A Debt Management Plan: Choose Carefully

Debt management plan companies have been under serious scrutiny in recent times. The media, regulators and politicians have all taken an interest in an industry that has sometimes promised too much and delivered too little.

The reality is that a debt management plan is an ideal solution for many people who otherwise could not afford to repay their debts. It’s known as being “informal” in nature and therefore potentially much less damaging to the debtor than formal insolvency measures such as bankruptcy or an IVA. With creditor support it may result in interest being frozen (or reduced) which can greatly increase the rate of repayment.

There are however huge discrepancies between the competence, ethics and customer-service offered by different debt management plan companies. Good DMP providers fulfil a valuable role on behalf of their clients, serving as an adviser and a buffer to facilitate an achievable repayment outcome. Poor DMP providers however may lead to a debt situation worsening.

Competence is of paramount importance. Many unqualified individuals have flooded into the debt management industry seeing it as a lucrative business prospect. Professional qualifications in debt advice (the Certificate in Debt Resolution for example) and insolvency are available. It’s suggested that you confirm the qualification credentials of advisers and refuse to deal further with any “adviser” that turns out to be unqualified.

The operation of good ethics is equally important. Have you been provided with information on options other than a debt management plan? Have the drawbacks of a DMP been explained to you as well as the benefits? Advice should be provided that is in your best interests; giving you the information that you need to make an informed decision is a vital part of an ethical debt advice process.

Customer-service is also very important. This can be hard to gauge when taking initial advice, so recommendations can be useful. Can anyone you know give you feedback on a DMP firm they have used? If you prefer not to discuss this subject with those you know, online debt management plan forums may provide some feedback and reviews on certain firms that will be useful to you.

Take the time to identify qualified debt management plan advisers who operate ethically (and who work within customer-focussed businesses). This will greatly improve the prospect of finding a DMP that truly benefits you financially as well as reducing any worry or stress you may have been experiencing.

 Guest Blogger:

Simon Wyllie

DebtManagementPlanForum.co.uk