Debt management scam?

NWilde

Hi all, I am looking for some help and advice please.

My partner incurred debt when she was in her teens and is still paying it off monthly via a debt management company now - 10 years later.

She joined a debt management company who she was relatively happy with for the first few years, but this company was taken over by another one, and then that one was taken over by another one. Each time they get taken over the payments and "management fee's" increase.

It's got to the point now where she has decided to leave the debt management company and go with Step Change who had been recommended to her.

So she decided to ring some of the companies she owes money to in order to get the account numbers for Step Change and she found out that the figures provided from her debt management company vastly differ from the figures from the actual companies she owes money to.

For example her debt management company says she owes £141 to the local water company, but the water company says she only owes them £61.

This follows with every single company all 9 of them. One of them the debt management company said she owes £51, it turned out she only actually owed £2.

Is this some kind of scam? Have they bumped up the amount of money she owes in order for them earn a larger overall value from their 45% "debt management fee"?

Really need some advice here. Have not confronted the debt management company yet, but will do pending advice.

Thanks.

engineer_amy

I would start by requesting a statement from the debt management company itemising each payment made by your partner and how they allocated those funds to each creditor.
At the same time, request activity statements from the creditors and see if the amounts paid over match.


as to what happens after that, im not totally sure, but it would prove whether they are "wiping your eye"

NWilde

Thank you for the reply!

We have the itemised statements, but didn't think to ask for activity statements from the creditors, that's a great idea. Thank you.

We'll do that and reply back with progress!

sourcrates

She has been paying this for 10 years ?

Thats an awful lot of money down the drain, just for reference, you should never, ever engage the services of a fee taking debt management company, they will just fleece you, and keep you in debt for longer than you normally would of been, there charges are horrendous, the amounts they claim you owe, may include there service charge.

I really hope she has binned them for good, and cancelled all methods of payment to them.
If it were me, i would pursue a complaint against them for mis-selling, as other options were available, that were free of charge.

I bet there "fee`s" have run into thousands of pounds, its disgusting how these companies take advantage of people, there have been numerous similar stories on here, but never heard of someone paying them for so long before, shocking !!

FireWyrm

I would be inclined to believe the actual creditors as to how much money is owed in reality. Fee charging companies are nothing but scam merchants. If you are very very lucky, they just cost you far more than you would have paid in the long run - if you are not so lucky, you could still pay thousands and when they go bust, they take your money with them as they rarely hold this money in trust and they are limited companies, making 'you' their creditor and therefore last in line for any money.

Ditch this company immediately, try what you can to reconcile what money was paid where and then write to each of those creditors asking for a full statement of account. Once you have that, write again telling them what you will pay them and at what frequency. You dont even need StepChange for this purpose, you are perfectly entitled to handle the financial affairs yourself. StepChange is more for people just starting out on the journey but it sounds as though you are very nearly finished. Pay off everyone and then consider yourself debt free.

National_Debtline

As sourcrates has suggested, the balances they’re showing as outstanding may even include their charges, but either way this isn’t clear or an accurate representation of the accounts.

The others have given good advice on requesting statements from your creditors to get a clearer picture of your outstanding debts.

If you have any issues you can complain. You can complain about debt management companies using a couple of different routes.

If they belong to one of the 2 main trade associations you might be able to use their codes of practice if they aren’t complying.

www.demsa.co.uk/members

www.debtresolutionforum.org.uk/members.php

You can also reference points from the FCA Consumer Credit Sourcebook in a complaint as there are various points DMP companies need to adhere to in section 8.8, such as clarity over charges and providing accurate breakdowns of the debts.

http://fshandbook.info/FS/html/handbook/CONC/8/8

James
@natdebtline

NWilde

Thank you all very much for the helpful replies.

She has followed your advice and the figure quoted from the debt management company was around 65% higher than she actually owes (which is fantastic news).

I don't know how they arrived at that figure, and apparently neither do they. But she's moved over to Stepchange now and only has 8 months left until she's cleared it all, which she is very happy about considering she had 2.5 years left according to the debt management company.

Thanks again.

National_Debtline

That's good to hear. I'm glad she's managed to sort this out.

James
@natdebtline