If you are having financial problems, particularly with credit card debt, you may be considering debt management companies like Eurodebt.
Eurodebt has been in business since 1996 and is one of the largest debt management companies in the UK. Based in Bedfordshire, it is part of Pentagon UK Ltd.. (www.mirror.co.uk)

Eurodebt has over 80 locations nationwide and has an annual turnover rate of over ?7 million. (www.bbc.co.uk) They provide debt advice and solutions for consumers with debts ranging from ?3,000 to ?300,000. (www.sitebuilder.yell.com)

What services can Eurodebt offer?

They can offer you a customized debt rescheduling, or debt management plan. They advertise a free initial consultation in your home. They will send an agent to your home to discuss your situation, as some people are not comfortable discussing financial matters on the phone or entering personal information online. At this visit, the agent will assess your financial circumstances and determine if their company can help you. If so, they will assist you in drawing up a budget.

This involves figuring up your living expenses such as home and car payments, household bills and expenses. This amount is subtracted from your income and the balance, or "discretionary income" is used to calculate an affordable payment amount to your creditors. Eurodebt says it will negotiate with your creditors for lower payments and handle all communications with your creditors. You write one monthly cheque to Eurodebt and they distribute payments to your creditors. They provide each customer with a personal account manager.(www.eurodebt.co.uk)

What does Eurodebt charge for these services?

They do not list exact charges, as fees vary according to your circumstances. They do charge an upfront fee, which may vary from approximately 1200 to 2500. (www.bbc.co.uk) There is also a monthly service fee, usually around 35 which is included in your total payment.

In some cases , more money can go to the company than to your creditors. In one instance reported by the BBC, a Eurodebt customer was making monthly payments of 53, of which only 18 went to all her creditors, while the company received 35 per month. (www.bbc.co.uk) As you might expect, with lowered payments, debts may take a longer period of time to pay off.

What exactly do debt management companies do?

The first thing to remember about debt management companies is that they are a business. And, as with all companies, they are in business to make money. Many consumers may not realize that the clever television ads they see are all aimed at attracting customers to their business and making money. In some cases, they are making quite a lot of money. Mr. Mark Lazarowicz, MP, said "Customers of debt management companies pay charges for the services provided that equal about 15-25% of their total debt." (www.publications.parliament.uk)

Debt management companies may negotiate a lower payment or interest rate for consumers, but they cannot guarantee this. Keith Tondeur of Credit Action says, "There's no way a company can guarantee to help, as they don't know what creditors are going to say "They just can't make this promise." (www.bbc.co.uk)

Debt management companies make money from consumers with debt problems, and are doing quite well with it. Eurodebt is actively seeking franchisees to open new locations across the country. Graham Dennis, National sales director for Eurodebt , said in Franchise Magazine "The latest figures show that at least 6 million people in the UK are struggling with their debt payments and they are all potential customers."

(www.franchisemagazine.net) In an attempt to attract franchisees, he added "Every case earns the franchisee an initial payment of approximately ?500, in addition to a monthly residual income." (www.franchisemagazine.net)

Eurodebt customer complaints

There have been instances where Eurodebt customers have complained. In one incident, Ann Baldwin writes that she signed up with Eurodebt and paid over ?1,000 in initial fees, but her payments were not made on time to her creditors, resulting in additional late and overlimit fees, adding to her debt. (www.complaints.com)

In another instance, a potential customer who couldn't pay the upfront fee was allegedly told to put it on his credit card, while he still could. (www.bbc.co.uk/insideout) Another customer said she was pushed to pay at the initial consultation, and the agent accepted post-dated cheques.(www.bbc.co.uk/insideout) Norman Mann, a Eurodebt customer in Leeds, complained that he was paying Eurodebt ?35 monthly in service fees, ?37.50 for insurance and only ?24 of his payment was actually going to his creditors.(www.mirror.co.uk)

Eurodebt customer testimonials

There are also apparently some people who have been satisfied or pleased with the service they have received from Eurodebt.
" "My new job is great and now I can call my money my own…endless thanks to Anita"---Rachel
" "After making a phone call to you, I can honestly say I have felt everything lift and I can carry on."---Karen
" "We were both skeptical and worried but…you put us at ease-it was like talking to friends, not strangers."---Derek and Pat

Options in debt management

If you are in financial trouble or just want to get back in control of your debts, there are several options. In addition to debt management companies, there are free, non-profit organizations that can provide basically the same services. Before you sign up with Eurodebt or any commercial company, take a few minutes to visit sites such as Consumer Credit Counseling Services (www.cccs.co.uk) or National Debtline (www.nationaldebtline.co.uk). After checking your options, you can decide if Eurodebt is right for your situation or if you prefer another solution.