There is to be a new clamp down on firms that offer the socalled Silver Bullet solution to debt ridden people. The companies which claim they can write up to 95% of your unsecured debts for a small set up fee could be banned under new regulation to be announced by the Business Secretary Vince Cable.

These firms work on broad outlines in existing Government rules that allow people to write off certain amounts of debt if certain conditions are met. Unfortunately hardly ever are these conditions ever met and what usually happens is that the person who is indebt pays these companies many hundreds of pounds to set up agreements that can't be enforced.
So for example the customer would pay Company X £200 to set up these agreements, then pay this company £100 a month. This company would then pay the creditors about £70 of the £100 of which the creditors would share. The company would then keep the £30 as another fee.

However what we have been hearing about is people who have been paying this £100 to the debt agency for over a year and thinking all was going well, suddenly finding that the debt agency has either not been paying the creditors at all or their never was an agreement with the creditors in the first place.

So what usually happens after a certain amount of time is that the original creditors end up taking the person to court anyway. So with new legislation coming in soon, these companies and off shoots like them will be a thing of the past very soon.

If you do need debt help then our advice would be to use a free debt charity such as the CCCS (Consumer Credit Counselling Service.