- strict budgeting

- debt consolidation or restructuring

- credit counseling from a reputed consultant

Bankruptcy is the ultimate option if nothing else seems workable. Self help is managing your finances in a way that your expenditure is always less that what you earn. Preparing a budget is the best way of doing it. Make out a list of your earnings from all sources.

There are certain fixed expenses that you cannot avoid like mortgage payments, insurance, car payments, rent. After that there are expenses that come under necessities but are variable. The third are what you indulge in only when you can spare some money for them.

Howsoever insignificant it may seem make a list of all expenses and try to understand your spending patterns. Your basic effort should be to meet necessary expenses like food, insurance, health care, housing and education and then prioritize the rest.

If you find it a bit difficult you may look up some books or a computer software program to learn more about balancing income and expenditure in a way that you can save and also bring down your debt.

Creditors have a threshold level of tolerance and you must always keep that in mind. Do not let matters reach a level that a creditor gives up on you and hand over your file to a debt collector. If you have trouble meeting payment schedules do not close your eyes like the proverbial pigeon that closes eyes on seeing a cat approaching.

Meet the situation head on and contact creditors and talk things over. Most of the times, they will agree to rescheduling and modifying payments to bring them to manageable levels.

How to deal with Debt Collectors

There is a federal law called The Fair Debt Collection Practices Act that governs debt collection. Provisions of the Act prescribe that a debt collector may not call:

- Before 8 am
- After 9 pm.
- At your workplace if the ender knows that your employer objects to them.

Debt collectors are also barred from harassing, lying or using unfair practices to collect debt. In addition, collectors have to accede to a written request from you to desist from further contact.

Credit Counseling

If self help does not work and you find yourself unable to manage your debt payments you can look up for credit counseling. Many credit counseling companies would have you believe that they are nonprofit organizations but that may not be the case always. Some of them have hidden charges or may pressurize consumers to make 'voluntary' contributions. Paying a high fee is bound to add to your debt.

Try to locate a nonprofit credit counselor who will provide in-person consultancy rather than getting it on a phone or the internet. Many institutions like military bases, universities, credit unions, housing companies and branches of the US Cooperative Extension Service have free credit counseling programs that can guide you in managing money and debt. Check out if your bank provides such a service or can refer a good counselor. Family, friends and local consumer protection agency too can prove to be a good source for recommendations.

A credit counselor will discuss money matters: your income and expenditure, and help you in budgeting after understanding your basic needs. S/he may also be in a position to provide free brochures, pamphlets and other educational materials to help you understand how to develop a personalized financial plan to help you save money to service your debt. A proper counseling session should not take more than an hour of your time and may also have a provision for workshops and/or follow up sessions if need be.

It is strongly recommended that you see your credit reports before you apply for any kinds of loan.