Are debt management companies worth it?

[mixedmama]

we have managed to clear a fair amount of our debt by selling an investment propperty that we have, but are still struggling severley.

we still have quite a large credit card debt spread over a number of cards that leaves us over committed.

A lady at work has advised me to go down the debt management route and she claims it doesnt affect mortgages, which to be honest is the only kind of credit we will ever want to get again as we are so now going to be living by the "if we aint got the money we aint having it" mantra.

Any experiences and if it is a good idea any ideas for the best company to go for. We are going to be having a serious financial chat tonight so want to have all the facts ready.

No

Go to CAB

Debt management companies are a business, they are there to make money out of other peoples misery.

Don't go to a debt management company. They have a terrible reputation. If you go to an licensed insolvency practitioner (IP) you can set up a formal arrangement with all your creditors (provided they agree) called an IVA, or you can go bankrupt. CAB is free and can advise you further. An IP will charge you, but is regulated I believe.

Ok... so CAB seems the way to go in the first instance.

There are Government funded advice services which can offer impartial advice - such as CAB,www.nationaldebtline.co.uk/ etc. Most of the Debt Management companies you see advertised cream off commission when they repackage your debts.

see money saving expert Martin Lewis is fab, there are 2 charitable debt management advice companies and he gives very sound advice on what route to take re your debts.

Have a look on that.

Don't go down the debt management line , I did a couple of years ago and the amount they took off for their 'admin charges etc' was over 1/3 of what I was paying them ..so my creditors were getting hardly anything.. ..although then lost my job and failed to keep up payments am now in limbo with old debts (over 7years old) that I still couldn't repay and hoping someone makes me bankrupt as I can't afford to pay the fees!!!!...be honest about what you can afford to pay each month ..CAB are good at helping you draft letters to creditors and working out budgets but ring first as depending where you are you might have to make an appt to see the financial expert ...Good Luck.

Thanks ladies,

That is great advice. Will make an appointment with CAB in first instance then and see where we go from there.

I had intended to call the credit cards and speak to them first.... i did call one before we became late with payments, but they were really unhelpful and told me i needed to 3 months in debt before they could help.

CAB often recommend Payplan. See here.

Hi

Debt companies are not great.

IVA DO affect your morgage.

Get hold of Payplan. They offer completly free service and will help you to reduce your payments to a manageable level.

As a rough calcultaion take the amount you owe each company and divide it by 120 that will give you the minimum payment they will accept.

You can find Payplan here

Hope it helps and you are not the only people who have got yourselves in a bit of mess. These people will help you straighten it out.