Don't pay for debt advice

by Ed Bowsher on 24 August 2010  |  0 comments
Tweet

If you've got serious debt problems, go to charity for advice, not a commercial company.

As a financial journalist I receive hundreds of press releases a month from various companies plugging their services. Debt management companies are an especially fecund source of releases. They nearly always make me sigh.

I got one today from a company called MoneySolve. The headline is fair enough:  "MoneySolve condemns reckless credit card lending."

Few people will quarrel with that. Banks shouldn’t lend money to people who will struggle to pay it back. There’s no doubt that credit card borrowing has been a major factor behind our current personal debt crisis.

But if you’re struggling with your own debt crisis, I wouldn’t recommend MoneySolve. For starters, they don’t seem to be able to write a coherent press release. Today’s release twice uses the word ‘lender’ or 'lending' when ‘borrower’ or 'borrowing' would be more appropriate. I’ve bolded where MoneySolve has gone wrong:

“Of course we all have to take an element of responsibility for our own lending. But the lenders are the supposed experts here.”

“The research highlighted that some banks are offering lenders credit cards with interest free introduction periods of over 12 months.”

Doesn’t exactly inspire confidence, does it?

More importantly, I worry that MoneySolve may be biased towards IVAs (Individual Voluntary Arrangements) as their preferred debt solution. In fairness, MoneySolve’s home page does highlight other debt solutions such as Debt Management Plans and bankruptcy. But if you go to the What We Do page on the MoneySolve site, the only information is about IVAs. Nothing about Debt Management Plans or any other option.

Yes, IVAs are a good solution for many people as they reduce the amount of outstanding debt that has to be paid off. But the charges are high and they’re not the best solution for everyone.

If you want to be certain that you’re getting unbiased debt advice, I urge you to go to a debt charity rather than a commercial company. It’s easy to get in touch with either National Debtline or Consumer Credit Counselling Service and I’m happy to recommend both organisations.

Get more advice on debt matters from our Dealing with Debt blog. It’s written by the Consumer Credit Counselling Service.