Debt management is an essential tool for maintaining macroeconomic stability and mobilizing long-term resources for a country's development. It is also a way to control debt through financial planning and budgeting, with the goal of reducing current debt and eventually eliminating it. Companies use debt management to provide relief to creditors and create leeway for corporate finance. A debt management plan (DMP) is a strategic effort to eliminate unsecured debt, such as credit cards and medical bills, by consolidating it and reducing monthly payments through reductions in interest rates and penalties.
It can also help you adjust your budget to find extra money to put a dent in your debt. However, there are drawbacks to consider, such as fees charged by debt management companies or credit counseling agencies, and the possibility of encountering more unexpected financial problems after the program has started. Settling debts may be an option if you are behind on payments and want to avoid bankruptcy, although some experts recommend bankruptcy rather than debt settlement.