Supposing you have three outstanding debts, and you are almost stuck, in the sense you cannot afford the monthly payments, while the interest is adding up with the speed of light. And this is how you will find yourself in a vicious circle, where you can’t find an effective way out.

A debt management consultant will help you come out of this whirlpool by providing you with the right answers to the questions you might have in the first place. Let’s face it there might be easy solutions you can take on in order to reduce debt, but you simply haven’t got the appropriate knowledge, because you are not a professional. Even more, such a consultant is able to make contact with your lender, in order to carry on discussions (even negotiations) relating to your financial status. Thus, your lender might agree to the proposals of your debt management consultant, to reduce the interest owed for example, or to reduce the amount of your monthly payments, thus extending the term. For example, if you owe $10,000 where the monthly installment is set at a fixed rate of $200, this schedule will actually “entertain” you for 4 years. However, you are in a situation where you find it impossible to pay the $200 monthly, having in mind that you have to pay for other outstanding debts as well. So, as a result of the negotiations between your lender and your consultant, the lender might agree to extend that loan term to say 6 years, which results your monthly installment towards the loan is set at around $130.

Where can you seek for the perfect solution? Where can you find such a professional? The answer to these questions is first of all research. You have to allocate a few hours weekly in order to research the problem yourself. And here it is implied that you use the Internet and browse through the available options: read as many materials related to the topic as you can, read costumers’ opinions you can find on several discussion boards, and so on. And only after you have done this, you can choose for yourself whether you would prefer to subscribe to a debt management program, take on a debt management loan or turn towards the IVA (Individual Voluntary Arrangement).

Each of the enumerated solutions is effective in its own way, only not all of these are the perfect solution for all kinds of debts.

A debt management program is the solution if:

• You have more than just one outstanding debt, and you really cannot afford the repayments as scheduled by the lender
• You consider that the repayment of the total owed amount will not exceed a period of five years. Taking the above mentioned example, if you are comfortable with making a repayment of $200/4 years for the loan of $10.000, then entering a debt management program will help you.

An IVA (Individual Voluntary Arrangement) is the solution if:

• You consider that the repayment of the total owed amount will exceed even five years. Entering an IVA means that you take a legal path towards trying to solve your debt related problems. It is important to note, that it is not as flexible as a debt management program.
• Your total debt is equal or exceeds $15,000

A debt consolidation loan is the solution if:

• You would feel more comfortable to have only one more significant monthly payment, instead of many smaller installments you need to pay.
• You consider you will afford making a one-time higher payment towards this loan. Don’t forget that although your existing debts will be paid off with the help of the debt consolidation loan, you are taking on a new loan which still has to be repaid in full and on time; otherwise penalties may apply.