Definitions of Debt Management

From layman's perspective, debt management is simply what it literally implies. It refers to the process by which one manages his debts in a manner that he would not be put in a position where he would have difficulties in repaying these. Apparently, debt management in this regard is one that is being conducted in order to prevent problems from arising in the future. Because this involves money which would be used to repay the debts, it naturally requires the individuals to be mindful of these when allocating funds for the different expenses he will have to cover in a month.?

The term debt management is also often used by the government.? This is particularly carried out by a country's fiscal managers.? It is a known fact that countries also incur domestic and foreign debts, which are usually triggered by trade imbalances. Of course, a government would not allow debt problems to grow worse, especially because these would seriously hurt the economy.

It is in this regard, that the government would resort to debt management.? The aim is to establish certain measures that would make it possible for the government to reduce the burden created by the debt and lessen its impact on the economy.?

In both definitions mentioned above, it is clear that debt management is considered as a solution.? It is applied in order to prevent problems resulting from delinquent debt payments and, in the case of countries, to create protection for the economy from the effects of debts.? The other definition of debt management, however, is one that refers to it as recourse whenever the debtor is no longer in a position to repay the debts that he had incurred.? In this regard, avoiding the problems is no longer possible because the debtor is already saddled by it.? All that he can do now is to seek ways to reduce the amount of his obligations to levels that he can afford.

Debt management services offered by certain companies help distressed debtors deal with their problems.? Counselors are sent to meet with the client debtors in order to study their respective situations.? The objective of the studies is to arrive at conclusions that would then become bases for the concrete steps to be taken in order to manage debts.? One of the key resolutions would certainly be to make the creditors agree to proposals that certain charges or fees are removed so that the value of the debts would become more manageable for the debtor.

In all the definitions mentioned here, it is obvious that debt management does not mean escaping from the obligation of repaying.? A debtor who implements this does not have any intention to free himself from his obligations to the creditor.? Therefore, the creditor should not worry about debt management too.? ?What debt management does is definitely beneficial to both the debtor and the creditor.?? It enables the debtor to solve his problems while it allows the creditors to get what is due to them.

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