Top 5 Best Debt Management Companies In UK

There are lots of debt management organisations that provide debt-related relief to the people of the UK. Some companies provide Debt Management Plans and other associated services for free while others may charge you for their assistance.

First and foremost, it is always necessary to borrow money when you have the capability to repay it. But, often it doesn’t work out as planned and an individual finds themselves in a pool of debt. This is where debt management companies can help you out. Debt management is a way to eliminate all your “unsecured debt” without the chance of any higher risk.

Though there are many companies, it’s important to understand how they can help, before you decide to opt for one.

How Debt Management Companies can Help an Individual?

All the debt management companies that are registered under the Financial Conduct Authority (FCA) can provide service and support to individuals who are worried about debt. They take control of your finances on your behalf and put forward a plan to help you pay off the debt completely.

You can opt for a free debt management companies like Citizens Advice Bureau (CAB), National Debtline, Consumer Credit or Counselling Service (CCCS). They provide free advice sessions to people whenever required. The companies use different techniques and plan to help you organise your debt using the Debt Management Plan or DMP.

Being free of cost service, the number of debt problems they deal with is relatively high. So, people seeking advice might need to wait for more than 3 weeks before scheduling an interview.

However, the companies that charge a fee for DMP are also highly acquainted and can help with your problems efficiently. They can also offer to administer your repayments to your creditors as an added advantage. The added surcharge for the providers can rise up to 15%. However, some companies may negotiate better terms with your creditor when compared with free debt management companies. So, the fee charged may be a worthy investment for you. 

Schemes Offered by Debt management companies

Debt management companies can help you with different schemes and can manage your debt effectively. Some of the services offered by debt management companies are:

  • Better Debt management plans.
  • Getting Administration orders.
  • Filing for Individual Voluntary Arrangements (IVA).
  • Helping with bankruptcy.

Although the services offered may vary for person to person depending on your current situation. So, before you choose a debt management company make sure to check the point beforehand:

  • How much help do you need with your debt?
  • Whether you want to administer your own payments or by any company?
  • The advice provided is suitable for you or not.

How to Find the Right Debt Management Company?

There are many companies that provide debt management plans based on your debt. The factors you need to consider before choosing a debt management company include:

1. Clearing Off Debt within Minimal Time

Many companies offer several low payment plans on your debt. These may seem to be an attractive option but could correspond to a lifetime of debt repayments. To minimize the time you should always try to repay the maximum amount that you can afford to your creditor. The higher the amount you pay the quicker you will be debt-free.

2. Fee Charged by the Debt Management Company

If you are opting for a debt management plan on your debt then typically the company charges 15% of your total repayments. Other than that, there can also be an administration cost attached which can take away all your first month’s repayment money. Your debt management company can only charge a fee when you both agreed to the same pre-offered package.

3. Services are You Entitled to

Before taking a DMP from a company make sure to know what are the services that you are going to get for the fees charged. What are the services that you are gonna entitled to – will the company distribute the payments on your behalf? Or would you have a dedicated account manager for all your queries? Will you get assistance throughout the term of your plan? These are the basic questions you should ask your provider before taking up any repayment plans.

4. The company should be Registered under FCA

The concerned company should be registered under FCA and should follow the guidelines listed by the Office of Fair Trading (OFT). Only then any suggestion or plans from them would be taken seriously by your creditors. Also, they cannot mislead and must explain all the risks involved with the service they offer.

5 Best Debt Management Companies 

Here are the 5 best debt management companies in the UK that can provide you with reliable help and information regarding your debt problem.

1. StepChange

StepChange is a one-stop solution for people looking for a reliable and fast solution for their debt problem. They offer a vast array of solutions on debt ranging from DMP to an Equity release.

StepChange has a team of experts that’s been providing relief to the people of the UK for 25 years. They provide advice and support to achieve long term financial control. As it is funded by voluntary donations from different public sectors including the government and loan companies, it’s able to provide free and impartial debt advice to thousands of people.

StepChange provides an in-depth look at your financial condition and gives you a possible solution to your debt crisis. If you are able to afford a payment option then the company would offer a repayment solution. Or else, if you are not able to repay the reasonable amount of time then they might recommend insolvency option. They will also review your financial situation annually to make sure if the solution is still relevant to you.

2. National Debtline

It falls under the free debt management companies that are run by the Money Advice Trust. It provides free and confidential debt advice for the people in England, Wales and Scotland. They provide practical and help empower people dealing with the debt problem.

National Debtline has helped almost 138,120 people over the phone and further 34,065 people over their webchat service. It provides advice on important subjects like rent or mortgage credit. National Debtline also supports people who are seeking any advice when their creditors take court action against them.

Along with that, it helps people to properly plan the budget regarding the earnings and also find ways to help you increase your annual income. National Debtline can also be helpful if you are setting up DMP, IVA, debt relief order (DRO), or an even filing for bankruptcy.

The main National Debtline website features are webchat function and also a telephone helpline. Although for Scotland they run a different website, as debt is handled in a different way than in England and Wales.

3. PayPlan

PayPlan offers free Debt Management Plans and advice for people who suffer from a financial crisis. It is a family-owned business and was created in 1992. Since then it has become one of the UK’s largest debt management advisors.

PayPlan offers entirely free debt advice. As they are backed by the credit industry, they will set up your plan for free without any hidden or monthly cost. It is one of the most trusted and recommended debt management companies in the market.

Since the beginning, it has helped almost 100,000 people with their financial condition and is highly recommended by the Money Advice Service. Another aspect that sets PayPlan different from its competitors is its experts. Whenever you reach out to Paypal, they with their vast wealth of financial knowledge and experience will help people get out of their debt as quickly as possible.

Although PayPal provides most of its service for free, you need to pay legal charges when you are applying for an IVA or any other legal process. It also has a Trust Deeds that is the only available for the people in Scotland. Furthermore, it’s very similar to the process of IVA in England, Wales and Northern Ireland.

When you set up a Debt Management Plan with PayPal, they allow you to keep track of all your repayments and also view your income and expenditure so that you can manage your budget easily. Additionally, with PayPlan you can contact an adviser directly at any time of the day and get access to recommendable advice and assistance regarding debt solution.

4.Debt Advice Foundation

Debt Advice Foundation is also listed by the Money Advice Service and is similar to PayPal. It provides free advice to people with debt and loans related problems to clear their partial debt if needed. 

The main objectives of DAF can be written as: to support people who need help with debt and to provide requisite information to the people of the UK regarding financial awareness and its prevention.

Debt Advice Foundation launched many projects like the Money Diaries, Debt Support Network and Financial Education through which they try to educate people about the problems of debt and how it can affect your financial situation.

When you set up a Debt Management Plan an advisor from DAF will help you consider all the different possible options regarding your case. This includes research on your income, assets, expenditure, and debt. 

After culminating all the different cases they would find the best and easiest solution to make your debt-free. The advisor will also ensure that you encounter the least expenses while setting up any plans under them.

5. Money Advice Service

The Money Advice Service (MAS) provides financial and money management services throughout the United Kingdom. It offers several services for the people of the UK including debt management, investment, borrowing, home and mortgages, pension and retirement, and other budgeting services.

MAS was set up way back in 2010 to help and improve the proper management of people’s income. It is also responsible for funding and improving the quality, regularity, and availability of debt-related advice. Along with that, it is responsible for better understanding and knowledge of public financial matters including the economic system of the UK.

Although the Money Advice Service is not a debt management company as it is launched by the government, for the people of the UK. It provides free and impartial money-related advice only. They provide online tools like Pension calculator to help you manage your retirement fund.

Money Advice Service also supports different Annuity programs. It’s important to take financial advice before buying an annuity as it’s permanent and irreversible. So, before taking any annuity to ensure to take the free and impartial suggestion of Money Advice Service on that matter.

What if You Choose a Fee Charging Provider?

If you want that your DMP plan is set by a provider that charges a fee, then here are a few aspects that you need to look out for:

  1. The DMP would last longer as there is an additional charge for your provider in each of the monthly repayments.
  2. If you are opting for a provider that charges a fee, then be aware that they will charge you a set-up, deposit or any ongoing fee deducted from your bank directly every month.
  3. No provider can take more than 50% of your DMP money. At Least 50% of your total repayments should be passed to your creditors.
  4. If you are cancelling your DMP anytime with your provider then be sure that you would not receive any refund of fees from them.

Make sure to undergo complete research and only then choose the DMP provider that matches your requirements. This way they can offer you its best service.

Debt Management Companies UK List: Requirements for Regulation

To be in the UK’s list, all the companies must be regulated by the Financial Conduct Authority. The FCA decides whether a company falls under the charitable or fee-charging scheme. All the companies that fall under debt management in the UK should be transparent about their fees and charges. 

Also, Owing to the rules of FCA, they cannot mislead anyone and even have to explain the risk involved with the services they offer. Other optional requirements are that they can choose to become members of the Debt Managers Standards Association (DEMSA). 

It is a trade association that audits its members to follow strict guidelines and its code of conduct. It is an optional requirement but provides more assurance to potential customers.

Similarly, like DEMSA, if you follow the DMP protocol, your company’s name would be listed by the Money Advice Service.

Is It Necessary to Join with a Debt Management Company to Set Up a Plan?

It‘s not necessary to join with a debt management company to set up a DMP plan. However, basic research tells that these companies understand the laws surrounding it and have pre-existing connections with the creditors. 

So, it can be beneficial for you to set up a DMP plan with a debt management company as they can provide you with the lowest monthly repayment plan possible. Although it is better to avoid getting into debts, still the earlier you accept your financial difficulty the sooner you can deal with these aspects.