Debt Management Companies
Debt management companies have been around for many years, though over recent years many more people have been taking advantage of them. Their primary purpose is to arrange and organise debt repayment plans for their clients. The debt management company makes its income by charging a fee to their clients for providing them with these services. All debt management companies must hold a consumer credit licence and they are regulated by the Office of Fair Trading (OFT) which provides a set of rules and regulations of how these companies must operate.
The economic outlook for the UK, Europe and indeed most of the world is looking quite bleak and it could be another decade before we again experience anything like the boom days of the past. Unemployment will increase throughout the EU and the number of people who will need help with their finances is expected to rocket. Ironically, debt management companies are likely to be one of the few beneficiaries of this downturn.
A debt management plan can be set up by an individual, but it is a rare individual who can do so unaided. Most of those whom seek help with debt matters will approach a debt management company or a charitable organisation. Charitable organisations include the Citizens Advice Bureau (CAB), the National Debtline and the Consumer Credit Counselling Service (CCCS) and there is no doubt that they can provide a useful service, though often they are overstretches and it can be weeks or months before an individual case is dealt with, and in many circumstances this can be too long if more serious consequences are to be avoided.
Professional Debt management Companies on the other hand are able to provide help almost immediately and this alone could be worth the 15% fee that they generally charge. They also provide far more than just free advice. They deal directly with your creditors and administer all the payments made to them. The client makes a single payment to the company which then distributes it to the various creditors. In most cases they are able to obtain far better arrangements from creditors than would be available to individuals.