Debt advice that may leave you owing even more money
People are increasingly falling behind on credit card repayments, so here's the best way to get debt advice.
Debt advice that could leave you owing even more money
More and more people are falling behind on credit card repayments as rising bills put pressure on household finances.
Lenders have told the Bank of England that they expect the number of unpaid credit card debts to continue rising this autumn.
That may increase demand for advice on managing debt — but if you are struggling and need help, there are some pitfalls to watch out for.
It is also worth remembering that impartial advice is available free from debt charities. Here is what to consider.
When money problems hit, it can be tempting to grab any chance to get back on track.
Social media and internet search results are full of supposed quick-fix debt solutions. Cold calls and WhatsApp messages also offer debt help.
But these may come with upfront charges, unrealistic promises about wiping out debt, and pressure to decide quickly.
Suggestions for finding the right help include:
- Impartial, authorised debt advice is free. You can find a provider on the government-backed Moneyhelper website
- Check whether any firm offering debt help is authorised by the regulator, the Financial Conduct Authority (FCA). You should compare the authorisation details they provide with the FCA's register
- If you are unhappy with the service from an authorised firm, you can complain and, if you are still dissatisfied, take it to the independent Financial Ombudsman Service
Alison Walters, director of consumer finance at the FCA, said: "Anyone struggling with debt deserves advice that puts their interests first.
"Free, impartial debt advice is available to everyone, and no one should be pressured or misled into paying for a debt solution that may not be right for them."
The FCA says some unregulated firms gather people's details through cold calling or online adverts, sometimes pretending to be debt advice charities or debt collectors, and then pass that information to firms selling paid debt solutions.
A quick online search will produce many businesses offering ways to clear debt, not all of them trustworthy, according to charities.
Warning signs of dishonest firms include pressure tactics, such as repeated contact, often by message and phone, urging people to agree to a debt solution, the FCA says.
Some people have been told to alter financial details on lenders' paperwork, or have been "coached" on how to respond.
At times, people are pushed toward a fee-charging debt solution, such as Individual Voluntary Arrangements (IVAs) or some debt management plans, without other options being properly explained or offered first.
Ask who they work for, and check whether their details match the firm's official details.
"Before making any decisions around how to deal with your debts, it's always worth getting full, free and impartial debt advice first, exploring all options to clear your debt in the safest and most sustainable way," said Vikki Brownridge, chief executive at debt charity StepChange.