Simply put, debt management refers to your means of effectively dealing with your debt as an entity that you are finding increasingly difficult to manage on your own due to every passing month. With this debt relief strategy, you can eliminate debt without even thinking about it. However, it is extremely significant to properly research and practice a debt management strategy that best suits you because it will aid you to get out of this vicious cycle of high expenditure without any risk or trouble. In other words, debt relief is not merely about you paying a certain debt amount in return for being relieved from all the stress associated with debt repayment.
This debt relief solution involves making single payments to your creditors. These payments may be done once per month, quarterly or annually and should definitely be designed and aimed at minimizing the interest charges that are constantly hounding you and causing you to spend more than what you can afford. You can also make these single payments through electronic transfer where you just send a single electronic payment to your creditor from your bank account.
Once this is completed, the debt management company will begin negotiations with your creditors. They will bargain on a new repayment plan where you will pay a lump sum amount and the remainder over a period of time until all of your loans are fully paid off. As part of the agreement, you will also be required to stop making any further payments to your creditors except the one payment required by the company. This will require you to first stop making payments to your student loans, which will be a lengthy process but well worth it when all is said and done.
You may be wondering if you will be able to avoid filing for bankruptcy as there have been many credit counselors who have tried to inform individuals that they will not be discharged from bankruptcy because of this. The truth is that your credit counselors are not able to prevent you from filing for bankruptcy in most cases. This is because bankruptcy is not an option that creditors are willing to give up easily. The reason why creditors will not give up on you is that their reputation is on the line every time you file for bankruptcy. If you have used credit counselors who did not give you any help regarding a realistic debt management plan, you may find yourself in the same position as you were before they entered the picture.
Another thing you need to understand when it comes to bankruptcy versus a debt management program is how long will it take to be totally out of debt. While debt management programs may take longer to completely eliminate debts, you will be debt free in five years or less if you do an excellent job managing the money that you currently have. Debt settlement will take longer to eliminate your debts and will probably have you debt free in ten years or more. These two methods will take you about the same amount of time and a considerable amount of money in the beginning. Keep in mind that the more credit that you transfer out of your name to your settlement company, the faster you will become debt free.
You do not have to go with a credit management company if you do not want to. There are other debt counseling services that are just as good and there are also some that will not even help you save money. Take some time to see what your best options are and how they can fit into your budget and assist you in getting rid of your financial worries.