Deplorable Debt Management Company Practice – Hoarding Funds
Each debt management company in the UK has hundreds of clients that depend on them for managing and repaying multiple loan debts. Each month, these people would faithfully pay their dues in hopes of finally settling their debts.
Unfortunately, a recent investigation conducted by a trusted research and news source (BBC) revealed that a large number of firms in the UK have been hoarding payments made by their clients, keeping them in the company coffers instead of turning them over to the lending bodies whom the clients are indebted to.
According to the findings of the investigation, it has become a practice among less trustworthy debt management companies to hold the money paid by their clients in an effort to persuade the lenders or creditors to agree to a settlement with lower interest rates and fees. This is all in the name of profit, which, while in itself is not completely a bad thing, becomes condemnable because it endangers the welfare of the trusting public. After all, creditors will be going after the borrowers under debt, not the company.
Debt Management Company Shut Down Due to Violations
As of May of 2011 there are already at least two companies that have been publicly condemned. These are Global Debt Solutions and Apex Debt Counseling & Management. The former was shut down for its lax monitoring of payments, while the latter hoarded payments then later ceased operations.
According to Andrew Smith, a manager of ClearDebt (a firm that welcomed 1,000 victims of bad debt management firms), there are at least four more unnamed firms that are in the practice of hoarding payments. Truly, clients of the said services should be more careful and watchful of their companies today.
On a sadder note, there were already 129 firms in 2010 that the Office of Fair Trading has issued warnings to regarding customer exploitation. The OFT has also been vocal that they won’t hesitate to suspend the Consumer Credit Licenses of any company found guilty of exploitation.
Screen Your Debt Management Company
Given these present circumstances, it is important for people who are yet to enter into debt management to carefully choose their company. It pays to take the advice of expert financial advisors and to conduct your own research as well. Take the time to visit the offices of the debt firms and personally talk with their in-house advisers. See if what they’re offering is not only attractive but also realistic.
As for those who are already in contract with a debt firm, always be vigilant about how your debt firm is delivering your payments. As a precaution, always follow-up each monthly payment with a phone call to your creditors. Ask if they were able to receive payment from your debt management firm, and ask for the status of your debt every quarter of the year.