Beware of Rogue Debt Management Plans

19 May 2012

Plenty of people around Northumberland will be trying their hardest to have a great time this Christmas and quite rightly, too - it's been a tough year for most of us.

However, behind the laughter, a lot of people in the county will be concerned about the start of next year. It's been reported that Northumberland's Citizens Advice Bureaux have seen a staggering 33 per cent rise in the number of calls it's taken from people concerned about employment issues.

The spike in employment-related enquires comes as more companies in the county continue to suffer from the recession.

In order to survive the persistent financial pressures employers are, once again, finding they have to review wages, amend employment contracts or consider possible redundancies.

All of these factors will force affected workers to live on a reduced income - and people who have over-borrowed in the past will start to find themselves facing extra difficulties.

People who feel they are drowning in debt often believe that a debt management company may hold the answer to their troubles, but picking the wrong one will do little to improve the situation.

A trustworthy debt management company will help people struggling with debt by working to negotiate lower rates of interest, to have late fees waived, to devise a schedule of repayments that is acceptable to both the debtors and the creditors and to help consolidate monthly instalments into one.

As the debt management industry is not a fully regulated arena it is littered with rogue companies whose sole aims are to make as much money as possible from vulnerable people.

Within the industry there are a number of charitable organisations, such as the Citizens Advice Bureau, that offer free advice and can help to arrange a suitable debt management plan.

However, these should not be confused with consumer companies who offer 'free help' - as they will often find other unscrupulous ways of charging for their services.

While it is acceptable for debt management firms to charge a fee for handling a case, and as a result can push the case through quicker and will make payments to creditors on the debtor's behalf, people must ensure they are being charged for the right kind of services and advice.

Many unaccredited firms will attempt to dress their organisation up to look like reputable non-profit organisations to help draw people in so be wary.

When looking for help with debt management people should always remember three key things - never pay for advice, shop around and do not pay for services upfront.

Potential clients should also always consider the experience of a company and references from previous clients, the online assistance it offers, what are its budgetary and account services and does it protect debtors from the harassment likely to be suffered at the hands of forceful creditors.

Northumberland residents concerned about issues relating to debt management should contact the DAWN Advice Team for free and independent advice on 0844 4111 309.