The Three Most Popular Strategies For Debt Management

Are you one of the unlucky people who have taken a huge amount of loans for a multitude of reasons and now are not able to pay them off

? And you are also finding it close to impossible to pay off all your debts on time because of the non-conducive financial situation? If the answer to both the questions is a yes, you are not only increasing your principal debt amount but the interest is also surmounting. You are even to pay the over the limit fees. There is obviously a way to come out of this financial mess and for that, you need to plan out things a little carefully. Three popular strategies suggested for debt management are:

Debt Management Plan: A debt management plan is a tool that help the individuals manage their debts. It is mainly in the form of an agreement between the debtor and creditor to help reduce the various outstanding debts when the debtor is in financial difficuly. This helps them to get control back over their finances as it takes into consideration the individual needs. The experts suggest the plan and then check if a debt management plan is suitable for you or not. The first step is to find out the exact budget which is required for day-to-day living. Once this budget is decided, the remaining amount from the disposable income is typically divided among the various creditors through a Debt Management Company.

Individual Voluntary Arrangement (IVA): An IVA helps individuals or business houses avoid bankruptcy. IVAs were originally intended to provide relief in case of business insolvency.

However, these days many individuals go for it in order to get legal protection under IVA. IVA is very popular among people who have very large assets which need to be protected in case of insolvency. In case of an IVA, the creditors cannot force you to repay an amount more than what you can afford conveniently. The repayment schedule is calculated only after taking into account the amount of money you spend on food, travel and other utility bills.

Debt Consolidation Plan: The debt consolidation plan as the name suggests consolidates all the smaller loans into one big loan. They can benefit individuals as the debt can be paid over a longer period of time to increase the cash in hand today. It is a great option for people who have multiple loans to pay off. By using this strategy one has to make only one payment in lieu of all other payments. Many banks provide this facility to their customers. The two main advantages of a debt consolidation plan are that (a) it helps in better management of ones debt as it allows you to make only one payment and (b) it helps reduce the interest paid on high rate debts like credit cards which typically have a higher rate of interest

Among the three strategies presented, you need to decide what strategy suits your needs the best. If youre not too sure what strategy to pick, it is best to look for guidance from the experts who know the world of debt management well. To make sure you dont go wrong with managing your debt scenario, it is best to choose a debt management individual or agency that has many years of experience and has a good reputation in the market. These companies study your financials, credit report, credit history and debts and guide you through the most suitable debt management action.

by: Debt

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