Beware of debt advice scams

Struggling with problem debt and looking for support and reassurance? If you head to Google to find help, you may find yourself targeted by adverts on social media. Some ads make big, tempting promises about writing off huge proportions of your debt. This may seem like music to your ears. You might find them in your Facebook feed, Instagram stories or TikTok scroll. They’ll usually claim that they have some sort of ‘secret’ way to help you become debt-free.

Don’t be fooled. There are many debt advice scams out there. That’s why we asked Clare Seal, financial coach and author to take over our blog. Clare provides tips on how you can steer clear of misleading ads and find reliable assistance.

If it seems too good to be true, it probably is

It could be a trustworthy-looking person claiming to know the secret trick to write off your debts. Or it could be an in-feed advert entitled ‘Mums in debt are able to write off up to 80%”. They may even be clone firms posing as reputable brands. It’s likely there’s something in your gut telling you that it can’t be that easy to solve your financial worries. Trust that feeling.

The reality is that most of these companies are offering DMPs (Debt Management Plans) and IVAs (Individual Voluntary Arrangements). Both are legitimate ways of dealing with debt that has become a problem. But neither is a simple solution. They have consequences that need to be considered when weighing up what the best option is for you.

Don’t be misled

The problem with these misleading advertisements is that their claims are often exaggerated. They mislead vulnerable people. They can end up applying for debt management plans that don’t always work. They then have fees to pay, even when the plan isn’t successful.

Some advertisements you come across break or ignore FCA rules. They’re not allowed to pretend to be a charity or government body. Some adverts are vague about this. They use indicative language like, ‘this is a government scheme’ without being explicit.

These companies can’t do anything for you that a free-of-charge service from a debt charity can. But they could end up costing you a lot of money and landing you in an even more difficult position.

So how do you know who to trust? It’s important to remember that a reputable company will take the time to evaluate all the options available to you. They’ll impartially explain the pros and cons of each option. Then allow you to consider the most appropriate route forward. For more information, we list steps you can take to make sure you’re getting debt advice you can trust. Head over to our blog here.

Have you been in touch with one of these organisations? Do you suspect you've been misled? If you haven't signed any sort of agreement, the best course of action is to refrain from signing and look at other options instead. If you’ve already signed an agreement, you may still be able to make a complaint to the Financial Ombudsman. You may be able to cancel your DMP if it’s not the best option for you.

The importance of reviews

Naturally, you’ll want to find a provider that you can trust, with a wealth of experience to help guide you towards the best solution for your needs. If you’re trying to find out whether or not a company is legit or not, you can check out their reviews on UK financial review site Smart Money People.

Reviews also provide a window into the real-world experiences of others. They offer insights that can help you make the right choices for your financial journey. Reading previous customer’s experiences, whether good or bad can help you make more informed financial decisions.

Help is still available

It might be gutting to learn that an organisation offering you relief from one of your biggest worries isn’t for real. But there’s genuine advice and support out there. One of the best things to do when you find yourself in a financial situation that is causing you stress and worry is to contact a debt charity you can trust. Here’s a list of organisations that can help:

• National Debtline
• StepChange
• Payplan
• Back2Credit
• Christians Against Poverty

If you can’t face speaking to anyone right away, StepChange has a form that you can use to generate a report of your options. However, speaking to a registered debt advisor may enable you to utilise the government’s recent ‘Breathing Space’ initiative.

Find some Breathing Space

Using the right channels, you can get the support to turn things around. One way to get back on track may be to access the government’s Debt Respite Scheme or ‘Breathing Space’. This may qualify you for a period of up to 60 days ‘breathing space’. During this period you must keep making repayments. But your creditors cannot contact you or add any additional interest or charges. It’s designed to give you the time that you need to get advice and make a plan. This way you’re not pressured into making any snap decisions that could lead you to make mistakes. You can find a free debt advisor on the government’s Moneyhelper site.

If you're having trouble with debt and can't see a way out, remember that solutions are always available. They might just not be as easy and breezy as the scammers want you to believe.

We hope you found Clare’s tips useful. If you’re struggling with debt and want to regain control you may find her blog sharing six steps to pay off debt helpful.