Much of the work to be done when a debt crisis occurs for a specific person is to collect all relevant information that will serve as inputs when negotiating with the lender on how much he can afford to pay and for how long. It entails producing documents and evidence to convince the lender that you are in trouble but only momentarily. It is not going to be acceptable for a lender if you declare yourself immediately to be penniless. It is not the problem of the lender that you have suddenly become insolvent. Bankruptcy takes effect only after a long process of hearing your side in court before the verdict that the court agrees with you and shall, therefore, grant you with the status of being bankrupt.

Of course, people will start calling you coming from the lenders but some other people will start talking, too, behind your back. You are practically doomed and you may not have a chance to recover next time. This brings to the point that debt relief programs are not created equally. There are programs that are easily understood and implemented. Yet, there are also other programs that are complicated in the eyes of a layman and who does not understand the intricacies under the law about them. You need an expert who represents an accredited debt counselling company.

He will tell you about debt settlement. This is an option to take if consolidating all your many debts can be strenuous and you do not have the luxury of time. You propose debt settlement so that the lender or lenders are paid right away and
collectors who bug you all day will stop calling you on the phone or following your
every move. However, this is the wisdom of engaging the services of a third party,
the debt mediator who works for you and helps you with conveying your message to the lender or lenders
that you can only have this much money to pay and hope that they accept your offer.

Your financial advisor may dwell on debt consolidation. He is likely to suggest consolidating your debts even if they are only all credit cards or a mix of credit cards and direct loans. But, what debt consolidation really is- is about appointing only one lender who will be the remaining creditor after the other lenders have been paid in "full". Normally, then, determining what you can afford upfront as down payment and the remainder will be settled by equal monthly
instalments over a certain period of time, obviously a longer term. Negotiating for a discounted amount or marked down figure to begin with as your total arrearages is actually a bargain for reducing interest rate on the loan. You have to
make sure though that the future repayments are within your reach. You have no plans to default again.

Usually, therefore, you may be entering into a new loan under a different debt instrument. It is possible that you have proposed to the lenders and they agreed to receive their payments when your bank loan proceeds are released. You
shall be left with one loan. Debt consolidation loans are acceptable with banks as long as the borrowers are of high
credit rating or at low-risk ratings.

Credit counselling is a service done by professional experts in the field of debt relief counselling. Borrowers who are at a loss on how to proceed prioritizing which debts to pay and how they can inform lenders need a "middle man" who can approach lenders and transmit the message about what the borrower intends to do and what his financial conditions
are. Only after discussing and understanding the different debt relief programs available, the credit counsellor can
proceed to meet the lenders. All these activities by an expert financial adviser can be termed into one - debt management. It is also applicable to the borrower who desires to be able to manage his debt efficiently and be able to allocate his resources effectively and maintain his good credit standing.