Can I Trust a Debt Management Company?

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Many people live with the negative effects of debt for a long time before taking action. It can affect their family life, their working life and their health. Often an event will spark people into action to tackle their debts, for example, a strongly-worded debt collection letter threatening legal action.

Because the point at which people seek help for debts is often already a stressful moment, some people can let down their guard. For example, if you search online for “get out of debt” you’ll get thousands of search results, many of which are promising you that they’re the best service available.

Like with any other industry, debt management companies can be competent or incompetent. They can be good value or ludicrously overpriced. They may follow the regulatory rules which protect you or they may ignore them. Some are trustworthy, others lack integrity.

Let’s be honest here..

Even though we work within the world of debt management we acknowledge that the industry as a whole hasn’t got a great reputation. Too many firms have been profiteering at the expense of their clients, promising much and delivering little, or pretending to offer clients advice while in reality, they’re merely treating them as a sales prospect.

While things are improving, our view still remains that there are debt management companies that you should not trust.

How can you identify debt management companies that you can trust? There are a few signals that will help you to identify firms that you can rely upon to provide you with great advice and effective debt solutions.

The company should be registered with the Financial Conduct Authority. Is this registration clearly mentioned on the firm’s website? If it isn’t, steer clear. If it is you might still want to verify the registration using the FCA’s consumer credit register tool.

While you’re on the firm’s website check a few other things

Is there a complaints policy, a privacy policy and a geographic address within the UK where they’re based? If these things are missing it’s almost certainly better to move on and find a more credible firm to trust with such an important and sensitive issue.

The website should also reveal whether the firm is a member of the DRF or DEMSA. These are trade associations for debt management firms which audit their members to check compliance with the appropriate rules and regulations. Being a member doesn’t automatically confirm that you should be 100% confident about using them, but it’s certainly a positive sign.

If a firm is not a member, you might wish to ask yourself why they haven’t opened themselves up to this scrutiny of their business.

Good debt management companies which are worthy of your trust invest in their employees

They understand that staff training and qualifications help their businesses to deliver a higher quality of advice. It’s a sign of commitment to providing good advice rather than just maximising their commercial opportunities. Ask any debt adviser you speak with what professional qualifications they hold. If they aren’t qualified, how can you know whether to trust their advice?

Take a keen interest in the fees that are proposed for handling your debt management plan. The level of fees charged can influence how well creditors respond to your proposals and how long it takes you to clear your debts.

You also have the option to approach certain debt charities that may be able to offer you a DMP without charging fees. If you live in Scotland, the debt arrangement scheme is likely to be a better option for you than debt management and can also be arranged without the payment of a fee.

If you’re offered a service with a fee, act as you would in any other situation as a consumer

Have a look around some other firms before you commit so that you can be reassured that you aren’t paying too much.

Can you trust a debt management company? The simple answer is that some are much more trustworthy than others. Hopefully, the factors mentioned in this article will help you to make an informed choice that works well for you in the long-run.

Our debt management partners were one of the first firms in the UK to be approved under the “Debt Management Protocol”, a voluntary code led by the Insolvency Service requiring external inspection. They’re members of the DRF trade association, FCA registered, and every adviser is fully qualified with the “CertDR” debt advice qualification. Contact us today if you’d like their professional help setting up a debt management plan.