Coping with Debt Problems

Managing your debts is not an easy problem to handle, which is proven by the growing number of people who are searching for ways out of their situation each month. If there was a set answer, then everything would be simple and we would be able to remove debt from our lives without help.

The problem is that we all have debts at some time and we are all likely to experience different levels of debt at one time or another. When those debts come at the same time, we often need help addressing them.

The Help that is Available

Sometimes, it is hard to establish which debts are the most important to service or which debts to concentrate on because debts are rarely a problem on their own. In most cases, debts mount over time and they are often numerous by the time there is a real problem. This is when you need to sit down with a pen and a calculator and work out what your situation really looks like.

This is the hardest thing to do, because for some reason people tend to avoid rather than deal with issues until they are out of control and actions are taken by the creditors. Using a debt management company is a good way of dealing with just one provider. This means you will not have to call every creditor and negotiate terms, you will only need to deal with one company and sometimes, one person.

Debt Managers Good and Bad

image of debt managementSome debt management companies are more trouble than they are worth and their fees are something you could do without. Most debt management companies though, are genuine enterprises that are set up to facilitate the repayment of debt.

They will often re-finance your current situation for you and this can greatly reduce the stress levels you are experiencing. Administering payments yourself could still be an option, but most people prefer to deal with one company than to have all their existing commitments continue separately.

Finding the Right Debt Management Company

There are some things to consider before deciding which debt managers to use. Think about how long it will take you to repay the debt and if you could be better served by clearing your debt early. Becoming debt free is a big attraction and should be considered more important than having a low repayment figure each month. If you opt to take the lowest repayment figures, you could stay in debt for the rest of your life and it will feel as though little progress has been made.

What are Your Other Options?

A debt management plan is something that could adversely affect your ability to obtain credit. If you clear your debt with the plan, your credit rating will return, but your credit history will record the fact that you were on a debt management plan. Data is kept on file in your credit report that dates back for the previous six years and if you expect to use credit again in that time, you should consider other options.

Reducing outgoings should be your first priority and then you should try and improve your income. An improved income will usually take longer than a reduction in outgoings, which is why you should remove any unnecessary expense or luxury. Debt management plans are great if your finances are likely to get better in the near future. If they are more long term, you may want to consider counselling from an expert in debt management. Explain to the debt managers how you expect your situation to improve and let them know that you want to be rid of debt as soon as possible.

In most cases, a debt management company is the best way to free you from the overburden of debt and leave your credit history remaining relatively unscathed. If you have every intention of clearing your debt as quickly as possible in the shortest space of time then this is the best course of action.

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