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i The advice on this page applies to anyone with personal debts taken out in the UK.

Debt management companies

Debt management companies help people pay off their debts by consolidating debts into a single monthly payment, which is then shared amongst their creditors. Many UK debt management companies charge fees for their debt management plans. Debt management and advice is free from StepChange and other debt advice charities.

Frequently asked questions

Do debt management companies charge fees?

There are some debt management companies that charge fees for their plans, and these charges vary. On average they’re around 17% of the monthly payment. A standard debt management plan from a fee-charging company could cost you an extra £4,000.

We don’t believe people should pay for debt management plans, so we don’t charge for them. We’ll organise and administer your debt management plan with no hidden fees, so everything you pay goes towards paying off or reducing your debts.

What does a debt management company do?

Debt management companies look at how much you can afford to pay towards your debts, after your living expenses (for example food and household bills.) have been taken care of. They usually manage the payment to your creditors on your behalf, and keep track of what you’ve already paid back and what you still owe.

Do debt management plans hurt your credit score?

When you have a DMP, your repayments are lower than the amount you’d originally agreed to repay. This will be recorded on your credit file. These ‘partial payments’ stay on your record for six years and form part of your credit score. Sometimes creditors add a DMP marker.

Find out more about how DMPs affect you.

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Debt management companies – advertising rules

Any fee-charging debt management company in the UK promoting their services as free is breaking strict advertising rules introduced on 1st September 2010.

In the past, some organisations were guilty of misleading the public, claiming to offer "free" help and advice in their advertising, even though a typical plan from a fee-charging debt management company could cost around £5,000.

Debt management companies must also comply with rules and guidelines set by the Financial Conduct Authority.

The advertising code states that:

  • Debt management companies are not allowed to advertise a product or service as "free", "without charge" or similar if the consumer has to pay anything other than unavoidable charges, such as response and delivery costs.
  • Financial products must be presented in a way that can be easily understood by the audience, rather than take advantage of consumers’ inexperience.

Make sure you never pay for debt help. We provide free, impartial debt help and advice with no hidden charges.

Has your debt management firm closed down?

In recent months, several debt management firms have closed, some because they’ve been unable to abide by rules set out by the Financial Conduct Authority (FCA).

If the debt management company you've chosen to help you with your debts has closed down, we can help. Visit our closed debt management company page for more information.

Who uses our help?

Being in debt is often caused by a change in financial circumstances, such as reduced income, losing a job, relationship problems and changes in employment status.

Our clients are from all walks of life and we offer debt help and advice to those on high incomes as well as those on low ones.

"Get in touch with StepChange, you'll wish you'd done it sooner" Rob, Wiltshire