There’s no shortage of ‘debt management’ firms promising rapid solutions to overwhelming debt. Their services typically include bankruptcy advice, formal and informal debt agreements and debt consolidation. Others advertise ‘cleaning’, ‘repairing’, or ‘washing away’ default listings on personal credit reports.

For anyone battling high debt this can all sound very appealing. But our money watchdog ASIC has cautioned that debt management firms can pose significant risks to financially distressed consumers.

One of the key issues is these companies can charge high upfront fees for services that don’t always deliver much value. That’s a real worry because people facing spiralling debt can be extremely vulnerable to taking up unsuitable services or become victims of a predatory hard sell.

It’s worth approaching debt management firms with caution. Sure, some may be highly reputable but you’ll still pay for their services, and that’s money that could potentially be used to pay down your debt.

Digging your way out of debt doesn’t have to come with a raft of fees and charges. A national network of financial counselling services is available that offer a free service. The  difference is that they don’t advertise an instant solution because frankly, there is no magic bullet to getting out of debt fast.

If you’re struggling with debt, it’s critical to take early action. Speak to your bank or creditors and explain the situation – many will offer a repayment plan.