Debt Management

By: Leroy A. Binns Ph.D.

Debt management is a widely adopted practice utilized to assist debtors who are incapable of addressing their finances. This strategy is most often developed and implemented by an independent organization working on behalf of clients who are insolvent and lack the knowledge and/or will to correct an overwhelming amount of debt.

The impact of inflation coupled with loss of employment, investments and medical and/or educational expenses are common contributors to such fiscal dilemma. However corrective measures can reverse this tide of despair. For some bankruptcy allows an opportunity to forgo liability and regain a semblance of stability in the years ahead while others select the path of fiscal reconstruction with the intent of repaying arrears over a prescribed duration of time.

While bankruptcy rids parties of monetary obligations it taints credit records for prolonged periods thus restricting lending privileges. In contrast modification defined by frugal means and disciplined attention to a repayment formula could yield the following benefits: lower secure debt payments, reduction of the elimination of interest rates and penalties, improved credit record and scores and a possibility of expunging the economic burden in many instances within 36 to 60 months.

An illustration of exemplary debt management accents the Hildebrandt family of New Richmond, WI who are the proud recipients of the 2009 Professional Achievement and Counseling Excellence Client of the Year Award. The Hildebrandts a family of five gained coveted attention via The National Foundation for Credit Counseling for eliminating a debt of $106,000 owed to 11 credit card companies, other creditors and family members in 4 years and 4 months – 8 months ahead of schedule.

With the assistance of Consumer Credit Counseling Service in Stillwater, MN that negotiated a favorable interest rates and reduced payments plus steadfast deployment of domestic adjustments Russell and Kandy Hildebrandt endorsed a rigid agenda that entailed a monthly payment of $2,000 to CCCS for coverage of all obligations to the creditors. Russell, a chemist at an environmental lab in Blaine, WI acquired a second job as a janitor in a grocery store at a wage of $10 per hour – a feat that sometimes constrained him to seek refuge in his car at nights for lack of funds to drive home and increased his weekly work hours to 100 for at least 4 years. Meantime Kandy, a housewife balanced the budget by purchasing generic foods, clothing and additional items at thrift stores, online and at yard sales for the household which included teen aged twin daughters Holly and Heidi and 3 year old son Joey. The family even avoided the temptation of sharing gifts at Christmas and more importantly buying a second vehicle.

The success story aforementioned is attainable by others providing sacrificial deportment is a prime ingredient towards the solution. Whereas the likes of CCCS and AmeriDebt provide expertise at a cost, the client/s must exercise determination and to a lesser extent adroitness. In essence as appropriately confirmed by the article entitled, “The Truth about Debt Management” debt management is 80% behavior and 20% head knowledge.