We all live with debt to some extent because it has become an essential part of modern life, but when the balance tips and the amount of debt we have becomes too much for us to keep up with, then serious problems can occur. This situation comes about for many reasons. International economic conditions have led to hardship for many thousands of people, from unemployment, reduced working and foreclosure, but there are many other circumstances to that can lead to serious debt. Common causes are break up of marriages, illness and subsequent medical bills, student loans and businesses failing.

Whatever the causes are, when you get into that situation the only thing you are concerned with is how to pay your debt off. You want to be free from that burden and just get back to normal life where you can afford to pay your day to day bills. For this to happen, you need to understand a little about the options for dealing with debt and be able to decide which option is likely to be appropriate for your circumstances.

Most people have heard of debt consolidation and because they have heard of it they immediately go looking for it. The term is not that helpful because it can mean more than one thing. It is often used to mean taking out a new loan and paying off all your old debts with it. This leaves you one big debt, which hopefully costs you less in repayments each month. Generally speaking this is not the best way to go, because you usually end up paying it back for much longer, costing you far more in the long run.

The other way to consolidate your debts is through a debt management plan. This tends to be far more appropriate and cost effective for most people. It is a way of paying back all your debts in full, but in a more affordable and simple way. A specialist company will negotiate with all your creditors and change the agreement for how you repay them. They bring down the amount you have to pay be agreeing to lower interest charges, etc. What you end up with is having to make one single payment to the debt management company each month instead of paying all your separate creditors. Not only is this simpler to manage, but your total monthly outgoing will be less too.

For debt management to work you need to have a steady income and enough left after paying your essential bills to make the monthly payment. If your situation is too severe for this and you could not afford a plan of this type, then that brings us to the other option you have to pay off your debt, which is using debt settlement. It is important to understand that this is an entirely different process to debt management, because it involves writing off some of what you owe, rather than repaying it all.

With settlement negotiation the company you work with will be trying to get your creditors to agree to settle your debt for much less than the total amount. On average you will normally have to repay about half. This does depend on your circumstances being appropriate for settlement to work. You cannot opt for it simply because you feel like not paying half of what you owe. Creditors will not agree to settle unless they can see that you may well go bankrupt if they do not.

Some of the larger and more reputable companies will offer both debt management plans and settlement negotiation, so you can apply to them and they will just advise you on the best option. Always apply to more than one and compare options before deciding.

Author's Bio: 

You can find a list of some of the most reputable debt programs on the K D Garrow's website, which is a free online guide on how to pay debt off. It provides advice on many debt related issues, including finding a good debt plan, debt settlement, negotiating debt, bankruptcy, student loan debts, medical debts, budgeting and loans.