Financial Resource

When you have serious debt problems and you turn to a debt management company for help, you really cannot afford to take chances.  All too often people make the decision to deal with their debt problems once and for all, they sign up with a company, and a year or so down the line they find that they have handed lots of money over in fees, but that their creditors are still chasing them for all their debts.  This is a consequence of getting involved in one of the less reputable organisations who are currently operating in the field of debt help.

If you are going down the debt management route you need to ensure that you choose a reputable company to work with.  Before you go that far, however, you should make sure that debt management is the right option for you, and that you have an understanding of the process you will be going through.  The reason you need to understand the process is so that you can make an informed decision.  It is also important to make sure you are opting for this route because it is the best solution to your problems, rather than because that is the only option you are aware of.

Debt management is sometimes referred to as debt consolidation, though this should not be mixed up with the type of debt consolidation that means taking out a loan.  No borrowing or loans are involved in this kind of debt consolidation.  The process involves a skilled negotiator dealing with your creditors on your behalf, to come to new arrangements for paying back your debts.  The person will work for you to reach agreements that result in new payment amounts, which are combined together into one affordable monthly payment.  You only have one payment to be concerned with, which you pay direct to the debt management company.

Debt management does not involve writing off any of the actual debt, so your creditors do end up being paid back all the principle amounts that they are owed. For a debt management plan to work, you need to have some money spare each month to put towards the payments.  You will therefore be expected to have a regular income.  The debts you can include in the plan will need to be what are called unsecured debts, which are things like credit cards and household bills, rather than mortgages or hire purchase agreements.

If you think you will not have any, or enough, money spare each month to set up a debt management plan, you still have options available to you apart from bankruptcy.  The main alternative is known as debt settlement, and is a process that involves negotiated settlements with your creditors which include writing off large amounts of your debt.  The equivalent of debt settlement for UK residents is called an IVA, or individual voluntary arrangement.

Once you are sure that debt management is your best option, you need to find some reputable debt management companies to approach.  The key points to remember when looking at companies is to only approach those who are well established and have a track record of helping lots of people already, and always approach two or three in order to compare the proposals they can offer you.  Following reviews and recommendations can speed up the process of coming up with a shortlist of reputable companies.

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