It is possible that debt management could be the cheapest solution to your credit and debt problems. Most other solutions will cost money. Even debt management could cost you some money but it is entirely possible to manage your debts without hiring a manager.

Just like it is possible to negotiate your own debts, you could also manage your own debts. Debt negotiation is a tactic that is used in order to reduce the amount of money that you owe to your creditors. Most creditors, when threatened with losing everything that you owe them through bankruptcy, are willing to negotiate and come up with an agreement that satisfies the debtor as well as the creditor. These types of deals are not really all that easy to negotiate and so most people hire a debt negotiation company to do this for them. The same can be said for debt management.

The Debt Management Solution

Think of it this way, if you can successfully manage your debt then you won't need to face the prospect of having to negotiate your debts. If you can successfully negotiate your debts, you won't have to face the prospect of going bankrupt.

Debt management is simple the process of managing your debts in a scientific way so that you can manage your monthly payments and come up with a plan to pay off your debts in a certain amount of time, usually within a couple of years.

Many people think that managing their debts just means that they need to be more disciplined about how they spend their money. A good debt management plan is actually much more than that. With a professionally designed debt management plan, you can use the science behind the numbers in order to gain leverage.

If you are an economics major or you happen to work as an accountant, you may have the skills that are needed in order to attack this task successfully. For most people, help is required.

Your creditors know that they could lose all that you owe them in bankruptcy court. If your finances have come to the point where you can no longer pay your bills on time or you are only making your minimum monthly payments on your credit cards, you are probably past the point where simple debt management is a viable solution.

At this point, you may be looking into debt consolidation or debt negotiation. First, you should know that these are two different types of solutions. Typically, debt consolidation is a loan that you take out in order to pay off your higher interest creditors.

Debt negotiation is when you contact your creditors and try to negotiate a better deal with them. They may be willing to forgive a portion of your debt, lower your interest rate or both.

The toughest aspect of debt negotiation is actually contacting your creditors. This can be a daunting task, at best. Fortunately, their are debt negotiation companies who can do this for you.

Using credit cards as an example, let's say that you have $50,000 in credit card debt and your minimum monthly payments add up to $900 per month. Remember, this is only your minimum monthly payments. Only making the minimum monthly payments on these debts will basically mean that they will never get paid off.

You would need to pay about $1,200 per month in order to gain any ground at all and even at that, it would be many years before you could pay off your debts and be completely debt free.

The debt negotiation people can make arrangements with your creditors so that your debts are much less. Using the example above, they may reach agreements with your creditors so that the minimum monthly payments total something like $300.

The debt negotiation company would then setup a special account for you to pay into each month. They will come up with a plan to have your debts paid off in 2 to 5 years. They may have you pay $600 into your special account each month. That's all you would have to worry about. Just make that $600 payment each month and they will do the rest and have you out of debt in the predetermined amount of time.

They would then pay your creditors the amount that they agreed to pay and then some. They would pay enough so that you could be out of debt in the prescribed and agreed upon amount of time. Let's say that amount if $450 per month. The debt negotiation company then makes their money by taking the difference between what they pay your creditors and the amount that you agreed to pay into your special account each month. In this scenario that would be $150.

For you, the bottom line is that you would be paying a fraction of what you were previously paying as a minimum monthly payment. Your creditors are happy, you're happy and the debt negotiation team is happy. In short, everybody wins.

Other than debt management and negotiation, your other two choices are debt consolidation loans or bankruptcy. The goal for most people who are having financial difficulties is to avoid bankruptcy. So you try to find a solution that will allow you to pay off your debts while avoiding going bankrupt.

A debt consolidation loan may be something that is worth looking into. Unfortunately, most people who are up to their necks in debt, can't really qualify for another loan.

An exception to this is the people who are fortunate enough to own a home. You may be able to get a home equity loan and use the money to pay off your unsecured loans, such as credit cards.

This can be a tricky situation. So if you are even remotely considering this option, be sure to get some professional financial counseling. The bottom line is that you could lose your home.

As you can see, there are many options when it comes to dealing with your debt. Do some soul searching, talk to your relatives, get some professional advice. These are decisions that will affect your life for quite some time.