Debt counselling

Need some debt counselling? Read this first.

According to the Consumer Credit Counselling Service the average debt of a person under 30 has risen by 28% from £12,452 to £15,890 in the last two years. Five percent of people who borrow will find themselves in a spiral of debt from which they may find it hard to break free. The age of debtors in serious trouble is getting younger each year and the amounts they owe are growing alarmingly larger.

Dealing with the problems of debt can be daunting and if you are having problems coping with your credit payments you should never be afraid to ask for help. The sooner you act the sooner you can get your life back on course.

Watch out for dodgy agencies

Finding who to turn to for help is another matter entirely. The world of Debt Management is rife with unscrupulous practitioners. Choosing the wrong source of help can sometimes make your situation even worse.

Frances Walker from the Consumer Credit Counselling Service explains the options. "The debt counselling sector is split in two. There's the charitable sector like ourselves, which is the CCCS and the National Debt Line and NACAB, who are also a charity, and there is no charge for our services. Then there are the Debt Management companies who are the ones who come in for quite a lot of criticism. They are commercial operations who advertise quite a lot in national newspapers and on daytime television. They claim that they'll give you free advice, but when they put you on a debt management plan, they take a percentage of the money or they charge you in some way."

A recent Which consumer report on Debt Management concluded that many of the non-charitable companies give partisan advice intended to bolster the company's profits rather than help their clients. So they're probably best avoided. As Frances points out: "There's no need to go to a debt management company, when they can't do anything for you that we can't, and we don't charge. Don't be tempted by things like consolidation loans because they can make your situation worse."

"I couldn't sleep at nights because of all the stress and anxiety I was suffering. Now I feel like I can finally put my life back together."

Rebecca's story

Rebecca is 22 and currently living with her parents. While everyone has a different experience of debt counselling, hers can give you a good idea of what to expect. "I moved in with my boyfriend two years ago and he convinced me to take out a lot of credit in my name to help us set up home. The relationship ended badly and I was saddled with a lot of debt that I couldn't pay off. At the insistence of one of my creditors I sought debt counselling with the CCCS."

"I spoke with a duty counsellor who was really helpful and she advised me to have a session with a more trained counsellor. He went through my finances with me and helped me prioritise my debts and draw up a debt management plan. After he spoke to my creditors I paid a single cheque to the CCCS and they split it between my creditors on a pro rata basis. I'm not out of the woods just yet, but in another five or six years I will be.

"It hasn't been easy but I'm finally beginning to get back on my feet. I would recommend anyone with debt problems to consider counselling. I couldn't sleep at nights because of all the stress and anxiety I was suffering. Now I feel like I can finally put my life back together."