What happens when your debt management firm shuts down

If you use a fee-charging debt management firm, you're at the mercy of it closing its doors, as has happened with Debt Help Direct.

Recently Debt Help Direct, a fee-charging debt management company, had its assets frozen, leaving over 3,000 people out of pocket and unsure of what to do with their outstanding debts. This again highlights why free debt help provision is so important.

With more and more people needing debt advice (last year we helped over 410,000 people) it’s important that people know their options when it comes to seeking help with debt.

By using our free service we’d avoid a lot of the stories we hear from some clients of fee-charging companies, like the situation the former clients of Debt Help Direct face at the moment.

When debt help turns to disaster

Debt Help Direct clients first noticed something was amiss with the company when there was no response to phone calls. Shortly afterwards, it was reported that John Taylor-Groom, the managing director, was arrested, and his company had its assets frozen.

Police released the following statement: “A 38-year-old man from Macclesfield was arrested on suspicion of fraud by false representation, theft of clients’ monies and possession of Class A drugs.”

Debt Help Direct was a provider of fee-based debt management plans, charging initial set-up fees and ongoing monthly management fees. The firm also offered services to bankruptcy clients similar to those we discussed in our article Firms that charge £600 for filling in a bankruptcy form.

What happened to Debt Help Direct’s clients?

It is understood that Cheshire Police has given responsibility for Debt Help Direct’s clients to another fee-charging firm, Clark Richards, which is in the process of contacting clients.

We’ve been contacted by quite a few of Debt Help Direct's clients who are concerned about their debt management plan and looking for free help instead of moving to yet another fee-charging company. We’re happy to assist. At least one ex-Debt Help Direct client who called us couldn’t believe that the service was free of charge when he’d been paying previously.

What free debt advice charities offer

The first thing we do is help put together a realistic and accurate budget, based on the person’s circumstances, before deciding on the best debt solution is. We’re not a profit-making organisation, so the solution is based on “best advice” – what’s best for the debtor.

If you’re a Debt Help Direct client – or a client of any fee-charging debt management company - and want free and impartial advice from the UK’s leading debt charity, you can start by speaking to one of our advice team, or by using our online debt advice tool Debt Remedy.

More on debt:

Where to get free debt advice

What to do if your children are in debt

Demand for debt help rockets

Self-employed suffering with double the debt of employed

Debt schemes that prey on those in need of help