An individual voluntary arrangement set up by a fee-charging firm and one set up by a free regulated charity are the same statutory arrangement, with the same legal effect. The debts covered, the protection from creditors, the duration and the outcome are identical. What differs is where your monthly payment goes. That is the entire comparison, and it is the part the advertising never leads with.
People pay for this every day, usually because the free route was never mentioned. Free debt advice in the UK is FCA-regulated and comes from the MoneyHelper debt advice locator, StepChange, National Debtline on 0808 808 4000, Citizens Advice, and Advice NI in Northern Ireland.
Why free services lose the search results
Charities do not bid for advertising space the way commercial firms do. A search for debt help returns paid placements first, and those placements are bought by firms whose model depends on charging. It is not evidence that the paid option is better, more thorough, or faster — it is evidence of a marketing budget.
The same asymmetry applies to cold contact. Free charities do not text people offering to write off their debt. If an unsolicited message promises write-off, that alone tells you which category the sender falls into.
What a fee actually buys
To be fair to the sector: fee-charging firms do real administrative work, and some people prefer a commercial relationship. What a fee does not buy is a different statutory outcome, a better arrangement, or access to a solution the free sector cannot arrange.
Where the money goes varies by route:
- Debt management plans. A free provider passes on your whole payment. A fee-charging provider takes a share, so less reaches creditors and the plan lasts longer.
- IVAs and trust deeds. An insolvency practitioner’s fees are payable either way, because the role is statutory. What differs is what you were told about them, and whether you were told the free sector could arrange it.
- Debt relief orders. There is an application fee set in law. Approved intermediaries at free charities help you apply, and nobody needs to be paid separately to fill in the form.
The comparison in one table
| Free regulated charity | Fee-charging firm | |
|---|---|---|
| Statutory outcome | Identical | Identical |
| Cost to you | Nothing for the advice | A fee, or a share of your payment |
| FCA regulated | Yes | Must be — check the register |
| Compares all routes | Yes, including doing nothing yet | Varies; some promote one product |
| Cold-contacts you | No | Sometimes, or via lead generators |
| Time to arrange | Appointment waits at busy periods | Often quicker to answer the phone |
The one honest advantage on the right-hand side is responsiveness. A commercial firm answers immediately; a charity may have a wait at busy times. Whether that is worth a share of every payment for years is the question to weigh.
The lead generation layer
Many of the firms contacting people are not debt firms at all — they are lead generators who sell your details on. That is why one enquiry produces calls from several companies, and why the messages are so insistent.
Two consequences follow. Your information travels further than you intended, and the firm eventually advising you was chosen by whoever paid most for the lead rather than by fit. Neither is a reason to panic; both are reasons to initiate contact yourself rather than responding to an approach.
What good advice looks like
Regardless of who provides it, an adviser should:
- build a full budget before recommending anything
- set out every route your circumstances allow, including the ones they cannot arrange
- explain what happens if the arrangement fails
- state fees plainly, in cash terms, before you commit
- tell you that free advice exists
An adviser who names one solution in the first conversation, before seeing your figures, is selling rather than advising. That is true of a charity too, though it is rarer.
Questions worth asking any firm
- Are you FCA authorised, and under what firm name and reference?
- What will I pay in total, and what proportion of my monthly payment reaches my creditors?
- Which other routes did you consider, and why did you rule them out?
- Could a free charity arrange the same solution?
- What happens if I miss payments?
The fourth question is the one that ends most sales conversations honestly. Our guide to checking a debt firm is FCA authorised covers how to verify the answer to the first, which matters because the trading name used to contact you is not always the authorised entity.
If you have already signed with a fee-charging firm
You are not stuck. Arrangements can usually be moved, though the position differs by route — an informal debt management plan is straightforward to move, while a formal insolvency arrangement involves a supervisor or trustee and needs advice before anything is changed.
If you believe you were misled — told a solution was your only option, not told about fees, or not told free help existed — that is a complaint. Raise it with the firm first, then take it to the Financial Ombudsman Service. Do not stop payments while you complain unless an adviser tells you to; that can collapse the arrangement and leave you worse off.
The cost over a full arrangement
The difference is easier to see over the life of an arrangement than in a monthly figure. A share taken from every payment for several years is not a small administrative charge — it is a proportion of everything you manage to pay, and it lengthens the arrangement because less reaches the creditors each month.
Ask for the comparison in cash: what will be paid in total, and what would be paid in total through a free provider on the same figures. Any firm that has done a proper assessment can produce both numbers, and seeing them side by side settles the question faster than any argument about service quality.
The same logic applies to the length of a plan. A debt management plan that runs two years longer because a share is being deducted is two more years of arrears sitting on your credit file — see how to check all three credit reports to see how those entries are recorded.
Common questions
Are free debt charities really free?
Yes, for the advice and for arranging solutions. They are funded largely by the creditor sector, which some people find surprising — it does not change the regulated duty they owe you, or the fact that they routinely advise routes creditors would prefer you did not take.
Is a fee-charging firm ever the right choice?
It can be a reasonable choice if you understand the cost and prefer the service, and if the route was chosen after a proper comparison. The problem is not that fees exist; it is that people pay them without knowing there was an alternative.
Will a charity arrange an IVA or a trust deed?
Yes. Free providers arrange formal solutions as well as informal ones — see debt solutions in England and Wales and protected trust deeds in Scotland.
How do I stop the calls and texts?
Do not engage, and do not confirm any personal details. Registering with the Telephone Preference Service helps with cold calls, and your phone can block numbers. Contact a free service directly instead.
What if I have already paid fees I should not have?
Raise it as a complaint with the firm, then with the ombudsman if the response is unsatisfactory. Keep every document, and note dates of conversations — evidence is what decides these cases.
Next step
Before signing anything, make one call to a free service and ask them to review the same situation. It costs nothing and takes an hour. Our list of free debt advice charities and helplines covers who does what, and the documents to gather makes that hour count.
This page is general information, not regulated debt advice. Fees, firm practices and regulatory requirements change. Free FCA-regulated advice is available from MoneyHelper, StepChange, National Debtline on 0808 808 4000 and Citizens Advice.