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Here is a typical example of a debt management discussion:

I am trying to sort out my debts and have a few questions.

How do debt management companies such as Baines & Ernst work? Can I really reduce my debt repayments. Also, is it possible to remove defaults from my credit files, as credit repair companies claim? i was always under the impression that only CCJs could be removed under certain circumstances.

Finally, how reliable are these credit repair manuals that i see being sold on the net which promise to reveal credit secrets, are they really just full of rubbish as I suspect?

You may be able to reduce payments if you can transfer debt to a lower interest rate, e.g. credit card to personal loan, but it's unlikely that such a company can do anything you couldn't do yourself for no charge. Try talking to a Citizen's Advice Bureau. The best thing you can do to reduce debt is pay it off! Again, these companies are only likely to be able to do things which you could do yourself, e.g. making sure that the records are updated if a CCJ has been paid.

I agree with the response from Stephen Burke but would like to add a few points. Going to a so called debt management company which charges a fee adds to your debts. It is comparartively easy for them to arrange to reduce your
monthly repayments but this is likely to be at the cost of paying much more than in the long run.

They can reduce your repayments by doing one of two things:

* reducing the interest rate you are paying
* increasing the term of the loan (ie it takes longer to pay it off)

The problem with these organisations is that although they may roll all your debts into one monthly payment, they will take a fee which puts you worse in debt, and they may also tempt you with more credit ("we'll pay off all your debts and you'll just have one low monthly repayment and you'll even get a grand 'cashback'!")

They do nothing that you can't do yourself by either

* paying off the highest interest rate debts first
* moving a debt to a lower interest rate loan with the same period to run as the existing debt (this lowers your repayments as you are paying less in interest)
* rescheduling your debts so you have longer to pay them off (this should be used as a last resort if you really can't pay off the debt as it stands, or get it moved to something with a lower interest rate)

You can make sure your credit records are up to date yourself (eg if you've paid off a CCJ) for a grand cost of 4 quid (2 pounds to each credit reference agency)