The research, by Lloyds Banking Group and Money Advice Trust, highlights that debt management plans set up by fee-charging companies were more likely to fail as arrangements where no fee is involved. 

Particular concerns have been raised about the nature and level of fees often charged to people struggling to make ends meet.

The survey findings showed around one in ten paid all of their fees up front, a practice the research argues should be banned.

The research suggests that people who sign up for these DMPs are unclear in their understanding of what they have signed up for, especially the level of fees and charges applied.

Joanna Elson, chief executive of the Money Advice Trust, said: “People deal with unmanageable debts in a variety of ways, but far too few people take the one step that stands the best chance of making a real difference, that is seeking free, independent advice.

“When people do take the brave step of confronting their financial difficulties, we owe it to them to ensure they stand the best possible chance of finding a fair and sustainable way back to financial health.”

The research also found that half of those who were being charged fees for a debt management plan were not aware that such plans could be set up for free.

People struggling with debt were found to be making distressed decisions and not shopping around for the best solution.

The absence of any objective or regulated means of comparison makes it difficult to choose between competing debt management companies.

Elson added: “We have long held the belief that, whilst people should be free to pay for debt advice if they choose, that decision should only be made from a truly informed position. The research makes clear that around half of those paying for debt help are not aware of the free alternatives.

“In times when free, charity providers of advice are facing tight budget squeezes, whilst the marketing budgets of fee-charging debt management companies seem to grow exponentially each year, we have to be very careful that this 50 per cent figure does not grow any further.”