With more and more households and individual facing a real struggle when it comes to repaying their credit cards and debts, a huge number have been looking at ways to make their debts more manageable over recent years. For many this has involved going through a debt management agency in order to have their monthly repayments reduced and their payments structured in a way that is more affordable.

When signing up with a debt management firm, consumers make a single monthly payment to the firm, and this is then meant to be distributed by the debt management agency amongst the various creditors. However, a shocking new report has shown that many consumers are actually ending up in a worse situation when doing this because some firms are failing to pass on the repayments to the creditors.

According to the report a number of firms have been caught out taking the monthly payments from consumers and then failing to pass them on to the creditors. The creditors are then coming after the borrowers threatening court action. One couple explained that they are now having to sell their home to settle their debts after a debt management firm took money from them for months but failed to make any payments to the creditors.

A number of firms have been closed down after being found to be engaging in this practice, and one debt management expert said that around ten thousand people could be in danger as a result of this.

The Office of Fair Trading stated: ‘We regard this practice as unacceptable. Where we have evidence we will remove a company’s consumer credit licence, which means it cannot operate.’

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