Borrowers who can’t keep up with their monthly payments have important decisions to make. They have to figure out which is better: to manage their debt and thus keep it under control or to consolidate it and make it more manageable in this way.
Management or Consolidation?
Cruel as it may sound, debt builds against the financial health of a private person just like the cancer spreads inside the patient’s body. In this line of thought, debt management is applicable when your debt is still manageable, that is, while it could be controlled by means of careful budgeting and responsible planning of the expenses. There are quite a few financial institutions, including virtually all big banks in Canada and the United States, which provide flexible and secure debt management services to their costumers. Essentially, debt management boils down to somebody else’s taking control of your financial situation so as to save you from your own habit of building debt. Its ultimate goal is debt reduction and, in time, debt elimination. Before starting your search for a debt management provider, note that most of the really good debt managers know their price and their services are everything but cheap.
When does debt consolidation come in handy?
Debt management may be compared to some kind of medical treatment meant to prevent the financial cancer in the form of debt from spreading further. Debt consolidation, on the other hand, comes in handy when one already finds it difficult to keep track of numerous debts that he or she has accumulated. It is likely that the borrower will keep on building them avalanche-like in the future, leading in the end to financial collapse, which is also known as bankruptcy.
How does debt consolidation work?
Debt consolidation helps make your debts more manageable by paying off your numerous old debts with one single fresh and often larger debt. If you come to think about it, this could save you tons of cash on interest rates and late payment charges. Instead of paying off many credit cards or consumer loans each month, some of which you are very likely to forget about and incur penalty charges, you will be making one single payment that will cover all your smaller debts.
Debt consolidation isn’t easy to get
When applying for debt consolidation, you practically go to some provider of financial services and tell him: “Look, I have built a startling amount of small and useless debts that are like a millstone on my neck, but if you give me this large loan that I am applying for, I promise to get rid of them and be a good payer in the future.” Will you believe it, if it were you in the banker’s shoes? Probably not but in fact, there are many financial companies on the market whose job it is to help people pay off their debts by means of debt consolidation. All you have to do is shop around for a reliable lender with reasonable interest rates and convince it that you are not going to screw it up again. Good luck!
Information on more debt and bankruptcy and financial terms
Disclaimer: This article is provided for educational and informational purposes only and should not be considered a substitute for professional and/or financial advice. The information found in this article is provided "AS IS", and all warranties, express or implied, are disclaimed by the author.
