When you fail to make payments, penalty fees will jack up the amount you owe. Don't wait for creditors to contact you. Call them before bills are due. If you contact them early, in many cases they will work with you to make acceptable payment arrangements. Explain your financial situation and ask for a reduction in monthly payments to a manageable level.

Reduce your interest payment

If you have several credit cards, try to consolidate the debt onto the card with the lowest interest rate and then work on paying down the balance. If it's not possible to consolidate the card debt, focus on paying down the balance on the card with the highest interest rate first.

Consolidate

Debt consolidation is a process by which credit counseling agencies negotiate with your creditors to obtain the lower monthly obligation needed to satisfy your current accounts. A nonprofit counseling agency may negotiate with your creditors to reduce interest and/or suspend fees. If you enter a debt repayment program, you'll make one monthly payment to the agency, which will pay all your creditors.

Debt Counselors

For a professional advice on how to deal with your debt problems, contact one of the personal-credit counseling organizations. See Debt Consolidation page for further info.