Debt Management is a new concept that is evolved in the finance market in recent times. In lay man’s term it means arrangement between a lender and a debtor whereby a lender agrees to pay all the debts of the debtor in consideration of a necessary charges. This charge is nothing but in the form of interest that is paid by the debtor to the lender. On a corporate level new companies called as the Debt Management Companies are getting established every day. These companies not only help for debt management to their corporate clients but also to private individuals.
Under debt management a fixed reduced sum of money is paid by the debtor to the debt management company and this company will then contact the creditors of the said debtor. The debt management company will enter into negotiations with the creditor on behalf of the debtor and then make payments to them. The debt management company will ensure that it bargains a good deal for the debtor so that he has to pay a reduced payment. The debt management companies for their corporate clients make sure that they maintain the working capital of their client. Also they make the necessary payments to the creditors of the company and ensure timely payment of the same. The debt management company makes timely payment of interest commitments of their clients. In return they charge consideration for the same. Also many a times they not only manage the debts of their clients but also lend the money to them on interest so that their clients do not have to penalty for non-payment for their debts.
At individual level, debt management involves payment to the debt management company who will in turn make payments to the creditors of the said individual. Many debt management companies offer Debt Management Plans to the private individuals wherein the individual can pay the monthly installment at a reduced rate to the said company and it will be the responsibility of the company to ensure timely payment to the creditors of the said individual.
Hence debt management is an useful service that not only help Corporate but even individuals to successfully manage their finances.
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