What is Debt Management?

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It’s not always easy to manage your debt and ensure timely payments, much more difficult if you are struggling financially. That is why having debt management will help in keeping up with all your bills.

Debt management is a way for you to take control of your debts. It is through effective financial planning and budgeting. The main purpose of debt management is to create and implement strategies that will lower your existing debt and eventually pay it off.

There are 2 ways on how to create a debt management plan. You can create a DIY debt management plan or seek the assistance of credit counseling.

DIY Debt Management

DIY debt management is an option where you create a budget for yourself. This budget you create should allow you to completely pay off your debts while maintaining stable finances. The most common DIY versions of debt management are debt snowball and debt avalanche methods. Debt snowball focuses on paying off the smallest of your loans first. Meanwhile debt avalanche focuses on paying off the loan with the highest interest rates.

Debt Management with Credit Counselors

A credit counselor is a third party that helps you reduce and eliminate your debts through education, budgeting and the use of various tools. They often come up with plans to repay your debt and may help negotiate a better repayment plan with your creditors. A credit counselor may help you extend your payment plans, gain concessions, have lower interest rates, reduced payment or waive some of the fees to get out of your debt quickly.

Debt is overwhelming and finding a solution is a challenge. Fortunately, debt management can provide relief and solutions for your debts.

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