Debt management is basically solution that a debtor in distress could use. There are several factors why a debtor could be in distress. He may have several debts that are overdue. Another factor is that each of the creditors of the said debts may already be after him already and pressuring him to pay up or severe penalties would have to be imposed. The threat of some properties being taken away could become very imminent. Under these circumstances, it is indeed prudent to subject oneself to debt management. There are, however, different types of debt management program. It is important that the debtor knows about each of these.

The most basic of these programs is debt consultation. During a debt consultation, the debtor and a representative of a debt management company would have to communicate in order for the former to share information about his situation. This can be done through internet or by phone. However, it would indeed be much better for the two parties to actually meet in person. Doing would mean better and more open communications. It is expected that the representative of the debt management company will ask a lot of questions. Apparently, this is an attempt to get a clearer picture of the problem before a solution could be suggested. On the part of the representative, an accurate solution could only be achieved if all the angles of the problem are covered.

Debt negotiation is another program, one which involves not just the debt management company representative and the debtor but also the creditor. What happens here is that agent hired by the debtor will negotiate with each of the creditors. The aim of the negotiation is to reduce the amount of debt to lowest possible terms. These include the elimination of penalties, the reduction of interest rates and other charges that only make the debt harder to pay. As long as the creditor finds the debt management firm it is dealing with credible, it is very likely that it would give in to such requests.

The third program often applied by a debt management firm is debt consolidation. Under this arrangement, all the debts incurred by an individual or by the client are summed up and paid with a fresh loan. Usually, it is the debt management firm itself that would provide the fresh loan to pay for the consolidated debts. Apparently, the debtor would still have a loan to pay for within a certain period of time. It must be noted though that since is only one loan, despite its amount, it is more manageable for the debtor.

It is not rare for debtors to actually make use of the three programs. This actually depends on the gravity of the debt problem or the amount of the debts incurred. The debt management company representative would just have to make a thorough review of the situation presented to him by a client so that he could determine which program to use in order to solve the problem.