Debt management refers to the practice of having a third party help a debtor get out of debt. However, debt management can actually be practiced without having to resort to hiring an expert. Debtors can manage their own debt by learning and implementing basic debt management strategies.
The basic steps in debt management include:
• Compiling the list of all debts owed to all creditors
• Listing all income and expenses
• Determining the maximum amount that can be paid as lump sum for debt repayment
• Determining the maximum amount that can go to debt repayment regularly (usually
monthly)
• Determining which debts to service (pay off) first depending on factors such as interest rates and impact on an individual’s credit score
