Contact Creditors

• One of the most effective and sometimes overlooked ways to control debt is negotiating with creditors. Creditors want to be paid back and if they understand that your debt load is so burdensome that you are becoming unable to pay your bills, they may be willing to renegotiate the terms of your loan. Essentially, creditors want to avoid the possibility of bankruptcy, since it often results in a large loss, even if they are able to foreclose on property or repossess items for which the loan was made. Keep accurate records of your income and credit history and use them to describe how you came to be unable to pay your debts. Many people face extenuating circumstances like personal injury, losing a job, and accidents that contribute to an inability to service debt.
  
  

Consolidation

• Debt consolidation is having one large lender pay off several of your debts to offer you a single loan with more favorable terms. Consolidating debts makes it easier to keep track of what you owe, since you will only have to pay one large bill instead of several small ones. It can also lower the amount of interest you owe, especially if you consolidate debts after a decrease in economy-wide interest rates. With fewer monthly payments, you will reduce the chance of being charged extra fees for making late payments or missing payments.
  
  

Credit Counseling

• Credit counseling services can help manage debt problems by closely analyzing your financial situation and creating a plan to repay and overcome the debt. They can also help you talk to creditors and get them to agree to a repayment plan that is feasible given your income and financial situation. This can be helpful for those without a solid grasp of how debt and finance work and those who are not comfortable talking with creditors themselves. Some credit counseling services are run through nonprofit organizations, and given that the people seeking help are in tough financial situations, fees for services are usually minimal and in some cases may be free.
  
  

Bankruptcy

• Bankruptcy is a debt management option often used when all other options fail. Bankruptcy allows many debts to be forgiven. This can lift the burden of debt significantly, but it also comes with several serious drawbacks. Bankruptcy will go on the public record and can stay on your credit report for up to 10 years. People who have gone bankrupt usually have very bad credit ratings and have trouble borrowing money.