Coping with debt

According to the Consumer Credit Counseling Service, a report commissioned by CCCS in 2011 recently identified 186,000 households in the 18 to 24 age group as 'financially vulnerable', meaning they are already in financial difficulty or 'at risk' of falling behind.

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, such as ourselves, the CCCS, the National Debtline and Citizens Advice, who don't charge for our services," she says.

"Then there are the debt management companies. They are commercial operations that advertise in national newspapers and on daytime television, and often come in for quite a lot of criticism. 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," says Frances.

A 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. "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," says Frances. "Don't be tempted by things like consolidation loans because they can make your situation worse."

Rebecca's story

Rebecca, 22, is 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," she says. "The relationship ended badly and I was saddled with a lot of debt that I couldn't pay off."

Not knowing what do to, Rebecca sought debt counselling with the CCCS at the insistence of one of her creditors. "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."

Rebecca was advised to start paying a single cheque to the CCCS, which they split between her 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."

Updated: 09/01/2013