According to Individual Voluntary Arrangement (IVA) provider ClearDebt, more debt management firms should lower their fees in order to assist those already struggling to pay off debts.
The company is particularly keen for lower fees to be charged to individuals with fewer debts, saying that fees incurred by borrowers who try to get help with managing their debts can sometimes lead to further problems.
More people may be encouraged to come forward for help at an advanced stage, or mean creditors may be more easily appeased at an earlier time if fees were lowered, preventing problems further along the line.
"Lower fees mean we can help people with lower debts," said Andrew Smith, ClearDebt's marketing director. "Lower fees also mean creditors will get more and they normally accept a minimum of 25p in the pound."
Mr Smith also said that lower fees would encourage better practise among IVA providers because "if you have higher fees there has got to be the temptation to push the debtor harder".
IVAs are used instead of bankruptcy to resolve issues of debt between a debtor and creditor for people facing financial difficulties.To read more about loans, click here.
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