Using a debt management company
Normally when you use a debt management company, you make one payment to the company and they distribute the money to your creditors. This can help to simplify the situation for you because you communicate with the debt management company alone, rather than with each individual creditor. There are issues that you should be aware of, though, before you embark on using a debt management company.

Most debt management companies will only deal with you if you have some income and own your home, so that your property can be used as security against the debts.

The debt management company may not deal with your priority debts, such as your mortgage, income tax, fines, child support payments or rates. They may only help you out with non-priority debts such as credit card debts, bank overdrafts, private loans and repayment of benefit overpayments. So you might end up having to handle the more important debts on your own.

Check whether the company will charge a fee, and what it will be. Some debt management companies also require a deposit at the outset, and a monthly administration fee. If you decide to cancel the service because you are not happy with it, they might charge a cancellation fee, so find out what this will be, and whether your deposit will be returned in this eventuality. It’s really important that you find out about ALL the debt management company’s charges, and get a contract in writing.

Debt management companies aren’t financial advisers and so may not be able to advise you on the best ways of paying off your debts. They offer one type of solution, but you should take independent advice (see other Buyer’s Tips for useful links) before you go down this road, in case there is a cheaper, better solution for your circumstances.

Debt advice from the Citizens Advice Bureau
Panicking over debt problems or ignoring them won't make them go away. Instead, go to the CAB website for some basic advice about debt and simple guidelines for dealing with money problems. There’s also a useful section about the advantages and disadvantages of using a debt management company, which can offer debt consolidation services.
Citizens Advice Bureau >

Independent financial advice
Search this national database of independent financial advisors to find a qualified professional near you who can give guidance.
Unbiased financial advisors >

Solve your debt problems
Get free, confidential and independent advice on how to deal with debt problems.
National Debt Line >

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