Debt management companies renegotiate debts with banks and credit organisations.

• Their advertisements and customer testimonials suggest that interest payments could typically be reduced by a quarter.
   
• There is also a promise of no up front charges.

This does work for many clients. But some do complain - we welcome feedback. But there are cheaper ways of getting the same results

• Sometimes debts are just extended over a longer period. So you might end up paying more interest.
   
• Your credit record will be affected. Not all debt management companies tell you this.
   
• With some debt managers you will pay a commission to on each repayment you make - sometimes 15% to 25%. This is how they will make their money from you. But we have found a better debt manager which does not charge you this way - see below.
   
• An agreement made through a debt management company is not binding on lenders as an individual voluntary arrangement (IVA) would be.
   
• Not all lenders are happy to deal with a debt management company. But the OFT says lenders must accept payments from a borrower's agent.
   
• There is some concern that some companies cold call debtors and pressure them into signing up. The OFT guidelines make it clear that they must not do this. If this happens to you, don't panic....

If you really want to grip your debts and get back on track, a good debt management company will do a lot of the nasty work for you. You provide the regular payments - and the self-discipline.

You pay a (relatively small) fixed monthly fee that you know the amount of in advance.

In exchange, they take over the burdens of dealing with the creditors, acting on your behalf for as long as you require assistance. So you don't have to deal directly with your creditors any more. It can be worth it for the stress relief alone! A good debt management company can also help you if any creditor does continue to harass you directly. But in fact you get a lot more.

They use your income & expenditure declaration to compile a debt management plan. Then they issue financial statements and re-negotiate payment terms with your creditors - making sure that your legal rights are acknowledged and your payments are distributed fairly.

Our preferred company say 70% of the arrangements they make result in interest concessions. They are quite open in saying they can't guarantee that in every case. But that's another probable benefit.

You send the debt management company one payment a week or one payment a month and they distribute it among the creditors in line with the agreed plan. Creditors often want to see a few months of regular payments before they agree to an interest concession. Just pay the debt management company the single fixed sum each week or each month, and they will organise this for you.

Why do we particularly like one debt management company? Because their monthly fees are fixed. You know what the fees will be up front. No nasty hidden surprises from them.

What now? The first thing to do is get hold of their clear and helpful brochure.

To contact them click here.