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Debt Management

Written by  The Dubrovnik Times May 27, 2022

It’s common for people to have some debt, whether it’s from student loans, credit cards, mortgages, personal loans from Payday Depot, etc. In fact, a 2020 report by Experian says the average American owes a debt total of nearly $92,727, with Generation X members carrying the most debt -$140,643.

While having debts is not a bad thing, too much debt can prove disastrous to your life. For example, your credit history and score will get affected. Or the debt will hunt you for years to come.  

If you wish to get out of debt, you need to learn how to manage your debt. You need a strategy or plan to guide you toward paying down debt.

What Is Debt Management?

Debt management means getting your debts under control via budgeting and financial planning. It involves formulating a debt management plan with strategies to reduce your existing debts and move toward clearing them.

Usually, non-profit credit counseling agencies help individuals create debt management plans. But you can formulate it yourself. Just remember that each option comes with its set of advantages and disadvantages.

Also, the plan only works for unsecured debts, including credit cards, utility bills, personal loans, or medical bills. Usually, debts attached to possessions like houses or cars are not covered. 

How Does Debt Management Works?

Do-it-Yourself Debt Management

Individuals having sleepless nights because of debts should consider creating a debt management plan. It will offer them a sense of hope since they can adopt strategies that will help them get out of debt and provide them with financial stability.

The debt avalanche is one of the best DIY debt management methods. It’s a form of the accelerated repayment plan. Here, the debtor assigns enough cash to pay high-interest debts first.

Debtors can also take advantage of financial tools, repayment, and budget calculators or other application to track their finances. Alternatively, they can hold discussions with their creditors to ask for reduced interest rates and monthly payments to lower the amount of their debt.

Debt Management with Credit Counselling Agency

Debtors can seek debt management services from a reliable credit counseling agency. All they need to do is visit the National Foundation of Credit Counselors. On the website, they can choose between non-profit and for-profit credit counselors. The website also provides them with reviews and other information about the credit counselors, including fees charged.

After selecting the best credit counseling agency, the counselor or agency will review the debtor’s financial situation. From there, they can come up with a repayment plan for the debts and negotiate with creditors to reduce interest rates and fees on the debtor’s account.

Balance transfer credit card or bankruptcy are other alternative counselors, or counseling agencies might suggest. But this depends mainly on how severe the debt is. Once the debt gets cleared, the counselor might close the debtor’s account to avoid new debts.


Managing your debts is as crucial as budgeting or creating a financial plan. Individuals who have accumulated high-interest debts should create a data management plan or work with credit counselors to design one. A debt management plan is a helpful tool for clearing debts. However, it only works for unsecured debts. Keep in mind debt management won’t prevent your bills from coming. So, debtors need to have a continuous flow of income to cover their current bills.