Guest Post: Chosing to Start with Debt Management

by hedy on July 3, 2013

Choosing to Start with Debt Management

When a person starts barnstorming the offices of credit counselors and debt management advisers, business people often say it is not a good sign. Summoning the courage to seek professional help is a good thing and an essential step a borrower must take to reverse the tide of financial adversity that has engulfed his or her life. If you are saddled with debt and need economic relief of some sort, contact a debt management counselor. It is also helpful to understand credit counseling before reaching out to a professional, because that knowledge will help you choosing the right debt consolidation option.

Credit Counseling and Debt Management Explained

Credit counseling, also known as debt counseling, involves educating consumers about ways to live within personal means and not to incur debts that cannot be repaid by a certain point in time. Credit counselors’ purpose is to reduce consumer debts, default rates and bankruptcy levels. A credit counseling agency helps a consumer establish a debt management plan, which is an accounting document replete with things like expenses, revenue, monthly surplus or deficit, assets and liabilities. Expenses refer to everything a person doles out money for, ranging from interest and tuition to rent, utilities and groceries. Revenue comes from the individual’s earnings, either from employment or through investment accounts – be it a savings account, certificate of deposit or brokerage account. A person also can derive revenue from rental property. A debt management or credit counseling agency also pores over a borrower’s assets and liabilities to determine the debtor’s net worth. “Debtor” and “borrower” mean the same thing, as do “liability,” “debt” and “obligation.” Net worth is the number you get when you subtract a person’s total debts from his or her total assets – which run the gamut from cash and investments to mortgage-free property, furniture and equipment.


When it finally makes sense to seek some help with debt management, have a look at the free advice at When a borrower contacts a debt management agency, he or she has several options, including negotiating with existing lenders, filing for bankruptcy, settling existing debts, and taking out a new loan. If you have debt problems, you can reach out to a nonprofit credit counseling agency. Contact officials at your state’s department of financial services and ask them the various options available for someone facing the type of economic tumult you are coping with. You also can try to take out a new loan to repay the existing debts. Credit counselors often tell borrowers to contact banks or other financial institutions with which they do business, to determine debt consolidation options and to apply for new loans. Debt settlement means negotiating a reduction of the amount owed and having the borrower pay the reduced amount at once.

Professional Help

Besides credit counselors, you also can enlist the intellectual help of professionals who are familiar with debt management. They include financial planners, certified public accountants, debt restructuring lawyers and estate planners. Seeking professional assistance is a good first step in planting the seeds of long-term financial stability. For example, an accountant can review your economic situation, prepare your personal financial statements, and suggest ways to reduce expenses and increase income over time. Financial statements – also known as financial reports or accounting data summaries – include a statement of financial position, a statement of cash flows, a statement of personal equity, and a statement of profit and loss – which is also referred to as an income statement, statement of income or P&L. “Statement of financial position,” “statement of financial condition” and “balance sheet” are synonyms.

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