Debt Management Pros and Cons Analysis Helps Debtor Take Right Decision

While debt management services could be one of the most widely used and effective ways of getting out of debt burden permanently, one has to examine the pros and cons before accepting any such services. That means you need to know the debt management pros and cons before adopting one.

A look at the advantages and disadvantages of debt management plans can be useful for the purpose.

Debt Management Pros

Among the debt management pros and cons, the pros are as follows –

• It allows the debtor to bring back his or her financial balance sheet in track without going for any further loans.


• Debtors can follow the options for debt management using the services of no fee charging debt management agency.

Debt Management Cons

Among the debt management pros and cons, the cons could be as follows-

• Result is not guaranteed as the creditors may or may not accept the reduced payments.


• Creditors may not agree to freeze the future payments of interests.


• Time taken for debt repayment will increase and fee charged by the debt management company would be additional burden.


• Debt management plan enrollment may affect the credit report adversely.

When Debt Management Pros are Greater

In some cases among the debt management pros and cons, the pros are greater. Such cases could be –

• When the financial problems are result of temporary reduction in income and


• There are chances of improvement of income in near future.

When Cons Get Better of Pros

At times however the cons in debt management will get the upper hand over the pros. Such cases are like –

• When the ability of the client for debt repayment does not improve within the next 12 months.


• Fees taken by the commercial debt management agency combines with refusal of the financing agencies to freeze interests will result in increase of debt instead of reducing it.

Pros and Cons Overview

When a debtor uses the debt management services, there are several advantages that accrue to them. Major advantages are –

• Monthly payments are lowered.


• Interests are frozen.


• Charges are waived.


• Debt management companies having better relationship with the creditors will have a lot of concessions obtained for the clients.


• It will save a lot of money for the clients not only every month but over the course of the debt management plan as well.

But there are a few downsides as well with such debt management services.

• Despite lowering monthly payments the time span of debt repayment will increase.


• If interest is not frozen there will be accumulation of interest for longer and that will add to the long term cost.


• There is also no guarantee that the creditors will agree to pay any concession.


• Debt management plan is informal agreement and the creditors can at any time change their minds.

However, there is one major advantage with debt management services. It can reduce the stress level to a very large extent.