How not to get conned by a Debt Management Company
With the credit crunch now in full swing and a definite recession on the horizon, many of us are finding borrowing on credit cards and loans as a way to make it through to the end of each month. For those of us who are struggling to make repayments and are slowly heading into financial difficulty, it's hard to know who to turn to for the right professional advice. The financial help industry is unregulated which means no government authority keeps a strict eye on Debt Management companies, and has thus resulted in a lot of 'cowboy' companies appearing to offer unrealistic solutions to solve your debt problems.
Go on the internet and see the thousands of companies offering debt advice and solutions. Which one do you call? How do I know they are professional? It's a minefield out there and hard to tell the good ones from the bad ones, so before speaking to any, it's vital to make sure the company that you chose to help you are doing things in the right way. Here is a list of points you should be covering when dealing with any Debt Management Company;
1. Make sure they have a 'Consumer Credit License'
Look for a 6 digit CCL number in the contact details page or in the footers of the company's website. These licenses are issued by the Office of Fair Trading which means they are registered with them and although Financial Management is an unregulated industry, it gives you some grounds to complain if you think are or have been treated unfairly or misled.
2. Compliance Procedures
If the company is of any acceptable standard they will have there own 'Compliance Procedure'. This is basically a list of points they must cover in any phone calls to you when signing up for financial help. It should cover in brief, their terms and conditions and be transparent about any fees and charges involved. Companies that have Compliance Procedures generally have a better relationship with creditors and are more likely to negotiate additional benefits on your behalf, like freezing interests and charges on your debts.
3. Beware of companies that offer to visit you at your home
There will be no record of the conversation as you would have over a phone call and you may have difficulty asking the advisor to leave if they are 'pushy'. Some Debt Management companies think of financial help as a 'product' to sell and have very tough sales people, when in fact Debt Management is simply a service to help you get out of debt.
4. Cooling off periods
Before agreeing to anything over the phone or in writing, make sure the company has a 'Cooling Off' policy. This way if you change your mind you can cancel any agreement usually within 14 days without penalty. Some 'cowboy' companies are known to apply excessive charges for cancelling an agreement and if not careful, can wind you up in a worse state than when you started! Most decent Debt Management companies will cover 'cooling off' periods in their Compliance Procedure.
5. Ask the company if the calls are recorded and monitored
If there is a discrepancy between you and the company's advisor it will be on record for higher authorities to examine. It's a way of safeguarding both you and the company.
6. Take notes
Don't be afraid to ask the advisor their full name. Take notes of the time and date of when you made the call so you have a record if needed for any reason in the future. So many people forget to take down basic details when making phone calls to companies.
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