Debt: don't trust this devious offer of help
Unscrupulous debt management firms piggybacking on the back of free debt charities have come under attack from the Office of Fair Trading. But is it enough?
If you’re in financial trouble, you must be wary about anybody who offers to give you help. Why? Because there’s a good chance they’re not looking to help you, but themselves.
Scores of private firms are targeting people in debt by using terms like “helpline” and “debtline”, giving the deliberately misleading impression that their help is free.
It isn’t. You will pay a heavy price for it, which is the last thing people with money worries need. Especially since you can get superior help from reputable organisations - and it won’t cost you a penny.
Misleading names
Your phoney friends often trade under misleading names that are remarkably similar to reputable not-for-profit charities and government bodies.
They are particularly keen to trick you into believing they are linked to National Debtline, which actually IS a free, charity service available to all.
If you Google the term ‘national debtline’ you will be directed towards a host of fake ads trying to trick you into contacting a fee-charging service rather than the free one.
Now why would they do that? I think you can guess.
What’s in a name?
The Money Advice Trust, the charity that runs National Debtline, is understandably angry about this. This public-spirited body is keen to help people with debt problems, but too many are picked off by greedy private companies instead.
It has just released some screen grabs showing just how closely ads on Google mimic the real thing. Some were taken six months ago, one as recently as last week.
Several lure the unsuspecting with the slightly-misspelled web address Nationaldebtline.co.UK [sic] or the phrase “National Debt Advice Line”, then direct you to a site run by a profit-making company.
Others claim to offer “Government approved debt services” or even “Government debt help”. Or they may piggyback off reputable money-saving websites by using phrases such as Money Expert.
When “free” isn’t free
I’ve taken a look at some of the fee-charging debt advice websites and they all have one thing in common. They don’t say anything about their fees. Not a word.
Some even claim to offer “Free no obligation advice”, an offer that will only extend to the initial phone call.
In fact, most don’t offer any debt advice at all. They simply harvest your details and sell them on to a private company that will charge a fat fee for setting up an individual voluntary arrangements (IVA) or debt management plan.
They typically won’t display a registered office or postal address either. Many don’t even offer a phone number. You contact them by completing an online form, and your details are then sold to the highest bidder.
No genuine debt charity will ask you to complete an online form setting out how much money you owe and how many creditors you have.
Your false friends will.
False friends
Once you have been passed on to a commercial debt company, it will typically draw up a monthly payment plan designed to appease your creditors.
Debt charities such as National Debtline may do pretty much the same, but all your payments will go to your creditors. With a private company, as much as half will be snaffled in fees.
This is money you simply don’t have to pay.
Many of the sites claim to protect you against your creditors. But who will protect you against them?
Charity begins with charities
Actually, the Office of Fair Trading is doing its best. It has just launched a crackdown on private companies who falsely claim they are offering free, impartial, charitable help.
That’s a step forward, although you have to ask why they’ve being allowed to get away with it for so long. This isn’t exactly a new scam.
Unfortunately, these companies will still be free to tour for business. The only difference is that they will advertise their services in a slightly less misleading way.
And thousands of people will fall into their clutches every year.
Help!
If you’ve got debt worries, it’s simple to avoid getting ripped off. Just make sure you call the real National Debtline. You can also get free, high-quality specialist advice from charities Consumer Credit Counselling Service, Citizen’s Advice and Christians Against Poverty.
It takes a lot of courage to own up to debt problems and seek help. Anybody who is brave enough to do that deserves a lot better than being conned by a fee-charging debt management service.
If you’re in debt, you need help from somebody. But not just anybody.
More on debt:
You could lose your pension if you don't pay your bills
Debt: ten money mistakes we hear every day
Why Coronation Street doesn’t help those in debt
Right of offset: how the bank can take all of your wages
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Need to add that the biggest problems come from 'voluntary' defaulters with Council tax - and most Councils are much more sympathetic with those unable to afford to pay than they are with the deliberate non-payers! Can't pay is one thing.Won't pay is something else entirely!
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Don't know what council you worked for, must be some very small and unimportant council. All the councils I know take the most drastic action they can to recover Council Tax and Costs, including sending in bailiffs and getting long-term Council tax defaulters imprisoned. You haven't by any chance fallen out of space from another planet have you? I agree that they can't actually fine people [b] directly [/b] for non-payment of Council tax, but it can result in the debtor being held in contempt of court for which fines AND imprisonment are possible indirectly. Council tax is a priority payment and must be paid high up any debtors list of essential bills to pay. If installments are not paid on time the local authority has powers of recovery. If the Council Tax due is not paid then the Council can take the following action: 1) REMINDER – The local authority will send a reminder if any Council Tax payment is overdue. If payment of the installment is made within seven days of the issue date no further action will be taken. If payment is not made the right to pay by installments is forfeited and the full amount of Council Tax will become due in a further seven days. If the claimant has genuine difficulty in paying they should contact the revenue section of the local authority as soon as possible to try to arrange payment or assistance. 1) SECOND REMINDER – If a second reminder is issued in a financial year the liable person will become liable for the whole of the outstanding balance following a third failure to pay. 2) FINAL NOTICE – If a third failure to pay occurs a final notice will be issued. The liable person forfeits the right to pay by installments. The final notice will inform the liable person(s) of the amount that is owing and that the local authority will be seeking a LIABILITY ORDER. 3) SUMMONS – To obtain a LIABILITY ORDER the local authority must apply to a magistrate’s court for a summons to be issued to the debtor. The summons instructs the debtor to appear at magistrate’s court and explain why they have not paid. The debtor does not have to attend and the hearing may take place in their absence. The debtor will be charged with the costs of issuing the summons. If the amount owing plus costs is paid the local authority cannot proceed with the application for a liability order. Some local authorities may accept an agreement to pay (usually by direct debit) even at this stage. In some circumstances the local authority may be persuaded to relinquish their costs. 4) LIABILITY ORDER – A LIABILITY ORDER may be granted to the local authority that giving them the power to: a. Obtain financial information about the debtor and therefore assess the best means of recovery action b. Make an attachment of earnings c. Make an attachment order on an elected members allowances d. Apply to the DWP for deductions to be made from the debtors Income Support, JSA or Pension Credit e. Use bailiffs to seize the debtors goods (also known as distress) f. Apply for a charging order against the dwelling in respect of which the debtors liability arose g. Apply to bankrupt the debtor (if they are an individual) or to wind up the company (if the debtor is a corporate body) h Hold the debtor in contempt of Court if it is felt the debtor is well able to afford to pay, and the debtor persistently ignores Court instructions to repay outstanding Council tax. This latter can - and often does result in very hefty fines and imprisonment.
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Charles 125 says the Council will 'fine you' for unpaid Council Tax. This is rubbish . The councils will certainly want the court costs on taking teh case to magistrates court but that is not a fine. It is , of course, better to get a payment schedule together with them before the case comes up to court and avoid costs. Actually , mots councils are staffed by intelligent people who generally loathe the debt management companies that exploit poor people. I know, as I am a retired Head of Financial Services at a district council.
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01 May 2012