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For a growing number of Americans, debt is a serious problem, and one that can “sneak up” on you. The first step toward controlling your debt is being aware of it. Once you’ve established that you need to consolidate and pay down your debt, the following ten possibilities may be useful to you.

10. If you have a 401-K or other employer-sponsored retirement account, borrow part of the money to pay down your debt. This should be used as a last resort, however. If you cannot pay the money back within five years, you will be assessed the taxes and penalties associated with the early withdrawal of the funds.

9. If you have life insurance, borrow money against your policy. Strictly speaking, you don’t ever have to pay the amount back if you can’t or don’t want to, but it will be deducted from the amount paid to your beneficiaries. For this reason, planning to pay the money back is advisable.

8. Borrow the money from family or friends. It probably will save you interest, but the list of associated problems can include the potential for damaged personal relationships, the expectation of a return of the favor years down the road even after what you borrowed has been repaid, and the possibility of legal action against you by someone who was previously a good friend or close family member.

7. Consult a debt consolidation service. Make sure you’re working with a service that does not charge you high fees. Check with your local Better Business Bureau or other consumer protection agency. You’ll likely sacrifice two things to work with a debt consolidation service: your freedom to open and use additional credit lines and, in many cases, your credit rating. The service will usually ask you to make one monthly payment that it will then use to pay your creditors. There are two main types, debt settlement and credit counseling. Debt settlement can hurt your credit score, but will lower your monthly payments and save you the most money without filing bankruptcy. Credit counseling lowers your interest rates and your monthly payments by less.

6. Renegotiate with your creditors. Your creditors may require that you incur no additional debt while working to pay off what you’ve already accrued. And they are under no obligation to agree to renegotiation; however, it is often to their advantage as well, since it means they will eventually collect.

5. Sick of getting those introductory 0% interest credit card offers in the mail? Before you throw the next one away, consider how much interest you could save by consolidating all your debt onto a new card. Be very careful, though. If you continually open new cards and close older ones, you’re not helping your credit rating. If you would like to consolidate all your debt onto a single card, consider keeping at least one of your older cards open with a small balance as well.

4. Do you own a car, boat, motorcycle, etc. with a free and clear title? If so, take out a title loan. Make sure you’re getting the rate you want. Also, be certain you understand the terms (will you get to keep your car, boat, or other collateral, or will you have to turn it over to the lender for the term of the loan?). Get a clear idea of the payment schedule, as failure to meet any of the terms may leave you without ownership of your property.

3. Take out a personal or signature loan. Weigh this option carefully, as the interest rate on this type of loan may not be significantly lower than what you’re already paying.

2. Refinance your home and take cash out at closing. This will help you pay down your high-interest debt without too much difficulty, and can be tax deductible. It saves you money and gets you a lower monthly payment. Just make sure that there is no possibility of missing a payment, because you don’t want to face a foreclosure because you transferred too much unsecured debt to secured debt.

1. If you own your home and have enough equity in it, take out a home equity loan or line of credit. Not only can you use the money for anything you would like, including debt consolidation, but the interest you pay on the loan will be tax-deductible so you will save in more than one way.

While some of these options may be more desirable than others, and most come with their own set of complications and consequences, keep in mind that they are likely preferable to continuing to struggle with unmanageable debt.

Short term debt problems are manageable problems associated with temporary job loss, sickness, a large one off payment which may leave you short for a month or two or you just have a lot of small out of order debts, which you need to take control of.

Below are just a few things to take into consideration when evaluating your credit situation.

Prioritise your Payments

Prioritizing your payments is a very important step. You must choose the creditors that are most important to you e.g. your mortgage payment and your utility companies.

Next are the credit cards and store cards which charge the most interest, by paying off the cards with the most interest you can reduce the amount of interest calculated on your next bill.

Try to clear some of the smaller bills first. Although it seems like there is not a lot of interest amounts being paid on them, it still adds up. Clearing some of your smaller debts gives you encouragement to set to work on the others.

Transferring your credit card balance onto another card, with a 0% interest period is also a recommended action. This allows the full monthly payment to be deducted from your balance, without incurring any interest.

Always remember to pay off your debt with any available money you may have at the end of each week/month. Doing so prevents any arrears and a build-up of interest on credit cards and store cards.

Can you improve?

Improving your situation is one of the best ways to acquire extra money. Try to think of ways to maximize your full income e.g. is it possible for you to work more overtime, can you claim any benefits, and do you have anything of value to sell? Also can you afford to cut back more? A drastic measure is to move to a smaller house and pay less mortgage or less rent, however this is a worst case scenario.

Contact your creditors

If you are experiencing money problems, do not be afraid to contact your creditors as they will try to help you. Due to the process the creditors have to go through to get money from you if you do fall into serious money problems, it can work out quite expensive to your creditors. Contacting them could lead to negotiating a new payment plan.

Before contacting your creditors, make a comprehensive list of all the outgoings and a realistic amount that you can pay each month. After you have completed a list of out goings, make a list of all creditors remembering to prioritize from most important to least important. Upon completion of this list, prepare a formal letter explaining your situation and proposing your payment plan.

When you receive confirmation/acceptance of your proposed plan (or something close to it) always keep your creditors informed of your progress. This process is a long drawn out process and you will have to prove to your creditors that you are struggling with the upkeep of your payments.

Cut backs

You will be surprised on what you can save on when you cut back. Make a list of all of your current out goings, this includes all your shopping, hobbies, magazines, news papers, treats, everything. When you have produced your list, take a look at it and remove all essentials

From this list also look at the brands of shopping you buy, you can save money buy using a cheaper brand.

The items you have left on your list are obviously non essential to you, therefore can be excluded from your weekly/monthly expenditure. You will be surprised to see how much you can save from this simple money saving technique. However you do have to be tough on yourself when excluding non essential things, think to yourself “do I really need it.”

Choose the best rates

If you still have a good credit score and still have the ability to be accepted for a loan, then try switching your outstanding credit to a new loan or credit card.

Search the internet, local papers and magazines, even keep an eye on the adverts on your TV, there are hundreds of creditors offering 0% interest on credit cards. Try doing the same for loans too. It is very unlikely you will find a 0% interest loan, however there a lot out there with rates from 5-9%.

Switching credit cards and loans will save you money on increased interest rates. Look at the big picture over the long term; you will save £100s on interest.

Consolidate through your mortgage

It is possible for you to consolidate your debt on to your mortgage. However doing so does increase the interest you will pay drastically. Imagine you have debts of £10,000 over a five year period. You wish to add this to your mortgage over a period of twenty years. The interest accumulated over five years will be significantly less than the accumulated interest over twenty years.

You must also be sure that the value of your property is significantly more than the amount of your mortgage. Negative equity on your home can lead to problems.

Consolidate with a loan

Consolidate through a loan. Quite like putting all your eggs in one basket so to speak. Then there are a few scenarios you may want to consider:

? How much do I want to pay out?
? Do I want to take the loan over a shorter term and pay my debt back faster?
? Do I want to take my debt over a longer term, pay more interest but take a lower payment?
? Am I going to stick to the loan and not get into more debt?

If you are aware of these simple scenarios then a consolidation loan is recommended. It is cheaper due to one amount of interest paid instead of multiple amounts. Also you will find your money easier to manage due to the one single payment every month/week.

Do pay particular attention to the term of the loan you require, it is better to pay the loan back sooner rather than later. Try to find an amount you are comfortable with. It is easy to take the lower payment over the longer term, which allows you to have more expenditure. However, is this option a sensible one? More interest, longer term, more to pay back. You would be better with shorter term, less interest, less to pay back.

If you are a bad credit rating, we have less option to resolve your debt issues. And if you are at the disparate condition to pull yourself out from debt and get rids of all the harassing phone calls from your creditors, there are a few options of debt relief for bad creditors.

Consumer Credit Counseling

There are many Consumer Credit Counseling service (CCCS) around to help you to solve your debt problems. You can enroll into their CCC program to get counseling on personal finance and follow their plan to resolve your debt problem. Normally CCCS is a non-profit community action organization whose staff members have the training and experience to help you help yourself. In many cases, CCCS assists consumers by contacting their creditors and arranging lower monthly payments. Some services are provided free to consumers. CCCS was founded by creditors to aid their financially distressed customers totally free of charge.

A CCC program will not lower your credit score, but it will be noted on your credit report and hurt your ability to get and the interest rates you pay on a home loan, a refinance, or a car purchase. Once again, be careful when selecting a CCC company as there are good ones and bad ones out there. Search online for any negative information that may be out there and use the Better Business Bureau to see a company's record there.

Debt Settlement or Debt Negotiation

Debt settlementis an aggressive approach to debt reduction, which is appropriate for debtors with a serious amount of debt or who are considering bankruptcy. Debt Settlement offers you a chance to reach a negotiated settlement with your creditors, paying back far less than you currently own.

Debt Settlement is a way to get out of debt in the shortest amount of time, and with the least amount of money without filing for bankruptcy. There are some drawbacks though. Debt Settlement will hurt your credit rating in the short term, because you must choose to go delinquent on your bills. However, because it will get you out of debt more rapidly than any other option aside from Bankruptcy, you can start to rebuild your credit rating sooner.

Bankruptcy

Bankruptcy can be the best choice for you, but it should be an option of last resort. It will hurt your credit rating severely and is not a pleasant process to undertake and your bad credit record will remain on your credit report for 7-10 years.

Bankruptcy will free you from overwhelming debts so you can make a fresh start, subject to some restrictions. If none other options available to you, declare a bankruptcy can be your best choice. After filling the bankruptcy, you can start to rebuild your credit and improve your credit rating by open up a new credit card from banks like Orchard Bank (Orchard bank has credit card plan designed specially to help people rebuild their credit after bankruptcy). Use this new credit card responsibly and make the monthly payment timely to rebuild you good credit record.

Summary

Although less option available for bad credit debtors, debt relief options are still available. No one option fit everyone, review all the options available to you and choose the one best fit your financial condition.