What are the key processes in debt management and how is it related to debt consolidation?

I partly agree with Japan Shah. Yes, Banks look for collateral. In corporates, where different banks sanction loans at different rates, the Finance Man will hold discussions with all the partner banks separately and collectively to reduce the interest rates or make a common interest rate for all loans. Some times he asks for a rescheduling of the loans, may be for a longer period, to make his cash flows comfortable.

It differs from company to company. No thumb rule for all companies. When the short term fund availability is low, we ask for a longer period. When the long term fund availability is good, we settle the loans faster and increase our profits in the long run.

As I said earlier, it differs from case to case. A good Finance manager can handle the issue properly.

Debt Management Plan we can define it as an Informal arrangement between you and your creditors.Its an activity where we try and negotiate with all the creditors to freeze or low down the interest rates and monthly payments and club into one single affordable payment so the doesn't has to pay different payment to different creditors , the person won't struggle anymore and can pay the debt quite easily and comfortably.So this activity benefits the Creditor as less chances of bad debts and the person in debt too as he can go with his daily routine without worries and also pay off the debt happily.

I agree with Darshil, Japan and of course ...esha.....

Debt consolidation is a very integral part of over all money management. With interest rates coming down corporates as well as retails ...must take advatage....this situation....Swaping old high interest paying debt with low interest paying debt is also good idea....but fine print needs to be understood in such cases....

Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, most commonly a house. In this case, a mortgage is secured against the house. The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale of the asset to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower. Because of the theoretical advantage that debt consolidation offers a consumer that has high interest debt balances, companies can take advantage of that benefit of refinancing to charge very high fees in the debt consolidation loan.

I agree with Esha. Debt Consolidation is a part of Debt Management. Debt consolidation is a process where in several debts are consolidated in one single debt, with lower interest rates. This can be like several unsecured debts into one unsecured/ secured debt. But it is more into a secured one.

The corporates do this quite frequently. For instance: A Ltd. has 10 unsecured loans of 10k each @ 14% pa. The company buys a new machine worth 2 lakh , now the company consolidates the 10 unsecured loans into one secured loan @ 12%, new machine as colletral. The secured loan is always cheaper than the unsecured loan. .

The company has saved funds with the help of proper debt management.

Really an excellent question madam,

I don’t know much about this especially, the macro level.

Debt consolidation refers to the process on combining number of debts into one single loan usually done to reduce cost or for convenience. In the case of individuals this is usually employed in the case of credit cards as they carry a higher interest rate. Corporate debt consolidation can result in better loan management.  Swapping unsecured debt for secured though reduces cost, is risky.

Can somebody with experience please answer this?

Sorry devi ji...i cud nt able to participate in this series by u...coz of IT background...but yep will find more abt this....wonderful question...