Debt Management Consultant

Introduction To Debt Management Consultants

Saddled with the responsibility of ensuring that borrowers pay up their personal unsecured debts in full and on time, the debt management consultant initiates and incorporates various techniques which make it possible to not only collect the borrowed monies, but to ensure that interests accrued are paid to lenders in full. People use debt management plans in various countries of the globe to eliminate their unsecured debts such as bank overdrafts, personal loans, credit cards and store cards.

If the debt management consultant is to succeed in reconciling the lender with the borrower, being a third party, he has to employ a number of measures to facilitate this task which include:

  • Analysis of the debt
  • Striking a balance between income and budget
  • Negotiating and re-negotiating interest rates and payments with lenders

Analysis Of The Debt

Being a consultant and a third party, the DM consultant tries to analyse the debts in question. A good look at a particular debt may reveal either a debt that can be paid on the agreed date or that which will be paid in a future date beyond the agreed date. Sometimes, there could be cases of debts that cannot be paid as a result of insolvency on the part of the borrower. What the DM consultant does here is to examine and investigate all the debts, classifying and sorting them in order of value and recovery dates.

Striking An Income/ Budget Balance

Secondly, the DM consultant tries to strike a balance between income and budget. Since these unsecured debts are usually repaid through salaries at the end of the month, an understanding of the difference between the income and budget will help in striking a balance as to whether the debtor would be able to repay the debt on the specified date. Budgeting here helps ensure that the debtor does not exceed his or her income, thereby running into deficit.

Negotiating And Re-Negotiating Interest Rates And Payments

Finally, the DM consultant negotiates and re-negotiates interest rates and payments with lenders. Knowing that it is the creditors that bear the cost of remuneration in favour of the DM consultants, he tries to negotiate and re-negotiate amounts to be paid to him in the form of wages and salaries. These consultant fees are usually deducted from interests accrued from payments by debtors. He tries to advise, first of all, on rates that will be suitable for the transaction as well as what percentage of the interest that will be given him as fees.


Of course if debtors and/or beneficiaries of these short term credits can be paid, a good interest rate should be consensually agreed upon so as to encourage them. DM consultants should also try to negotiate wisely with creditors not to dissuade them from participating in the contract. As for debtors that fail to repay these credits, default notice should be given to credit agencies so as not to give such debtors, who have breached contractual agreements, a second chance of doing the same. Adequate time should be taken to study the debtor before consenting to contracting with him or her.

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Debt management Consultant