How Does Debt Management Work
Why Debt Management?
Since the turn of the century the number of people in South Africa who have run into problems managing their debt has jumped noticeably. External factors have played a big roll and have left many people with no other choice than looking at debt management to resolve the problem.
The idea around debt management is sometimes misunderstood and as a start we would like to clear that up. In its most basic form a debt management plan is an agreement that is reached between a debtor and creditor to address any outstanding debt.
What often happens is that it is not a singular source of debt that usually causes the problem, but a number of outstanding debts that compound the problem. Companies that specialize in debt management are then equipped to step in and assist you.
These companies would act as intermediary between a person and those they owe money to. A payment plan is then devised that is affordable to the individual and acceptable to the creditors. Money is then paid to the debt management company on a monthly basis and they then pay the respective creditors.
During the time a person is under debt management they won’t be able to incur any further debt. After the time has passed however, they would be able to continue life without the crippling debt dragging them down.
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