What do you think of when you think of the term “Debt Management”? Many people think of consumer credit counseling, budgeting, debt consolidation. While others think of getting out of debt, debt relief, or debt settlement. For 2012 we will use the definition “to take charge of or care of” for manage. So to manage your debts is to take charge of them or to take care of them.

So how do you take care of your credit card debt, payday loans, car title loans, unsecured personal lines of credit, department store credit cards, car loans and home loans?

There are many financial experts out there like Dave Ramsey and Suze Orman and even Kevin Trudeau who offer free debt management tips to help you get a handle on your debts and become debt free one day.

There are also many ways to take charge of your debts – you can make a budget, list your income and expenses and live off of that, consolidate them into a home equity loan, negotiate and settle your debts with your creditors, walk away and ignore them, or file bankruptcy.

Debt consolidation either through a home equity loan or home equity line of credit or other debt consolidation loans is a popular way to pay off some bills and free up some cash each month however, many financial experts warn that you cannot borrow your way out of debt.

You’ve already shown that you cannot handle a certain amount of debt and now you want to borrow more money to consolidate and pay off your old debts? That does not make a lot of financial sense. That’s where the old robbing Peter to pay Paul saying comes from. You should not try to discharge one debt only to incur another.

Debt consolidation and credit counseling do not have high success rates for getting you out of debt. The majority of people who join a debt consolidation program do not successfully complete it. We are talking upwards of 60 to 75%. Do you want to join a debt management plan that only has a 25% chance of success?

So what do the financial experts say about managing your debts?

Suze Orman hosts her weekly Suze Orman show where she advises people about all the money situations and her popular “Can I Afford It” If you can show her the money and savings then she may approve you to buy something you really want. What does she preach about managing debt?

On her website you can find budgeting tools, along with a lot of books and products to buy, to help track your income and expenses. She has a pledge you can take to spend less than you earn, living within your means. She has a financial interest in promoting FICO scores and FICO kits so she will not recommend the debt relief options such as debt settlement and bankruptcy which can seriously harm your FICO scores.

She also preaches other debt tips like cut your spending by 10%, make a 13th month payment to your mortgage, and build up an emergency fund before you pay down your debts aggressively.

Dave Ramsey provides similar advice for debt management in what he calls his baby steps. The first three are get a $1,000 emergency fund, pay off all debt using the debt snowball and build up 3 to 6 months of expenses in savings.

From my experience the debt snowball works well if you need those small victories to keep you going paying down your debts. You do pay more in interest charges overall but you may stand a better chance of succeeding with this method than paying the highest interest credit card first.

How do debt settlement and bankruptcy compare for debt management?

With debt settlement you can take charge of your debts and take care of them once and for all. You can get your debts discharged or forgiven by your credit card companies in 12 to 18 months. Once you have tried to keep up with your minimum payments but have not made any progress you may want to consider talking to your creditors and offering a lump sum settlement payment to forgive your entire balance.

They will not agree to this if you are only 1 to 2 months behind on your payments. You will have to be 4, 5 and 6 months behind on your payments before your creditors will be willing to listen and agree to a settlement offer.

Debt settlement or debt negotiation is an alternative to filing chapter 13 bankruptcy, it does ruin your credit score for a few months to a few years. But is has the benefit of completely wiping out your credit card debts in a short period of time. If multi billion dollar corporations can file bankruptcy to wipe out their million and billion dollar debts and come out a leaner, healthier and debt free company with no repercussions then why should you not be able to do the same? You can get your debts taken care of for good without filing bankruptcy.

Even though it has its benefits, debt settlement is not and will not work for everyone. Your creditors have to agree to your settlement offers and you have to be able to save money to pay their lump sum payments when the time comes. But if you do qualify you can use this to clean up your personal balance sheet and get rid of some liabilities once and for all.

That leaves bankruptcy as a last resort. You should avoid it as much as possible. Filing chapter 13 bankruptcy has a similar success record as debt consolidation. Most people cannot stick to a rigid 48 month repayment plan. There is too much uncertainty in life to know what will happen to your finances in the next 4 years.

Debt settlement is a better way to manage your debts than bankruptcy. The effects on your credit score are the same but you do not have a permanent black mark on your credit reports as with bankruptcy.

So how do you begin managing your debts? How do you take charge and take care of them? You don’t have to make a budget but you do need to know where your money is going. Listing out your income, expenses and total debts will give you an idea of where you stand.

One of my favorite sayings is “if you continue to do what you’ve always done, you will continue to get what you’ve always gotten”

You cannot keep doing the same things you have done in the past to crawl your way out of debt. You can sacrifice for a few months or a couple short years and get your way out of debt and then live like you want once you are debt free.

Now you know more about debt management and what it means and how you can plan your attack to take charge and take care of what you owe.