Debt management plans that incur fees can often save consumers money in the long run compared to free alternatives, according to ClearDebt.

Andrew Smith, marketing director at the company, argued fee-charging debt management firms offer significantly better value for debtors, as he responded to a report by Which? suggesting free services would be a better choice.

Such organisations give free advice up to the point of taking out a plan or an Individual Voluntary Arrangement, so fees are not paid until the client begins paying off their debt.

And Mr Smith added that charities often simply give “a DIY debt management plan and no help at all with making distributions to creditors”.

In addition, he pointed out that around three-quarters of people choose to go with a company that charges for the service, this proportion having risen from 50 per cent in recent years.

The report by Which? also encouraged consumers to avoid getting secured loans, advising that unsecured or personal loans were a safer option.

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