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In this earlier article we talked about why banks reject loans, and why it can become difficult to arrange short term or long term loans when you need them. Now we’re going to take a closer look at debt management, and what to do when these issues get out of hand.
The big question at the front of everyone’s mind is always the same – how do I escape?
Well, to get yourself started on the road to recovery you need a plan. Specifically, a Debt Management Plan – and don’t worry, it’s not as technical as it sounds!  
So what is a Debt Management Plan?
A debt management plan is an informal agreement between you and your creditors, so payments can be changed to meet your circumstances. An arrangement is made to repay your debts at a rate which you can afford. It is done by taking in to account your income and expenditure and coming up with a practical payment plan that is good for everyone involved – the creditors get paid in full and you can repay your debts without any stress. If your situation changes and if you can afford to pay more, the payment plan can be changed quickly and easily. If at any point you decide that a plan is not needed it can be cancelled but you will still be responsible for any outstanding debt with your creditors.  
Why a Debt Management Plan?
There are Debt Management services who will negotiate on your behalf, for you to pay a lower, monthly payment to them. They then divide and distribute them to your creditors after taking a small fee for their services. In many cases interest is frozen, although there is no guarantee that the creditors will agree to this. Once the plan is completed your unsecured debts will be cleared. Making one regular monthly and affordable payment gives you better control over your finances. This will give you much needed peace of mindin many cases, you will no longer be contacted by your creditors or debt collectors.  
Points to consider before you choose this option:
Creditors won’t always agree to a debt management plan, and may still contact you asking for immediate repayment. Mortgages and other ‘secured’ debts are not covered by a debt management plan. It will adversely affect your credit rating. Your debts must be repaid in full as they will not be written off.  
Is there an alternative?
Yes – even though many believe that a debt management plan is the final solution, in reality there may be a better solution available for you based on your individual circumstances. There are many different criteria for determining the correct solution for you, although it mainly comes down to number of creditors and the amount you owe. Some examples of different options are Term Loans, Short-Term Loans, Business Lines of Credit, Stock loans, Equipment Financing, Invoice Financing, Merchant Cash Advances and Business Credit Cards.  
Prevention is better that cure!
Hopefully you won’t get into this situation! Controlling your finances properly by keeping an eye on your income and outgoings and taking immediate action if it starts to fall out of place is the best option.