A Debt Management Primer

Consumers are carrying record levels of personal debt, with millions of us owing more money than would be conceivable even just a generation ago. A long period of historically low interest rates combined with surging property prices have led to a distinct change in attitude towards borrowing money, with it almost becoming a way of life rather than a last resort for the majority of people. While interest rates remain low and economic prospects rosy, most experts accept that the levels of debt we've burdened ourselves with are sustainable, if not advisable.
However, recent changes in the economic outlook mean that the picture could be about to change. Lenders are becoming increasingly nervous about the effects of the 'credit crunch' and are beginning to hike up the interest rates they're charging on both secured and unsecured credit. Combine this with an expected fall in house prices, and it's easy to see that for many people debt could easily become a very real problem that needs an urgent solution.
For some people affected by this, the problems could be solved by a simple reordering of their finances such as debt consolidation or even just sticking to a more austere budget and lifestyle. For others less fortunate, their debt burden may propel them down the unhappy route of court proceedings, bailiffs, home loss and even ultimately bankruptcy. For a lot of people though with problem debt, there is a middle ground strategy that could see your debts serviced and eventually cleared without the trauma of losing your home or being forced into insolvency, and that strategy is known as debt management.
The basic premise behind debt management is that your creditors would rather receive something than nothing. If they force you into bankruptcy, they may be at the back of a long queue of creditors and might be forced to write the debt off. Obviously, this would be a poor outcome from their point of view, and so most creditors are willing to discuss ways of preventing the situation getting to that extreme stage.