Which of the following best describes the term 'debt management'?

The term 'debt management' refers to evaluating and implementing strategies to repay debts effectively. This involves analyzing a debtor's financial situation to create a plan that may include budgeting, prioritizing debts based on interest rates, and negotiating with creditors for better terms. It focuses on organizing and reducing outstanding debts to improve the overall financial health of an individual or household.

In contrast, investing in stocks and bonds does not pertain to managing debts but rather focuses on increasing wealth. Accruing more debt for future expenses is counterproductive to debt management, which aims to reduce existing obligations. Taking out additional loans on existing debt can compound financial issues rather than addressing them, risking greater financial instability. Therefore, the essence of debt management lies in developing effective repayment strategies rather than any actions that could exacerbate debt situations.