If a particular person has a lot of issues regarding liabilities in his personal finance, the common tendency would be to think of bankruptcy to be an effective option. But filing for bankruptcy should be kept as the final option. The key elements of liability management are settlement and consolidation of the loan. These are the best ways to reduce the liabilities which got popular in the recession time.It is essential for the defaulter to have maximum usage of these best possible options. Since, if the economic condition gets better these options would no longer be available. The settlement of liabilities is a procedure of negotiation which is done between the lender and the borrower to make a decrease in the amount which is owed by the borrower.If the negotiation process is carried out by an expert in the industry, the amount of the liabilities can be decreased up to 60%. If the person who does the negotiations is an expert who can professionally manage the lenders, he will talk on behalf of the defaulter to convince the creditor to reduce the amount. In usual cases, it takes only 12 to 36 months for repayment once the liabilities are settled.The other way in which liabilities with regard to personal finance is settled is to apply for the liability consolidation loan. You can apply for it quite easily and it is the most effective way to begin a new financial life. In this, all the outstanding loans are merged into a single loan with an interest rate which is much lower. The additional charges, like late fee, fines, are taken away.Most of the lenders will agree to the settlement of liabilities since they do not want each of their clients to file for bankruptcy. This would bring great losses for them and they will lose the clients. Because of these reasons, they accept repayment of the liability with a much lower amount. Thus it is necessary to take care of personal finance and liabilities.