Debt Management

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What is Debt Management - Definition
A planned repayment approach for consumer debt, often involving a debt management plan. Debt management is about managing repayments in an effective and efficient manner for the purpose of reducing interest burden and paying off debt faster.

A debt management solution is a strategy for moving as quickly as possible towards debt free status. A debt management solution does not involve consolidation of creditors or debt. Furthermore, debt management does not involve a new loan or introduction of funding to secure an immediate pay off. The best debt management solution for debts means competently managing one's existing routine debt repayments.

debt management solution


  • Negotiation with creditors over terms
  • Getting better organized in your repayment approach / methodology
  • Getting better with personal finance to allow maximum repayment opportunity

Effectively managing debt fundamentally requires accepting personal fiscal responsibility. Managing debt with the help of an outside service involves carefully selecting the best alternative for dealing with debt.

Debt Management

Debt management solution  "Debt management" is one named outside service way to manage debt. With this service you manage debt through a plan or "DMP". We provide an online debt management resource to help you learn about this specific option and find other online debt management options to help with the general debts management challenge. Broad debts management alternatives are summarized in our article Debt and Consolidation


Debt Management Types

1. Debt Management Plan/Program (outside service)

2. Do it Yourself Debt Management

3. Personal Repayment Techniques

4. Self-Learning and Education

1. Debt Management Plan (DMP)

The term "debt management" is synonymous with repayment plan services that you sign up for. This is a plan that is managed by a chosen third party administrator. Plans are only relevant to debt that is unsecured (e.g. card debt). You entrust a service provider of choice to manage your repayments for you. Debt management help is largely through negotiations over your rates. Debt management consolidation comes in the form of a single bill, instead of several bills to manage.

These services offer debt management consolidation of repayments only - not consolidation of the debt itself - or the number of creditors involved. (i.e there is no debt management loan. A "debt management loan" is another method.) The DMP debt management solution is also known as a "Program" and is provided by different types of organizations at varying cost.

The DMP debt management solution is commonly connected with the idea of non-profit (and the false idea that this means free). This is because local "non-profits" can often provide the service. Unfortunately, so can expensive even fraudulent companies who are also "non-profits".

You can read up about this here, and about the debt management solution correctly called a Debt Management Plan.

2. Do it Yourself Debt Management - Your Debt Management Alternative

This involves establishing your debt management plan of action to negotiate with creditors over terms and follow a disciplined approach to repayment. The purpose of do it yourself debt management is to cut down on the cost of borrowing such that you can "re-invest" the money saved in the form of larger repayments to speed towards the debt free goal.

Ideally as part of a personal debt management strategy you should not borrow further, so adding to the principal (amount borrowed). In the case of cards, stop using them (borrowing).

Personal Debt Management

  • Note down all outstanding balances
  • All interest rates currently applicable
  • All charges other than interest rate (annual fee, late fee, processing fee)
  • All lender contact numbers

Now contact each lender (e.g. card issuer) to negotiate over terms.

Debt Management Tips

Debts Management

  • Talk to the right person - ask to speak with a debt manager. Each lender should have a debt manager i.e someone with authority. Debt managers have discretion.
  • Will they please reduce the interest rate or perhaps "upgrade" you to another product with a lower rate?
  • If you have more than one product from the same bank/lender - ask, what can they do to rationalize products for a lower interest rate?
  • Will they waive any late fee?
  • Will they waive any processing or annual fee, recently or about to be charged?
  • Will they lower the rate if you change payment methodology?

Why would they?
- Stop you taking your good business elsewhere.
- Help you avoid bankruptcy - so they don't lose unsecured money.

If you have reasonable credit and a good history of repayments made on time then you might be surprised what you can achieve through this debt management. Reduction of interest rate is the primary goal although fee waivers do help. If you are heading into difficulties, have damaged credit or have started making late payments then you may still be able to secure a debt management reduction in interest rate and/or fee waivers. Check before you seek any provider debt management solution.

The next element of a Do it Yourself Debt Management solution is to establish a repayment strategy to manage debts. To manage debts means setting goals for increased repayments and achieving. You should establish the total of your current repayments each month and explore how you can increase this amount by cutting back expenditure and redirecting this money. Turn an expenditure amount into an increased repayment. In addition to designating more total money for management debt repayments - there is also a need to prioritize repayments for maximum impact.

3. Personal Repayment Techniques

Methods to reduce personal financial debt. Management of repayments is an important element of success. What is your personal financial debt management strategy for repayments on two or more creditor accounts? On what basis do you decide who gets what amount? More than just avoiding late payment and paying back as much as you can, debts management involves prioritizing repayments so that you get to the debt free point fastest.

Example - Debt management repayment techniques for two or more cards:

1. Snowball - Paying off the smallest balance first - Feel good approach.
2. Avalanche - Repayment priority according to interest rates. Correct fiscal approach.
3. Divide And Conquer - Reduce the "average daily balance" by splitting one monthly payment into two biweekly.
4. Snowflake - Pay into the account as often as possible, not just month end.

4. Self-Learning and Education

Ultimate Debt Management Solution

The wider and more fundamental issue here is budgeting. Nobody can help, no technique or plan work if you spend more money than your earn and do not control your finances. Counseling and online debt management resources are available. Each person has a responsibility to exercise good budgeting and financial discipline. Online debt management in the form of free debt management software can help you create a private debt management strategy. Other free debt management online resources are available including other media forms. You may find further resources on this website that explain your options for debt and consolidation.

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