Self-Help Methods

• Getting out of debt doesn't necessarily require the help of a professional. Many people have paid off their debts by simply changing the way they manage credit and understanding how bad habits can bring on new debts. For starters, rein in credit card use. Pulling out credit cards to buy items increases your balances. Once you've put a stop to credit card use, start making bigger payments to knock down the principal. Minimum payments are pointless at this stage, and often only reduce the new interest charges for the previous month.
  
  

Debt Consolidation Loans

• Consolidating your debts makes it easier to pay off your balances. Combining all your outstanding balances into one loan, and then paying a low interest rate on such loans, reduces monthly payments, and pays off the principal quicker. Depending on your credit rating, you can apply for a debt consolidation loan with your bank, or use your home's equity to consolidate debt. Discuss options with a loan officer and weigh the pros and cons of home equity loans. Equity loans are easier to acquire if you have adequate equity in your property, but if you are unable to pay the loan, you risk losing your property.
  
  

Debt Settlement

• In reality, unless you come across a huge lump sum of cash, you may never pay off excessive credit card debt. Rather than make minimum payments for the next 20 or more years, talk to your creditor about a debt settlement. Ask about eligibility, and then offer a settlement amount to satisfy the debt and remove the obligation. Debt settlements do offer a quick fix. However, settling debt can result in a damaged credit rating because creditors often report the settlement to the credit bureaus.
  
  

Bankruptcy

• Debtors often do whatever possible to avoid bankruptcy, and some creditors work with debtors to help them avoid bankruptcy. Bankruptcy should be a last resort because the consequences are long lasting. Once a bankruptcy court eliminates your debts, creditors will report debts as "included in bankruptcy" to the credit bureaus. Bankruptcies stay on credit reports for 10 years. Seeing this entry may prompt future creditors to deny a credit application or charge an enormous interest rate.