Debt Management & Debt Consolidation

Debt management

At its most rudimentary form Debt Management is a step involving three actions:

Knowing the correct amount of debt you have currently.

Stop all the factors that are pushing you further into debt.

Calculate the repayment amounts in a way that it doesn’t affect your financial well-being.

But what’s possible in thoughts are often not in practical life; therefore, there are people who make available funds to clear off the debts a person is currently in. In return, they charge a certain amount of interest which is way down lower than what the individual debts charge. Debt consolidation – in other words – is thus a vital part of the debt management process.

What is Debt consolidation?

Debt consolidation processes multiple payments into one. Thus, it relieves a person from the hassles of remembering multiple repayment debts, but most of all; it eases the burden of paying more in terms of interest. Debt consolidation merges all unpaid debt amounts into a single, monthly payment that can be paid with ease.

Debt consolidation has a direct link with bad credit histories; in the sense, those who mostly apply for debt consolidation are bad scorers on their respective credit reports. This is because clearing off debts increases the credit scores. Therefore, those who are being subjected to:

  • Arrears
  • Zero or very slow payments
  • Bankruptcy
  • County Court judgments/CCJ-s
  • Multiple defaulted payments

May set right their financial health once more by opting for a Debt Consolidation Service. However, now it’s time to have a look at the situations that bring about the need for debt consolidation, with credit card debt being the factor mostly responsible.

What is Credit Card Debt?

Use credit cards thoughtlessly and impulsively; in a couple of months you shall come to know what a credit card debt is. However, if you are not willing to learn the hard way, then the words below shall suffice for your quest.

A person must use his/her credit card(s) according to the monthly income, so that no billings from the lender(s) remain unpaid. But this is often not the case; what most of us think is clearing off a huge amount part by part. What we fail to understand is we also need to pay the interests that grow every month on the unpaid amounts. These all add up to real huge amounts leading to defaulted payments on which late payment fees apply. The accumulated burden, within sometime, multiplies soon to greater magnitudes making it an impossible load to bear. Credit card debt, from this point onwards, starts becoming a much dreaded subject.

How to get out of Debt?

You may either file for a bankruptcy (the escapist’s way for debt management) or go for a debt management program (the sane people’s choice), but opting the first recommendation is also going to give your credit report(s) a 7-year long stigma. So it’s the sane people’s choice that’s left. Sane in the sense, the step shall not only clear the credit card debt peacefully but shall also implement certain habits in the debtor to prevent running him/her into similar debts in future.

So the first step is to get into some constructive shopping. That translates to finding out a financial planner or advisor who can restructure your way to financial freedom and well-being.

Role of a Bookkeeper for Debt Management

A debt manager or Bookkeeping service not only provides the necessary advice but also keeps a sharp watch on how well they are followed. The advices, if followed properly, set the best course for expenditure against a person’s monthly income. Therefore, to find out if an accountant certified for running Debt Management Services is good or not, you must:

· Hold open, face-to-face discussion(s) to see if he can reinforce your credibility to the creditors.

· Find out if he can devise any custom Payment Plans

And if you think you can read from a DIY guidebook and get into action, always remember that a debt management professional has learnt the ways of Credit Card Debt Consolidation through his experiences besides earning the certification from the state. He can devise ways and make sure you walk on them. Or just think it the other way, had a D.I.Y. book on debt management been that good, why would you fall into such a situation?


One Response

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