Introduction

The term debt management is actually an umbrella for a large group of debt-environment functions and activities. Debt management involves one or all of the following: debt reduction, consolidation, negotiation, settlement, bankruptcy, credit repair clinics, and even deciphering credit reports. To have some inkling as to what debt management really is, let's first define these few terms:

• Credit Repair Clinics - These are services offered by institutions that are said to help you fix your credit. Nolo Press and other notable consumer groups for debt management issues strongly advise against credit repair clinics. They say that a lot of these clinics are illegal. Some of their actions include stealing the credit files of folks under the age of 18 or the credit files of those who have died or live in far away places. Some have also been said to break into credit bureaus and change files. Still, others suggest you to start a new IRS Employer Identification Number (EIN) which is illegal and prevents you from earning Social Security benefits. But the bottom line of these so-called debt management operations is that they can't do anything that you can't do for yourself.
• Deciphering Credit Reports - It can be a bit intimidating trying to study credit reports. However, if you take it slowly, you can get through it. Debt management involves some bit of understanding of credit and credit reports. If you want to correct your credit, then you need to understand it first.
• Debt Reduction - Debt reduction is just that - reducing your debt. This is perhaps the most logical way to manage your debt. Reduce your debt so you'll have little trouble with it.
• Debt Settlement and Negotiating with Creditors Yourself - There's no doubt that debt management can be a daunting task. Although settling debts might be best relegated to professionals, there is still nothing like self-involvement.

Debt Management vs. Bankruptcy

The differences in impact between debt management and bankruptcy are debatable. Deciding which course of action is best for you can be very tricky. This is because there are so many factors involved and these are often dictated by external circumstances. In theory, we all know bankruptcy to be a method used by people when they are absolutely unable to repay their debts. However, we known that this is not always the case in reality. The idea therefore is to find out if it is a temporary or permanent problem. Then and only then can start deciding which is best: debt management or bankruptcy.