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Debt management is a strategy or plan devised by a third party to help an individual repay their debts to a creditor or creditors. The third party involved in this process is usually an organisation with specialised knowledge in the field of managing debt and the troubled individual seeks them out because, in most cases, the debts that they owe are so high that the individual is unable to successfully cope with it themselves.

They may also have no real understanding of the options available to them in a situation where they may find themselves struggling badly with debt.
A debt management plan involves the third party looking at the outstanding debts and taking into consideration the debtors’ income and budget. They then consult with lenders about changing the interest rates and payment terms for the debts. These negotiated rates are based on the debtors’ ability to pay, albeit over a longer period of time, thus the creditors’ collection in full being more likely.

Debt management can be necessary in many ways; those in trouble may have accrued the debt for a variety of reasons such as excessive spending on credit cards, a lack of income due to being made redundant, reduced income due to an economic downturn, or even on grounds of illness.
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If you are struggling with credit card debt, your home could be your savior. A home equity loan can help you pay off the expensive credit card debt. A home equity loan is a loan that is secured against the equity (the extent of ownership) you have in your home. Since the home equity loan interest is much lower than the credit card APRs, it makes a lot of sense to use home equity loans for paying off credit cards.

So, here is a 3-step guide on how to pay off credit card debt using home equity loan:
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An individual having to choose between a bankruptcy and a foreclosure often has to make a choice between the proverbial devil and the deep sea. It will pay off big time if you know the pros and cons of each. The ultimate objective of both is to get out of debt and get set on a path to new financial growth and credit repair. You should be aware of which path will enable you to achieve your objective with as much saving of time and money as possible – because you are going to need both when you set out to rebuild your finances from scratch.

Pros of foreclosure

• If at all this can be considered a pro – a foreclosure stays on your credit report as a negative mark for only seven years. Moreover, you can work to improve your credit score and qualify for a mortgage again in as few as four years.
• You are not bankrupt – the foreclosure may leave you with some assets and liquidity to start your rebuilding process afresh.
• In certain states like California, if you choose to move away from your home the lender cannot then contact you for further payments.

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The easiest and most straightforward way to avoid bankruptcy is to not be in debt and if at all you take a loan, see that you pay it off in time. Simple as that!! But is it really that simple. Let’s try and understand.

What Is Bankruptcy?

Bankruptcy is basically an extreme step that you take to give yourself a chance to start all over again financially. It means that you move the court and establish via federal court proceedings that you are simply unable to pay off your creditors. Under federal bankruptcy laws you are then protected from the creditors; they cannot contact you to repay the loan.
Individuals file for bankruptcy under Chapter 7, this is also known as a “straight bankruptcy”. A bankruptcy will allow you retain certain property that is exempt from creditor take-over. Liens on real estate will survive. Most assets will be sold to pay the creditors. Also bankruptcy discharges will stay on your credit report for up to 10 years, affecting almost areas of your life including jobs and ability to get a loan at good rates.

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