For a lot of people, the term bankruptcy evokes the same emotions as the word cancer. To hear someone has gone through bankruptcy is like hearing they are getting chemotherapy for a malignant tumor or treatment for a life threatening disease. To others, bankruptcy sounds a lot like surrender and defeat. To wave the white flag to your creditors and admit you are a failure and cannot keep the promises you’ve made.

The reality is that bankruptcy is a business decision and should be seen as such. When people talk about Donald Trump going through bankruptcy, they don’t look at him as if he were a pariah. He’s a business man and bankruptcy is merely another tool in his toolkit. The Road Out of Debt, written by Joan Feeny and Theodore Connolly, is a book about getting out of debt with that perspective on bankruptcy. It’s not a book about bankruptcy, it’s a book about debt with a look at how not thinking about bankruptcy is a mistake.

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A few weeks ago, I discussed How Debt Settlement Works, and today I wanted to talk about another debt related topic – debt management programs or debt management plans.

A debt management program is similar to debt settlement in that you pay a third party who will, after taking their fee, pay your creditors. You are still responsible for your debts but the third party will help you stay disciplined in keeping your obligations. However, that’s where the similarities between the two differ.

A debt management programs or plans may be able to help you negotiate for lower interest rates on your debts, get your late fees waived or reduced, work out a payment schedule, and potentially consolidate your various monthly payments into one payment. Like debt settlement, these programs are not cheap and some places will charge you a lot in fees. The goal with a debt management program

Everything I’ve ever read about debt settlement has been extremely negative and, for the most part, ugly. It’s because debt settlement is designed for people in very dire circumstances.

A friend of mine recently got into the debt settlement business since he was working with a lot of individuals in weak financial situations. We spent the better part of three hours discussing how debt settlement worked, why debt settlement made sense to some people, and why the business had such a bad reputation. My friend is a stand-up guy, I trust him, and so it was refreshing to hear about the business, warts and all.

In this Foundation series article, I hope to pass on some of that knowledge to you.