What Is a Debt Management Plan?

by Lois Leonard

1 min read

Some businesses require a lot of money to get off the ground, and if you have good credit just starting out, you may end up taking out more loans that you can actually repay. If you feel like you’re sinking in debt, consider adopting a debt management plan to get your accounts back in the black.As the name suggests, a debt management plan uses several tactics within your power to reduce your debt. If you’re in debt, consider redoing your budget as a start. When redoing your budget, plan to pay your bills when you have the highest cash flow, say the beginning of the month, rather than at the middle or end of the month. Cutting out unnecessary expenses is another effective way to get a moderate amount of debt under control.Depending on the type of business you run, you might plan to increase your cash flow as part of your debt management plan. This strategy works well for retailers who can run sales on popular items frequently to increase cash flow quickly.You might consider credit counselling if you have a large amount of debt. A credit counsellor can help you communicate with your creditors to come up workable payment plans to reduce your debt. Taking on another loan, such as a debt consolidation, loan lets you pay off your debts; afterwards, you have just one convenient payment, instead of several, which helps you avoid late payments. However, a debt consolidation loan doesn’t reduce your debt in the short term.Having a huge amount of debt can sap your creativity and your drive to run your business. Put a debt management plan in place as soon as you know you’re in trouble so you can keep the problem from getting worse.

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