Debt Management

When you’re dealing with debt, it isn’t always easy to see the wood for the trees. Sometimes, there’s just too much information at your disposal; a few too many dead-end websites offering to dispel debts at a click – and, inevitably, a few too many disappointments. Whilst it’s reassuring that there’s so much help available, it pays to sift!

Perhaps one of the most confusing aspects of dealing with your debt is the terminology. It’s not the terms themselves that are confusing; it’s just the way they’re used that’s liable to addle our brains. It should come as no surprise that some sites actually try to confuse you. They’ll give short shrift to straightforward advice and use terms interchangeably; so in the end, you don’t know your debt consolidations from your debt management schemes. You’ll be hard pushed to distinguish the debt recoveries from the debt settlements. It’s just one of the ways in which they take control of your situation away from you.

As we hope we’ve demonstrated throughout this site; when you untangle it, debt is really quite simple, albeit frustrating. Debt solutions should be simple too. Above all, look for clarity. It’s important to know what’s what. Debt management is a prime example. What is debt management anyway? Up to now we’ve been talking about it in terms of actively taking care of and managing your own debt repayments. But we can also talk about debt management in terms of a professional service that will manage your debt on your behalf.

You can enlist a debt management company to negotiate with your creditors on your behalf. They’ll apply for extensions to your existing repayment terms, freeze interest, or even write off a significant part of your debt. Bear in mind that debt management services will generally only be offered to debtors with loans to fewer creditors; the bar on exactly how many creditors will likely differ, but three is popularly cited.

How does it work? Your debt management ‘case worker’ will negotiate with your creditors and arrange a settlement, based on the evidence they’ll provide that you’re unable to handle your existing arrangement. Assuming your creditors agree to the terms, and the likelihood is that they will; you’ll pay a set sum of money through your chosen debt management company, who will apportion the funds among your creditors on your behalf.

To complicate things ever so slightly; some debt management companies will actually utilise a debt consolidation scheme to manage your debts. But this is just one aspect of a comprehensive debt management service. We’ll look at debt consolidation in more detail on the next page.

Some debt management services are free; just as many aren’t. This doesn’t necessarily mean they should be avoided. You’ll need to decide for yourself which service best meets your needs; consider whether the fees you’ll incur genuinely represent a justifiable expense. Will you save more money in the long run? Will you feel more secure knowing your debts are being managed on your behalf? Will it make your life easier?

Above all else, if you’re entering into a debt management scheme, do ensure that your creditors agree to the terms. Don’t just take it on faith that your financial representative has confirmed this. Make sure you know what you’re getting into; and if you’re at all unsure talk it over with a debt helpline advisor. While the majority of debt management consultants and debt management caseworkers will only ever act in good faith; your helpline advisor will be able to re-assure you, so if you have any questions, just ask.

Debt management services can be an excellent way for you to take control of your debt; by delegating the responsibility. No paradox intended!