You need both: Debt Management Plan and Debt Management Program

Although the number of private insolvencies has steadied somewhat over the past few years rather than continuing its steep ascent, that is cold comfort to those facing massive, all but insurmountable debts. Still, there has been at least one positive trend: More and more of those in need are discovering that bankruptcy need not be their only choice. Today, there are a wealth of tools at your disposal, which allow you to deal with your financial difficulties in a variety of ways and according to your particular needs. And although none of them should be wielded carelessly, they can prove to be incredibly useful. A debt management plan is one of them.

Starting at home: Your personal debt management program

Before you even start thinking about working with a professional debt management plan, however, you need to realize that debt management starts at home – and by examining your very own spending patterns. Using multiple credit cards to rack up debt and spending more than you can afford on a long-term basis are important issues which you’ll need to confront before speaking to a debt management agency. So, the first step towards financial stability should always consist in mapping out a personal debt management program. As part of this program, you should compare your monthly earnings and expenses, establish an overview of your accounts and credit cards as well as the interest paid on them, come clean about your spending patterns and take appropriate action. Even a well-thought-out debt management plan will not be of much debt help, after all, if you haven’t faced up to the factors responsible for getting you into trouble in the first place.

Facing your creditors: Setting up a debt management plan

Of course, these individual debt management programs won’t help you with your creditors. Which is why debt management plans established by professional debt management agencies have become popular all across the country. Put technically, a debt management plan is little more than a renegotiation of your debt with your creditors, as part of which your different university student loans are consolidated into a single payment handled by the agency. More to the point, however, the value of a debt management plan lies in the act of arbitration between two sides whose interests are fundamentally different: While the debt management agency explains your position to your creditors, they, in turn, are provided with a realistic assessment of your financial situation. Under these circumstances, the seemingly impossible – a renegotiation of your obligations – can suddenly make complete sense.

Cleaning up your debt: Benefits of a debt management plan

There are multiple benefits to a debt management plan. For one, they clean up your potentially complex system of creditors and loans, thereby allowing you to spend your time with a far more important task: Earning the money you need to pay back your loan. Not always, but frequently, they will also drive down the overall amount to be paid.

And yet, in some cases, there may be an alternative programme to a debt management plan – an IVA, or Individual Voluntary Agreement – which essentially works along the same principles, but constitutes a government-supported tool providing for a more formal and standardized procedure. Deciding whether a regular debt management plan or an IVA is the best program for you is not an easy thing to decide. Which is why it is strongly recommended you turn to a professional debt management agency to get expert help.

This post is brought to you by the Debt Advisory Line.

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