Bad Debt Management : a Scheme to Take you Out of Debt Trap

By: Alec Recce

It is often necessary to plan ones repayments, especially when there is a matter of multiple unsecured loans in question. Bad debt management is a plan that is basically meant for repayment of one's debt as soon as possible. It comes into picture when one is unable to repay one's debts due to some sudden unfortunate reason. For instance, suppose a person is unable to make the repayments on his loans due to sickness or whatever reason, in such a case, the interest rate rises and might go out of hand along with the debts. This is when one might most need bad debt management.

Bad debt management helps you plan your repayments in such a way that your living expenses and house hold expenses are accounted for first and then the left over surplus money is used for repayment purposes.

It is of utmost importance when you owe money to more than one creditor. A debt management plan is formulated in such a way that you are able to pay back reasonable amounts to the creditors. One positive of the bad debt management option is that interest charges are, more often than not, frozen. This ensures that one's debt does not increase. Also the duration of bad debt management depends on various factors which in turn depend on the situation of the person concerned. It may vary from a few months to a few years. Bad debt management is free, however in some cases you might be required to pay 15%-17% of the monthly payment as a startup fee. This amount may be paid by cash or by cheque, whichever one is more convenient. Although bad debt management plans can not be discontinued whenever you might want, such a situation should be avoided as this might again "un-freeze" your interest charges and might also cause your debts to go out of hand again.
One must remember, bad debt management does not handle secured debts and that it basically helps to make condensed payments to the creditors. Personal loans, credit cards, store cards, catalogues and overdrafts are handled by bad credit management.
All said and done, bad debt management plans are not legally binding, the creditors might still take action against you, however, this can be dealt with too.

Debt, Loans & Business Cashflow
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