Debt Management: An Overview
Debt management is big business in the United States and with an average of $50 billion collected in finance charges alone each year, it's obvious why. Debt just seems to be an accepted part of life and as families struggle to contain their financial problems the debt industry sharks are circling to take down the naive and the vulnerable.
The average American adult has a credit card debt topping $8500 simmering away at an interest rate of 18.9%. Roughly half of these 1.2 billion credit and retail card holders pay only the minimum monthly requirement on their bills, so the interest racks up alongside the debt. And yet he or she will still be solicited seven times each year by credit card companies.
In this type of climate it's easy to get swamped by debt, and each year 1.3 million Americans do, declaring bankruptcy as a way out of the financial abyss. But the prospects needn't be so gloomy. Despite the negative statistics and the bad press for the debt management industry, help is out there. This site aims to help you begin to manage your finances, plan a budget and find a responsible debt management company to work with if you choose to seek professional advice.
There is no easy solution or quick fix for debt management problems. The only real answer is to stop spending and start controlling where your money goes. If your debts are small and your biggest problem is organization, you just need to get on top of things, make some small sacrifices and sort the problem out. If things are more serious you need to take a sharp look at your spending habits and see where you can cut back. Our page on planning a personal debt management program will help with this.
If you know you can't manage the problem on your own you may want to enlist the help of a debt management company . Complaints against these commercial bodies have increased dramatically in recent years and it is crucial that you choose one with care. Most debt management agencies are non profit companies funded by the credit card industry, but just because they say they are non profit it doesn't always mean they will act in your best interests.
A good debt management company will train you to mange your money more effectively as well as negotiate a reduction in interest rates and a late fee waiver with your creditors. The debt management agencies generally receive a percentage of your debt in payment from your creditors, and shouldn't charge extortionate fees. In turn you will pay them a monthly check to cover your repayments to your creditors.
Once you begin to get your debts under control you need to come up with a long term money management strategy. This will allow you to make the lifestyle changes you need to live within your means and make problems with debt management a thing of the past.