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Most of the people do not have knowledge about the actual thought of debt consolidation and its usability in reducing the cruel debt difficulties. Several debtors puzzle it with debt management plan which is a new way out for rising debt problems but there is a large difference in debt consolidation and debt management. Debt management requires negotiating with lender to agree lower interest rate with lower monthly payments. In that choice debtor pays to debt Management Firm and firm distributes the amount into creditor as in debt consolidation a big amount is borrowed to pay off smaller debts and to combine them into one debt with lower interest rate and more repayment period.