Debt Management Companies – Tips to Find One

Debt management companies have popped up all over the UK but not all of them are in business to help you

. Rather, they are in it for some fast cash and it is up to you to weed out the fly-by-night companies from the legitimate ones, particularly if you are seeking help regarding your debt load.

Owing money is not only worrisome but it can also affect your health and relationships. You owe it to yourself to find a company that will help you manage and pay off your debt legitimately, easing your monthly financial burdens. Whether it is through bankruptcy, individual voluntary arrangements (IVAs), debt management, informal payment arrangements, debt consolidation or simple counselling, there are some factors to consider when shopping for a company to help with your debt.

What to Look for in a Debt Management Company

Obviously, the amount of your debt will dictate the type of solution you seek. When researching the various debt management companies, one of the first factors to consider is how quickly you can pay your debt off. Some companies may lower your monthly financial obligation greatly but you will find that you end up paying for a longer period of time. This can translate to more interest paid on the debt than normal. The higher the payment you can afford, the quicker you will be out of debt. Ask for a timeline when you talk with one of these companies.

The next question to consider is how much the services of the debt management company will cost. Sometimes, there is an initial sign-up fee and then a small monthly fee for each debt handled. Each company is different, charging from 5 to 15% or more of your repayments to your creditors. It is important that you do not pay any fees up-front; rather, you should read all the terms and ask questions first before agreeing upon any repayment plan and administrative fees for the services.

Always find out what you are getting for your money in terms of services, particularly if there are any initial administrative or monthly fees. Does the debt company administer creditor payments for you? Do you have one counsellor who handles all of your accounts? How are your monthly payments handled? It is important to know how your payments are allocated to your various creditors so you are well-informed.

You should choose a company that is well-regulated with a good reputation in the debt management industry. The Office of Fair Trading has a database where you can check to see if a company is in good standing. Not all debt management companies have a license so that alone is important to confirm. It is up to you to make the right choice because your financial life and future credit is at stake, affecting your ability to buy a home, car and other important purchases.

Debt Management Companies Tips to Find One

By: Chris Jenkinson

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