Debt Management Schemes

Debt management schemes are designed to help those who are in debt and are unable to meet their repayments. In these situations finances are assessed by debt management operators and a monthly repayment deal arranged mutually with all creditors and the person in debt.

Debt management schemes are run by both for-profit companies and by charities. In the case of for-profit companies, fees and management costs are added to the repayment amount. Charities offer a similar service free of charge to the consumer. Always make sure that a debt management agency has the proper OFT credit licence allowing them to provide this service.

The Government is consulting on whether there is a need for intervention in this area, in light of the various other government policies that have already been introduced to help people in debt and, if so, whether regulated schemes should be introduced and how they would work, or whether tighter non-statutory regulation of current schemes would be more appropriate. The government has stated that taking tough, swift action against firms who fail to operate within the rules and who provide sub-standard services to consumers with problem debt remains a high priority.