The emergence of Debt Management companies over recent years has been a new devlopment.

Basically a Debt Management Company - for a fee - will arrange to contact your unsecured creditors, endeavour to obtain concessional arrangements regarding your debts with them, and then 'manage' your debts for an agreed period.  The aim is to take all the hassle and worry from you, leaving you to make just one monthly payment (to the management company) who will then - after deducting a monthly fee - distribute what you send to your various creditors in accordance with arrangements they have made.

A lot of Christians are already involved with debt management companies, others who are experiencing difficulties financially frequently seek advice from us about the wisdom of becoming involved, so here is our advice for what it is worth.

1. If you have serious financial problems, then you will obviously need to take remedial action.  Problem is, we are often called by homeowners who have received a property possesion notice  to take effect from a few days hence, asking for our help.  Although obviopusly even in situations like this we will  do everything we can to help, options are very limited.  We cannot emphasise enough that at the first sign of impending problems you should contact your mortgage company and other creditors immediately and tell them about the situation.  If you have been told you are going to be made redundant next month, for example, tell your creditors before it happens, not after the event.  Contrary to what some may think, provide you are open and honest with your mortgage lender and creditors they will do all that they can to be of help.

2. Let us assume, however, that you have made satisfactory arrangements with your mortgage company (debt management arrangements never include mortgage or other secured loans) but are still faced with a lot of debt from credit card companies, bank overdrafts etc.  You must exclude priority debts(utilities,council tax and the like) because these cannot be included in debt management plans either.

3. So what do you do now? You will find debt management companies, offering to 'set you free from debt worry' or other solutions to  release you from your financial problems abound.  Not many of these companies have been established long, as what they do is a fairly new phenomena. Some of these companies are offshoots of major financial institutions, others are run by possibly one person operating from the back bedroom of a house.

But here  are some pointers which you should bear in mind.

a.  None of them can do anything for you which you cannot do yourself!  It is just that some people do not appreciate this, others fear they would not know how to set about it, whilst  yet others are just plain lazy!  If you approach a management company, what they will do - or at least what they should do - is obtain from you complete details of what you owe and to whom, get full details of your income and expenditure, and approach all your creditors with proposals as to how you can deal with your obligations, and hopefully come to satisfactory arrangements to reduce your outgoings by having  interest frozen for a period, or  extending the loan periods amongst other ways forward - all with the ultimate aim of making life easier for you financially.  All well, good and noble, but for their work you will pay what can be a very substantial on going fee (in practice taken out of the amount you send them every month before they distribute the balance to your creditors under arrangements made.)

b. Your credit rating will probably have already become impaired but using a management company could make your position worse!  Remember you are dependent on the management company sending the agreed amounts to your creditors regularly.  What if they don't do this? What if they just 'disappear' with your cash! In recent months many debt management companies have gone bust

If you have to use a management company make sure it is a long established reputable one and find out how they operate, what fees they will charge before you commit yourself.

We woud strongly recommend that you use a specialist company which does not charge fees and will give you all the help you need. Contact Consumer Credit Counsellig Services for example. Have a look at their excellent website at www.ccs.co.uk  Or you can telephone them and discuss your problem for free at 0800 138 1111.  You don't even have to give your name if you don't want to!

c. Think carefully before becoming involved with a debt management company.  If there is a better way out, take it, but if you have to go down this route, do take great care not to be involved with a company which is not acting in your best interests.

d. Remember however 'good' the debt management company is there will be  long term repercussions for you.  Your credit record will be affected.  It will be difficut if not impossible for you to obtain a mortgage or other credit for some considerable time after the management arrangement has eventually expired, and in the meanwhile it is absolutely vital that any arrangements made with your creditors via the debt management arrangement are honoured