When you find yourself deep in debt you may have to turn to a debt management company for help. Some debt advice companies will advertise a free Debt Management Plan (DMP), but quite often this is just a marketing ploy to try to get your business. The chances of finding any company that offers a truly free debt payment plan are actually very slim because all companies that provide these services are commercial organizations. These companies provide a service and will expect payment for that service in order to cover their costs and make a profit. This does not mean they do not offer a worthwhile or honest service, or that they cannot help get you out of debt, but it is important to find honest organizations to deal with.

You may come across companies that advertise free services. What these companies are usually offering is more likely to be a service that does not ask for any upfront fees. This does not, however, mean that their service is cost free. All it usually means is that their costs will come out as a proportion of the monthly payments that they collect from you. The danger with companies that are devious enough to pretend their services are free is that their commissions can be high in order to make up from the fact that there are no up front costs involved.

It is important you clear up all the payment questions you have before agreeing to do business with any company that you approach. It they advertise for a free debt management plan, ask them what is actually free. Any reputable organization will be completely transparent and open about what their services will cost you.

Many companies in the UK are being investigated by the Office of Fair Trading for false advertising. The UK is cracking down on companies that advertise for a free debt management plan and then turn around and charge for it.

The first step in setting up a debt repayment plan is finding a company that is honest and reliable. The only way to be sure of this is to check out whether an organization is well established and has a good track record of getting people out of debt. Look for testimonials and proof that their advisors have plenty of satisfied customers who were once in the same situation as you. If in doubt, stay away from the companies that advertise for a free debt management plan unless it is very clear where their funding comes from and that no charges are taken through commission or anything else. Most of all, stick to companies that are instantly upfront and open about their fees and charges.

When you decide to work with a particular advisor, they will then speak to your creditors on your behalf. In many cases they may be able to get the interest rates reduced to lower the amounts that you have to pay out each month. When they have done that with all of your creditors, they will collect one payment from you each month and then divide that payment among your creditors in line with the new agreements. Pay day loans, credit cards, and medical bills are some of the common creditors found on a DMP.

Even though you are unlikely to find a free debt management plan that does not mean that such a plan can not be of great value to you. A debt advisor that does a good job is well worth the fees they take, and you will still be better off than you would otherwise have been.

There are some basic things you should do with a payment plan to ensure all goes well. Make sure you are on time with your payments. Your creditors are not likely to re-write another agreement for you if you default on payments. Contact your creditors and make sure they have agreed to the plan before sending money to the debt management company and ensure that the creditors are being paid by checking your bills every month.

Author's Bio: 

Find out more about getting a free debt management plan on K D Garrow's debt help website, which also provides a list of some of the best debt management companies in the UK and US. You will also find advice on debt settlement, using IVAs, how to budget, and tips for finding the best debt management firms.