Three Factors to Consider in a Debt Management Program If you have found yourselves mired down in debt with maxed-out credit cards, your first step is getting together and developing a budget that starts chopping away at that stack of bills. Debt management includes other options if you're seriously in trouble. Which method: credit counseling, debt consolidation, debt settlement or -- heaven forbid bankruptcy -- depends on several factors. Secured You may have seen the reality TV program Pawn Stars. Pawning is a simple definition of a secured debt. You take your engagement ring set and give it to the pawn shop for a pre-determined length of time in exchange for a loan. When you pay back the loan you get the rings back. If you don't pay the loan back, the pawn shop keeps the rings. The lenders for secured loans such as cars, boats, furniture and your house are not usually agreeable to any sort of debt management solutions. You don't pay, you lose the asset. The exception would be a home mortgage lender which may be open to loan modifications. Unsecured These are credit cards, store cards and personal loans. There is nothing for the lender to repossess if you default on the loan. Most creditors when faced with the reality that the debtor is in trouble are willing to work with you. Getting something for the loan is better than no payment at all. Creditors, both secured and unsecured review your credit report on a regular basis. It's obvious which are getting paid and which aren't. The collection efforts may increase from those that are getting farther behind. How Much You Owe A few thousand dollars in credit card balances might seem frightening to someone who is used to paying their balances in full every month. You might just have to tighten your belt a little and use the extra money from reducing expenses to get rid of the debt within four or five months. The story is different if you find yourself only being able to make the minimum payments. If that's the case, credit counseling may be the answer. The counselor will work with you to come up with a budget that allows a hefty payment to your creditors. He'll then work with the unsecured creditors to get them to waive any late fees, decrease the interest rate and accept your new payment arrangements. Debt settlement is asking the creditor to accept a partial payment as payment in full. If they feel there's a good chance you'll declare bankruptcy they may be willing to take the partial payment.