budgets and repaying creditors explaining to them.
The Consumer Credit Counselling service is a registered charity which was established to help debtors deal with their creditors. They will often negotiate repayment plans on behalf of debtors and advise them in controlling their budgets and offering possible solutions to sort out their debts. The CCCS can be found on www.cccs.co.uk and will give free advice on debt problems or help the debtor compile a debt management plan.
The National Debtline can be contacted on 0800 808 4000 and provides self help advice to callers and self help packs to aid people in debt. “The service is free, confidential and independent” and again it is a registered charity which gives expert debt advice.
The Citizens advice bureau is best known to many with financial problems and again a free service is provided. However it is important to remember that the citizen’s advice bureau is served by trained volunteers rather than financial professionals, and the advice given is not always the ideal way for the debtor to deal with their creditors. Debtors ideally should be looking for the quickest and most effective way to pay down debt. Debtors who are facing real problems would be better served by the service provided by Payplan which provides advice from experienced professionals.
Payplan is funded by contributions from the credit industry and has experience in advising people on how to deal with practical matters such as individual voluntary arrangements, bankruptcy, county court judgements, as well as general debt. Payplan can be contacted via www.payplan.com .
As those in debt can see there is free help available within the UK to assist with financial worries. Practical solutions can be offered and help in dealing with creditors. However it is worth noting that as of 2009 at least 90,000 of CCCS debtors were in a negative debt situation and could not be advised on dealing with their debt beyond increasing their income in some way. That figure was struggling to meet the bare expenses of living and had nothing over to tackle their debts with.