Debt Management and How to Survive

Debt management is a popular topic, especially when money is tight. Almost everyone has debt, and there are quite a few that find themselves with more debt than they can handle. Debt management should be discussed when you are consistently late or altogether cannot make you minimum monthly payments. This can be handled several ways.

To begin to handle credit card debt management, put together a monthly budget that targets payoffs. This consists of writing down all of your account balances, interest rates, and minimum payments. Once this information is gathered, there are two ways to manage the debt. One is making some extra payments to your highest ranking credit card in terms of interest rate, or you can begin with your card that has the lowest balance. All other cards need to have minimum monthly payments made. Paying off the card that has the lowest balance is good, since it gives people progress towards debt management that they can actually see. Some would argue that this is more important because the feeling of happiness or relief when a card is paid off is stronger than the feeling of guilt that the higher interest rate card is still around.

-Debt Payoff Acceleration: Once the first card is paid off on either plan, continue to allocate the same amount of money monthly to your credit bills, but add the amount you were paying on the paid off card to the next card in line. Continue this process until they are completely payed off. With this form of credit debt management, you will be paying the same amount in total each month, but progressively paying more on each card, which accelerates the payoff for all cards.

-Debt Consolidation Program: If you are looking for debt management on a larger scale, then you may need some outside help via formal debt consolidation programs. This can also be done by you, but first you have to call all creditors that you owe money to, and try to get them to lower your interest rates, or let you make smaller payments, or have the balance settled. For better and quicker results, a debt consolidation company can do this for you. They have better standing, and can achieve results in a fraction of the time. You must pay them an amount monthly that will cover all credit payments, at a reduced rate because they negotiate your debts over a longer period of time and at lower interest rates. The amount you pay monthly will be less than what you currently need to pay each month, so that offers some relief to your budget.

-Debt Negotiation: This can be done by you, but it is a tactic of debt management better handled by a professional company. You will be charged a fee, or get a reduction from creditors while you pay off your bills. They are best able to negotiate breaks on interest, fees, and payments for you.

Another option is a Debt Consolidation Loan where a person can get one large loan to pay off all their smaller debts, thus saving them money and leaving them with one monthly payment. Payoff checks will then be written to each creditor. If you are lucky, the interest rate will be lower, therefore lowering your payments and time period for payment of all the debt.

-Debt Management through Bankruptcy: This is a last resort, but a Chapter 13 bankruptcy will allow you to restructure your bills, making credit debt management easier. If you choose bankruptcy, you are not allowed to work on any lending obligations to pay. For ten years, your credit will be adversely affected. Chapter 7 Bankruptcy is also an option but it is harder to qualify for and a debtor will not owe their creditors anything once it is finalized.