Debt management in general is about following mutual agreement between a debtor and a creditor that includes a plan designed to reduce the level of debt that is currently unsustainable. Debt management can be undertaken by the debtor or a hired debt management or debt counseling company.
The main objective of the debt management is to help debtors regain control of their finances.
Debt management and debt counseling services are regulated by Federal and State laws. For example, some States allow only non-profit debt counseling services and prohibit any for-profit debt management and debt counseling services.
A debtor seeking help from debt management company should be aware that a debt management company that is for profit may be too much focused on what they do and just may overlook other available options to the debtor such as participation in free of fee hardship program or a bankruptcy.
Normally debtors seek third party debt management services when they are overwhelmed with debt, scared, confused and lack the knowledge and will to manage the debt payments and situation they find themselves. It is important to make sure the debt settlement company is registered in the State you live.
According to the Uniform Debt-Management Services Act any such service must be registered with the State, bonded and insured in order to offer debt management services. If you are an debtor seeking such service check if the debt management company you consider hiring is registered in your State. Also make sure that they have clear disclosure about the fees and services and the risks involved if you decide to take this route and sign a contract.