Just as its name implies, debt management is the act of managing debt, hopefully to the point of getting it under control enough to allow the debtor some financial security. While it certainly is one of the best ways to handle overwhelming debt, the best strategy is, of course, not to go into debt in the first place.
Unfortunately though, that’s not always how things work. If you’re reading this, then chances are that you are struggling with debt. As hopeless as things may seem, there is a way to reduce your debt and get it under control. There is a way to get your life back on track.
In fact, there are several different ways that you can manage your individual debts and get out of them fast. There is also a wide variety of information and advice on the topic of debt relief available out there, the most important and useful of which is helpfully outlined below.
Overview of Debt
Debt, in its most basic sense, is when one person or group owes another person or group something. This ‘something’ is usually money. In most cases, especially when dealing with the legal work behind debt management, the person who owes the money is referred to as the debtor, the group the money is owed to is referred to as the creditor, and the money owed is referred to as the debt itself.
Many people fall into debt when they borrow money from a creditor. There are many reasons that a person might need to borrow money and many reasons why they might then fall into debt. Below are a few of the most common:
People with low incomes generally tend to have more debt problems than people with higher incomes. The reason for this is simple: they have less money to spend and are more likely to take out loans for everyday essentials that they end up not being able to pay. Some people also fall into debt when their incomes are lowered. An example of this is a person being forced to accept a lower paying job and still expecting to live the same lifestyle as before.
- Divorce: A tough divorce is another one of the top causes of debt. Divorce can leave you with hefty lawyer, legal, and settlement fees in addition to wasted time and possible child support payments. To further add on to the expenses, many people going through a divorce must find a new place to live after all is said and done.
- Credit Card: One of the most common types of debt is credit card debt caused by failing to pay off credit card loans. It is all too easy to misjudge the amount of money that you have and overspend without thinking. It is equally easy to simply overspend without weighing – or even considering – the consequences. Many people find themselves so deep with credit card bills that the possibility of paying them off seems hopeless.
- Gambling: More than 50% of the adult population in the United States has gambled at some point in the past year. A handful of those people are gambling addicts. If you have trouble staying away from gambling, you could find yourself in serious debt in the blink of an eye.
- Illness: As terrible as it is, the expenses that come along with a prolonged illness really can’t be avoided. Medical expenses are a major cause of debt in the United States.
- Education: With the seemingly ever-rising cost of education, it is no small wonder that so many college students leave school with massive debts on their shoulders. Add to that the freedom that comes with having your very first credit card and even more debt can be easily racked up.
As you can imagine, falling into debt, for any reason at all, can have serious negative consequences if it is not handled in the right manner. A few of the dangers of falling into debt include:
- Health: Debt causes a lot of stress, so it is no small wonder that the health of a person battling debt is in danger. Health effects caused by debt can range from minor headaches to full on heart attacks.
- Relationships: Money is one of the largest stressors in just about any marriage. Add debt into the mix and things are bound to get even more difficult. Worse yet, overwhelming debt sometimes leads to divorce – which, well, if you read the information above, can lead to even more debt.
- Family: Just as debt affects romantic relationships, it can also affect family. In addition to doing away with family vacations and Christmas presents, the stress that debt causes you can also rub off on your children, parents, and anyone else closely involved with your life.
- Career: The stress caused by debt can have a negative effect on your work performance and thus your career. In addition, many employers are starting to check their applicant’s credit histories…if yours isn’t up to par, you just might not get the job.
- Credit: Yes, credit problems are a big consequence of having debt. A poor credit score can keep you from getting a loan for a new house or a car and, in some cases, even prevent you from renting a new apartment.
- Enjoyment: While not absolutely essential, having a little extra money can greatly add to your enjoyment of life. People with overwhelming debt might not have enough to do some of those fun little things that make life enjoyable. Think: family vacations, going to the movies, and eating out.
As many negative consequences as there are to falling into debt, debt itself is not entirely negative. For instance, it allows many people to afford houses, new cars, and exotic vacations, among other things.
However, having debt is only safe in these situations when it is handled well and paid off in a timely manner. If it isn’t, then it will quickly spiral out of control and cause a lot of damage to your life. Luckily, there are several ways to handle debt if you already have some (or a lot) of it.
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Overview of Handling Debt
There are many different ways that you can handle your debt if you are in over your head. Three of the most effective ways are debt management, debt settlement, and debt consolidation. These three methods of handling debt are further discussed under their respective subheadings below.
One of the most common debt relief programs, debt management involves the services of a debt management company. Generally it also involves some form of financial counseling.
A debt management company will also negotiate with your creditors to try and help lower your interest rates on your bills. The aim of debt management is to try to put you back on track financially and make your bills easier to pay.
Debt management works best for those working to pay off unsecured debts such as credit card bills, medical bills, student loans, personal loans, and payday loans.
The benefits of using a debt management company in these situations include getting out of debt quicker, having your monthly bill payments lowered, and helping your credit score improve over time.
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If mounting debt is setting you back, then debt settlement is one of the best ways to cope with it. Like debt management, debt settlement programs are run by professionals. Their expert debt collection advice will help with your current debts and help you avoid new ones in the future.
A debt settlement program will reduce your collection calls and help you avoid bankruptcy. The company that you are going through will also deal with all of your creditors and collection agencies thus making paying off your debts much easier and less exhausting.
Most debt settlement companies will only work with you if your debt is over $10,000. Debt settlement works well when you have unsecured outstanding balances, are behind on your payments, are not in a position to repay your bills, or are considering bankruptcy. Most companies like to work with clients who will be able to repay their debt if their monthly burden is reduced.
Debt settlement will help you get a break from collectors, avoid legal hassles, avoid bankruptcy, get a reduction in the amount of your debt, and avoid paying any extra fees or penalties. Above all, it will put you on stable financial footing once again and help prevent debt in the future.
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Debt consolidation is a method of handling debt that can be done alone or with the help of a professional company. In a simple sense, it replaces multiple debt payments with a single monthly payment. It makes your monthly payment affordable so that you can get out of debt with ease.
In many cases, it is wise to consider debt consolidation assistance. Like debt management and debt settlement, debt consolidation can be tricky for a layperson to understand. There are many companies around who will help you with personal loan debt consolidation so that you can get your life back on track.
Debt settlement works best for those who are unable to handle multiple bills at the same time. It can also help give you relief when you are short of cash, are using credit cards to pay your bills, or when you’re being bugged by creditors on a daily basis. Debt settlement cuts interest rates, cuts monthly payments, gets rid of late fees and penalties, and organizes all of your payments into a single easy-to-remember monthly bill.
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Reasons to Seek Debt Relief
If you’re in trouble financially and are swamped in debt and bills, why wouldn’t you seek debt relief? Seeking debt relief through the three methods listed above: debt management, debt settlement, and debt consolidation, will help you put your life back on track. It will help you onto stable financial footing and hopefully prevent all future possibilities of falling into debt again.
Debt relief is essential to almost everyone struggling with debt, especially if that debt is out of control. If you haven’t been able to pay your debt off for some time, then debt relief will help you come up with a plan of action. It can be extremely hard to know how to manage debt on your own, so it is lucky that there are experts out there who do.
Reasons to Seek a Debt Relief Specialist
If you’re fighting against overwhelming debt, then you might need to consider hiring a debt relief specialist. In fact, there might be no other choice (apart from winning the lottery that is).
A debt relief specialist will be able to give you the absolute best advice on handling your debt. They will be able to help you get out of debt fast. Handling debt is their job and they know how to do it better than anyone else does. They will help you fight back against it and regain some control over your life and your finances.
Best of all, hiring a debt relief specialist is very affordable, especially when you consider how much money it is potentially helping you save.
Without a debt relief specialist advising them and helping them with their financial matters, people in debt tend to fall deeper and deeper into it. It is a viscous cycle. A debt relief specialist really can help.
While no one ever wants to be in debt, it is reassuring to know that if you ever are, you have options. There are multiple ways that you can pull yourself up out of the deep end of debt and land on the shores of a normal life again.
Many people seem to think along the lines of ‘once in debt, forever in debt,’ and, while that is the case for many Americans, it doesn’t have to be. Debt management, debt settlement, and debt consolidation can all help you get your debt under control. Hiring a debt relief specialist can help make things get accomplished more quickly.
If you’re in debt, don’t wait. Make a plan. Find professional debt counseling if you need it. Pay those loans off as quickly as possible.