There’s a long running debate in the UK that fee charging companies provide a better service because they charge for the advice they provide. Charities working from grants and donations require volunteers and they are poorly trained. The question is, free vs fee debt organisations: Who is better?
Free Charities vs Fee Charging Companies
The fee charging companies are usually the companies advertising on TV, Google and radio because they have the money to do so. I’m skeptical about these companies. Everybody needs to make money in business, just to cover operating costs, if nothing else. However, I’ll tell you why I’m skeptical.
“WRITE OFF 100% OF YOUR DEBT”
WOW! Really!? Pay nothing back… ever! Hold the phone!!
Nope. It doesn’t work like that.
It’s a shame really. If the debt companies were being honest the advert would say
“WRITE OFF 100% OF YOUR DEBT, BUT YOU MAY LOSE YOUR HOME AND YOUR CAR AND PAY A FEE EVERY MONTH TOO”
Not as catchy, though.
Now granted, many fee charging debt companies don’t make these bold and inaccurate claims and honestly provide the facts, but the majority will lie, cheat and steal to get a person in debt to sign up with them.
The reason I prefer charities is because they are transparent. You know where they make their money and they will tell you up front. You know from a charity that they will provide the full advice and explain how it all works. Charities usually make their money through donations, grants or money from creditors i.e. banks etc will pay for the charity to provide advice.
Who to trust with debt help?
There are some excellent for profit companies out there when it comes to selecting a debt advice partner. But they are hidden among the crooks and dishonest companies too.
For profit companies make their money via a number of ways. So, check out your company first:
Debt Advice: Some debt advice companies which charge a fee will ask you to pay for the advice. In today’s society this is a joke – everybody gives advice without having to open your wallet. This is because money is made via alternative means.
Debt Management: If your company provides debt management plans then they will likely charge you a set up fee. The setup fee will usually be the first 2 month’s payments. BE CAREFUL! This means your creditors won’t be paid for two months. After this, the debt management company will take a monthly percentage from you for managing the plan (typically 17% of your monthly amount).
Referral: A debt advice company can make money from you by passing you to another company for a solution. If the company they pass you to is not reputable they could rip you off.
I won’t be convinced that it’s worth taking the risk with a for profit company. The fees are higher, the advice is biased and there is no evidence to provide the service is any better. There is sometimes a wait to see the Citizens Advice Bureau, however, you can also receive telephone debt advice from charities.
Search around, a charity option will always be best.