Is Debt Management Right For You?

This is an alternative to Debt Consolidation Loansin that it is a type of plan completed by you and a debt management company that is designed to help you make affordable and sustainable repayments each month to your creditors. By trying to get creditors to reduce your payments can be hard work, especially when their collection departments only know the word 'NO'. However, with an arranged debt management plan, a full assessment of your financial situation is carried out. By knowing your regular income and expenditures, a plan can determine realistically how much you can afford to offer each of your creditors. With a debt management company, your creditors are approached and asked to accept reduced payments. Creditors are often happy to agree with management plans because they know from experience, that such plans are realistic and substantable. You then make a single monthly payment, all of which is distributed pro rata to your creditors and 100% of your payment goes to reducing your debts. Thoughout the duration of the plan, if you experience difficulties in making payments, the debt management company can help in meeting your payments. If your circumstances change, the plan can also be reviewed at regular intervals and can continue until all the debts are paid off or until you wish to end the arrangement. The most common arrangement for this is an improvement of income enabling you to leave the plan and reverting to the original monthly payments.

The graph on the left shows the dramic upswing in the non-Business Bankruptcy Fillings. The increase in the total household debt is worrisome because greater debt is a sign of lower savings rates and has been steadily climbing since 2003.

Source: American Bankruptcy Institute