As you search for solutions that would effectively solve your debt problems, you may come across debt management and debt consolidation. These two methods have actually been most commonly used by people who wish to unburden themselves from the debt problem. Some, however, find the two almost the same, which is why they tend to just choose one without some serious thought about it. In fact, while they may treat the same problem effectively debt management and debt consolidation are entirely different. It is important for you to learn about the differences so that you would know which of the two best suits your situation.

Debt management is usually done with the help of a debt management company. As a debtor, you may seek the help of such a company so that you could deal better with the debts that you have to repay. The debt management company is expected to have good relations with the creditors. They should be very reliable from the point of view of the creditors. If they are so, they could negotiate better in your behalf. The positive results of the negotiations would be lower monthly payments, the reduction of fees, and the elimination of penalties, if ever you have become delinquent.

It is possible that in a debt management arrangement, you would be paying the debt management company for the debts that you have incurred. It would be the said company that would deliver your payments to the creditor. However, because of the services that they have rendered to you, it is only normal that they would actually charge you too. You should not consider this as additional expenses though. The fact that the said company has been able to reduce your payments to the creditors by a percentage would mean that have some extra funds which you could use to pay for debt management service.

Debt consolidation simplifies things a little. This is ideal if you have so many debts with so many creditors to deal with monthly. Under this method, all your debts are combined into one single debt. This is done by dealing with another company that offers a big loan that would be used to repay each of the different debts that you have. When all such debts have been repaid, you would naturally have only one big debt to repay. Of course, this is much simpler to deal with. Your monthly payment would probably be bigger but the good thing is that you only have to forward this to just one creditor.

It is clear that debt management and debt consolidation are two very different methods in solving debts. If you are wondering which of them is better, it would really depend on your situation. If you have the means to pay monthly even if at a bigger amount, debt consolidation would be ideal for you because it saves you from the hassle of dealing with many debts. However, if you really need to reduce the monthly payments, then debt management is the better option.