Some of the common debt solutions that you may choose from are:

Debt management

Encase you are having a great deal of trouble handling multiple bills together and are also not being able to pay all the installments, debt management is the solution for you. After enrolling in a debt Management company you are given financial counseling and a budget is prepared for you. This helps you organize your financial situation better. If counseling does no good for you then you are enrolled into a debt management program. Under the program you pay only a fixed monthly installment. This amount is then used by the debt management company to pay your creditors.

Debt consolidation

Incase of this debt solution, companies that consolidate debt help you combine all your monthly debt into one easy monthly installment. The company negotiates with the creditors, asking for lower rates of interest, also for reducing or waiving off late payment charges. After your financial situation is analyzed, a fixed monthly installment is decided upon. This amount is to be paid to the company and is further distributed to your creditors. As you are gradually paying off your debt, your credit score also improves.

Debt settlement

When you are not being able to pay even the minimum amount, then you can opt for debt settlement. In this case the creditor settles for 40% to 70% of the outstanding debt in exchange for a one-time-payment. When creditors settle your debt they report it to credit bureaus as ‘settled’. This does not have a very favorable impact on your credit score. However, it is a better option than filing for bankruptcy.

Bankruptcy

This is when you recognize your inability to pay your creditors and this is legally accepted. This debt solution should be treated as the last resort as it badly hurts your credit score bringing it down by almost 200 points. If this is your last resort you will need to take pre and post bankruptcy credit counseling classes to file bankruptcy. Although bankruptcy can be scary it is a legal way to get out of debt and may be the best option for some people.  People filing bankruptcy should consider this a business decision rather than a failure.