Debt management. To be sure, the phrase has been in use for some time
now and the Federal Trade Commission reports that there is a fast growing area
of complaint involving the so-called Credit Management or Debt Management
industry. But what is debt management anyway? And why do people consider it as
either potentially lucrative or downright hazardous path to follow?

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.

Tony Forster has a keen interest in living debt free having been "up to his ears" before realizing the need to take control. He has compiled an online financial article resource at http://www.loan4payday.info