The modern culture of consumerism and the advent of easy credit have seen a drastic rise in personal debts. There is hardly anyone who follows the saying, ‘Never spend your money before you earn it.’ Consequently, many of us find ourselves spending substantially more than we earn. If you find yourself burdened with debt, the simplest and most sensible solution to your problem is budgeting.

Planning a budget helps you to become aware of the discrepancy between your income and your spending: take a stock of your debts, reduce your expenditure and pay a portion of your income to pay off the debts. It’s not too difficult to plan a budget, but sticking to one very difficult. You need to make a strong effort and follow the budget.

However, budgeting is of little use to someone who is neck deep in debts. If you are battling heavy debts and staring at the unpleasant face of bankruptcy, you need to consider debt management solutions that can help you get rid of your debts. When you feel you are at the end of the rope, it’s surely time to seek professional advice. Many companies specialize in finding a manageable debt resolution program for people standing on the brink of financial suicide.

Credit counseling and consolidation is a simple debt management solution. A counselor analyzes your present financial situation and advises you on the best way to deal with the debts. The counselor may also negotiate with the creditors and work out a repayment plan at a lower rate of interest.

More importantly, the counselor helps you reorganize your debts and consolidates your future monthly payments to creditors into one monthly payment which is substantially lower than the sum of all the pending payments. He/she can also get the loan extended and get a waiver on the late fees or other penalties.

Loan consolidation, very similar to credit consolidation, is another way of warding off the creditors. Under this system, you take one big loan at the lowest possible rate of interest and pay off your debts. The only problem is that if your credit ratings are not good, the rate of interest on the fresh loan can be too high. Or you may be asked to set your house or other property at collateral to get the loan for a lower interest rate. Be very careful while choosing this system of debt management solution.

Debt settlement or debt negotiation is another program that can help you pay off your debts. You can hire a lawyer or a debt negotiation firm to negotiate with the creditors. When the creditors see that there is no way in which you can pay off the whole loan, they might agree to reduce the principal amount of the debt. The rate of interest will remain unchanged, but a substantial cut in the principal makes it easier for you get rid of the debts.

These different debt management solutions can help you escape bankruptcy. Debt management companies that deal with a number of creditors can be of great help as they can use their leverage with creditors to ease the terms of your loan. By choosing the right debt management program and company, you can avert financial ruin and get a firm grip on your financial future.