Those who face financial problems often think the only way of getting their head above water again is to file for bankruptcy.

Debt Management is the act of taking control over your finances, your money. Your financial situation is always an ongoing and changing situation. Your debt does not have to become the source of your stress and worry forever. You have the ability to consolidate and work with your creditors to get your financial situation under control. If you are making multiple payments every month to your creditors, consolidating your debts will lower the amount that you have to pay out every month and it is going to help you pay off your debts faster because your money is focused to paying down the principal balances.

While bankruptcy is a viable solution to solving debt problems, it’s not the only solution. Debt elimination without bankruptcy is possible-and it’s not as difficult as one might think.

Credit Counselors can assist you in understanding how to more effectively manage your money and your debts. A good credit counselor can also help you create a budget that will help you keep on top of your bills and eliminate your debt without needing to resort to bankruptcy. Most credit counselors also offer free workshops and can provide you with educational information such as brochures.

Finding a good credit counselor can be somewhat of a challenge. You certainly want to make sure you find a credit counselor who works with a non-profit organization. Ask for references from other clients of the credit counselor. A reputable credit counselor will be certified and well-educated in money management and debt elimination.

Debt Management Plans are one way you can eliminate your debt without having to file for bankruptcy. Generally once you meet and discuss your situation with a credit counselor, if he thinks it’s a viable option, he may suggest a debt management plan.

A debt management plan is simple, at least in how it works: each month, you will pay a pre-determined amount to your credit counselor. In turn, your credit counselor will pay your creditors. Before your monthly payment is determined, your credit counselor will negotiate with your creditors to reduce interest rates and even waive such fees as late payment fees.

Before you jump into a debt management plan to avoid bankruptcy, make absolutely certain you are working with a reputable counseling company. Also, make sure you contact your creditors to ensure they offer reduced interest rates and fee waivers, as the counselor claims. Not all creditors participate in such plans. It’s also important to understand that you must apply for and be accepted into a debt management plan.

Debt Consolidation is another popular debt elimination option that can help you avoid bankruptcy. However, it doesn’t come without its risk. Debt consolidation means you either take out a home equity line or credit or take out a second mortgage on your home. Therein lies the big risk. If you happen to miss a payment or fall behind on your payments, you’re facing the real possibility of losing your house.

Another big disadvantage to opting for debt consolidation to eliminate your debt is the cost. You’ll have to pay interest on the loan. In addition, you’ll likely face the cost of points. Each point will likely be equal to one percentage of the total loan.

On the upside, check your tax advisor for tax breaks associated with second mortgages or a home equity loan. It's possible to eliminate debt without bankruptcy, millions do it every year, and if you're in that sticky type of situation, with persistence you can do it too!.