As the name suggests, debt management is basically a debt-relief option to offer help to people who are struggling with their monthly bills and credit liabilities. So, basically, you sign up with a debt management company that renegotiates your repayment plan with your creditors and creates a debt management information plan for you to manage your finances more efficiently.
Debt management information
While most people end up confusing debt management with debt consolidation, there is a critical difference that distinguishes one from another. While you can carry out your debt consolidation all by yourself, you need to authorize a debt management company to take up the responsibility of your debt management and pay back your creditors on your behalf.
The debt management company will offer a statement of affairs or SOA comprising all relevant information regarding your disposable income and so on to the creditors. Once the creditors agree upon the plan, you will be required to make monthly payments to the debt management company, which will, in turn, distribute the funds among your creditors. Debt management is an effective way to reduce the stress and pressure of your multiple monthly payments, by passing on the responsibility to the debt management company. Since all your several different debt payments are now integrated into a single compact payment, you will be able to keep track of your finances better and pay off your debt quick.
Who is a right candidate for debt management?
Debt management can be an extremely useful tool for all individuals who:
- Are currently facing a short-term financial crisis and expect a better cash flow in the near future.
- Do not wish to either utilize the equity in their home or procure any additional loans to deal with the debt.
- Wish to manage their monthly debt payments better and do away with all the stress associated with them.
- Are finding their current repayment plan unaffordable and unmanageable and wish to renegotiate the terms with their lender.
If you are considering debt management, contact a Houston bankruptcy lawyer for more information. It is important to review your options to make an educated decision about debt relief.