The first thing you want to do is assess how frequently you are paying on your mortgage. Banks use something called amortization to calculate what your mortgage repayments should be. This method indicates what your monthly payment must be in order to pay it off during your loan term. These payments will be calculated so that some of the balance of the mortgage is paid off and some of the interest.

However if you pay more often, even bi-weekly, you can cut down on your loan term and potentially save thousands of dollars in interest. To keep your budget easy, set up these payments for when you receive your paycheck. All it takes is a call to your lender to set up more frequent payment, but be sure you will be able to afford it before you do.

Make sure you do your own calculations before approaching your lender so you know that you can do it. Take your minimum monthly payment and divide it by 2 if you wish to pay biweekly and by 4 if you wish to pay weekly. Don’t try to complicate it and figure out anything too complex. The new amount you get will be your new monthly repayment.

Now that you have more frequent payments, round up that amount to the nearest $5 mark. For instance, if your payment is $531.56, then round it up to an even $535. This is a very small amount and will make it very easy to add to your budget and make the payment easy to remember. Even though it may seem like such a small amount that it won’t make a difference, over your loan term it can add up to thousands of dollars.

You bank calculates interest based on your average daily balance. In other words they look at how much your balance is every day then add up that interest and give you one interest figure at the end of the month. By taking the two steps listed above you are more regularly reducing the amount of your balance, which means that there is less money that you can be charged interest for.

Using large sums, like tax returns, to pay off part of your mortgage will lower that balance even more. Reducing mortgage debt doesn’t have to be complicated; it’s as easy as sticking to a schedule and making small steps that add up in the long run.

If you want to eliminate credit card debt, just knowing this is needed and being willing to make change is half the battle.  From there, you can move forward to the next step to eliminate credit card debt.  Just remember, once you make that decision, you need to be 100% dedicated to the process.  Eliminating debt such as this takes time but being focused and determined will allow you to achieve your goal.

The first step to eliminate credit card debt is planning, which means to understand your current situation.  You will need to look at the interest rate and terms of the cards you possess, along with your income.  Now, when looking at income, you want to consider not just what you make currently but what you expect to make in the next year or two so you can plan better.

The key with this exercise to eliminate credit card debt is to determine your debt to income ratio.  A great way to keep track is by keeping handwritten notes or use an online program such as Excel.  Then, you need to separate what you owe on each of your credit cards to go with the Annual Percentage Rate or APR.  With this information, determine the total amount of debt on the cards, as well as what you pay out monthly and even annually.

Next, analyze the amount of money you have in your checking and savings account that could be put toward the process to eliminate credit card debt.  For this, make sure you do not put yourself in a bad financial situation but use every spare dime you have to get this debt paid.  If you can pay off balances in full, that would be the ideal solution but if not, see what the most amount of money you could pay.

From there, you would need to determine the credit card to pay off first.  Remember, you sorted your credit cards by APR.  Now, you want to look at the cards with the highest interest being charged and pay those off first.  Even if the card has the lowest balance, if you are being charged a lot of interest, the card is draining your finances.  Therefore, the goal is to eliminate credit card debt for the card with the highest interest first, followed by the second highest, third highest, and so on.

While paying the greatest amount on the cards with the highest APR, remember to continue making the minimum payment on the rest of your cards so fees do not start adding up along with the interest.  Yes, it takes determination, dedication, and time but with a good plan, you can eliminate credit card debt forever.  Once you have the debt paid, you want to make sure you change the way you use the cards so you never end up in this situation again.

Writing down specific financial goals  is a key step in the money management discipline. Establishing goals will help you determine where you want to go with your families finances. Recording your goals will help to provoke  you to change accordingly. Financial goals should always be realistic and have time frames. Establish long-term goals as well as short-term goals and mid-term goals. If all your goals are long-term they may seem too far off to motivate you to action. You will also need to plan for each goal you set, because goals without specific action steps for achievement are really just a dream.

To help ensure success, request everyone in your household follow this personal money management commitment. Because each family member has a different perspective on what he or she considers a financial priority, it’s important to make goal setting a family affair. Discuss the similarities and differences of these priorities, then work together to decide which items will become your goals. It’s essential for every family member to commit to the agreed-upon goals.

Communicate:   Take the time to talk about each others needs and wants so that everyone feels a part of the plan.

Cooperate:   Be prepared to compromise and work cooperatively. Agree within the household that everyone will take turns getting what he/she wants and even giving up something that is wanted. Work within the household toward a financial partnership.

Control:   Every family member must exercise self control and avoid unnecessary spending. Strive to live within the household income, and limit the use of credit as much as possible. Make savings a priority. You can take control of your financial future by working together.

And remember,The average middle-class American spends more than he makes and often lives from paycheck to paycheck. Comparing yourself to the lifestyle you see around you is not a safe way to make decisions.

You may require help and knowing when to seek help is critical. If your family’s budgeting plans don’t bring the results you want, or if your debt seems to be wining the war, consider seeking budget and debt counseling.

Living with a realistic budget and eliminating debt should be your financial goal. Remember, while your goals give you direction; this doesn’t mean that your direction can never change though. In fact, circumstances beyond your control may dictate that you rethink your goals, from time to time. In that case, you might need to re-evaluate a goal in order to make it a reality. The point is that your goals should work for you, not the other way around.

Where do credit reporting agencies obtain information? Credit reporting agencies build their files and obtain information in a variety of ways.

CONSUMERS:

When a consumer completes a credit application, (mortgage, personal loan, auto loan, credit card or any other form of credit transaction) various pieces of identifying information such as name, date of birth, social security number, phone number, address (both current and past), and current place of employment are reported to the credit reporting agencies.

Note: Much of the identifying information comes from the credit applications you submit. Therefore, it is important when filling out a credit application to print clearly and fill out all requested information completely and consistently.

CREDITORS:

Creditors who subscribe to a reporting agency will report all account activity. A creditor may belong to one or more agency. Reported information includes:

* Date account was opened and type of account
* Credit limit or amount borrowed
* Account numbers (or partial numbers for security purposes)
* Interest rate
* Who is authorized to use the account
* Who else is obligated to repay the account
* Payments received and dates received
* Account payment status

PUBLIC RECORDS:

Credit reporting agencies gather information such as property liens, monetary judgments, filed bankruptcies, wage attachments or garnishments, and in some states child support and spousal maintenance. This information is gathered from local, state and federal courts.

Note: A bankruptcy filing will remain on your credit report for up to 10 years, whereas, other public record information remains for up to 7 years.

INQUIRIES:

Every time you or a credit grantor makes a request to see what is in a file, a record is made of the inquiry on your credit report. There are two types of inquiries, and the length of time that those inquires remain on your report varies. Excessive inquiries may be considered negative on your report. However, multiple inquiries of the same type within a 14-day period count as a single inquiry (e.g. when you are trying to obtain financing from different sources for an auto loan).

External:

External inquiries occur based on credit applications you initiate and are viewable by any lender who inquires on your credit file. Credit-grantors may access your files when you apply for things such as credit cards, loans, insurance, a mortgage or an apartment rental. Inquiries you initiate can be reported for up to two years.

Internal:

Internal inquiries are inquiries shown only to you, not to lenders to whom you’ve applied for credit. These types of inquiries do not affect your credit score. Samples of internal inquiries include: current lenders monitoring your account; potential lenders determining whether to offer pre-approved lines of credit; employers checking your credit file when making hiring or promotion decisions; or your own personal request for a credit report.

CONSUMER STATEMENTS:

If you are unable to resolve a credit reporting dispute with a creditor, you may add a 100 word personal statement to your report regarding the negative item. This statement will remain on your report for seven years, but may be revised or removed at any time.

COLLECTION ACCOUNTS:

When an account is placed with a collection agency by a credit grantor, the collection agency’s name and ID number will appear on the credit report. The original grantor’s name and the current balance owed will also appear. Collection agencies report payments received and current balance information as well.

What information is not in a credit report?

Your credit report does not contain information regarding race, religion, medical history, political affiliation, checking or savings account information, criminal records or any other information unrelated to credit.

When Can Creditors Review my Credit Report?

Consumers always have the right to review their credit report at any time. We suggest that you order and review your credit report prior to any major purchase such as a home or auto purchase or when refinancing. Anyone with a “permissible purpose” may review your credit report. This means there that they have a valid reason to review your report, as defined under the Fair Credit Reporting Act. Reasons for permissible purpose include:

For Credit Approval

Creditors may use a credit report to help them decide whether or not a person will be given credit, what terms will be offered, interest rates provided, etc. They will also use other personal information that you have supplied them. When you complete and sign an application, you give your creditors approval to obtain your credit report.

For Employment Purposes

Employers may view and use a modified version of your credit report. It is used to help assess an applicant’s character. Some employers use credit reports when considering promotions. You must give a prospective employer your permission and you will be asked to sign a separate document acknowledging that they will be obtaining your credit report. Current employers may review your report only if you have given permission as part of your employment. The report that employers receive does not contain account numbers, your year of birth and your spouse’s name. Employers are not permitted to ask those questions and the report does not show that information. This is done to comply with federal employment laws. Should you know you might be credit issues, it is best to be forthcoming and explain these issues to your perspective employer.

To Underwrite Insurance

Many insurance companies now request your permission to obtain a credit report when you apply for insurance. They consider the past payment patterns as part of their process of deciding insurance coverage. If you have questions regarding this use of your report, please contact the Department of Insurance in your state.

To Issue a Professional License

Organizations that grant licenses for certain professions that require an employee to be bonded, such as real estate agents, nurses, police officers and some other professions, may review your credit report.

In Response to a Court Order or Federal Jury Subpoena

In a very few cases, the courts may request your report directly from any credit bureau. This is very rare, and few consumers are ever affected by this action.

Internal Revenue Service

The Internal Revenue Service may pull your credit report when you have a tax debt and you are offering to make payment arrangements on that debt.

For Review or Collection Purposes

Creditors with whom you have an established relationship may periodically review your report. They may be reviewing it to offer other rates of interest or other credit products. Most credit counselors advise you to accept only those credit offers that you can afford and that fit your budget.

Credit Scoring

A credit score is a number that creditors use to assess the likelihood that consumers will repay their debts and make their payments on time. The number is generated using a statistical computer model that takes information from your credit report and ranks it numerically. The credit score is not a part of your credit history; it is simply a number that is generated at a particular point in time. Making payments, obtaining new credit, or other credit action can cause your score to fluctuate.

There are many existing sources for credit scores and creditors are even developing their own programs and systems for generating credit scores. One widely used provider of credit scores is Fair Isaac and Company. They produce their score — the FICO score — using proprietary formulas developed to compute personal credit scores. Freddie Mac and Fannie Mae endorse the formula that this score utilizes. Some other companies that produce a score you may be familiar with include: TransUnion’s Empirica score, Experian’s PLUS score, CreditXpert’s CreditXpert score, and Equifax’s Beacon score.

Each creditor and lender has a different corporate policy on risk levels. Keeping this in mind, it is important to note that there is not a minimum, or cut-off score, that is universally with all lenders. Lenders and credit experts agree that paying all bills on time as contractually agreed and never taking on more debt than you can afford will positively impact your score.

Each company that produces a score uses different criteria. As an example, FICO scores weigh the information that makes up your credit score as follows:
35% Payment History
30% Amount Owed to All Creditors
15% Length of Credit History
10% Amount of New Credit
10% Types of Credit In-Use

Scores typically range from the 300’s to the 800’s. Lenders equate higher scores with lower credit risk. A credit score is a “snapshot” of your potential risk at the time you requested the credit and is generated based on the information in your credit report at that moment.

Your score may be different from one credit-reporting agency to the next because your credit history may be different at each of those agencies.

Even if all lenders used the same score, each lending institution has its own criteria for approving loans. One creditor may extend you credit with a score of 675 while another lender may deny you credit based on the same score. Your score may affect the type of credit, amount of credit or the interest rate that a lender offers you.

First, How Do You Get A Copy of Your Credit Report?

Equifax
Credit Information Services
P.O. Box 740256
Atlanta, GA 30374-0256
Phone: 1-800-685-1111
Web Site: www.equifax.com

Experian
National Consumer Assistance Center
P.O. Box 2104
Allen, TX 75013-2104
Phone: 1-888-397-3742
Web Site: www.experian.com

Trans Union
National Disclosure Center
P.O. Box 1000
Chester, PA 19022
Phone: 1-800-916-8800
Web Site: www.transunion.com

The Fair and Accurate Credit Transactions (FACT) Act entitles all consumers to a free credit report once a year from all three major credit reporting agencies which have established a centralized source for accepting the requests. You can order a free copy of your credit report by calling 877-322-8228, visiting www.annualcreditreport.com or mailing a standardized form to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

For further information you may visit the website of the Federal Trade Commission at www.FTC.gov.

How do I dispute an inaccuracy on my credit report?

Along with a copy of your credit report, you will receive a dispute form. This form is used to dispute items that you believe are incorrect on your credit report. It is prudent to clear up any pending disputes before applying for new credit.

You can file a dispute via mail or online. Please refer to the contact information provided with your credit report and follow the specific dispute instructions provided by the credit reporting agency from which you obtained your report.

With the passing of the FACT Act, a consumer now has the option to dispute credit report information directly with the source of the incorrect information rather than the reporting agency. For example, if there is an error with a particular account, the consumer can submit a dispute form to the creditor instead of the credit reporting agency from which the credit report was obtained.

If a consumer chooses to dispute information directly with the creditor, the consumer must mail the dispute form to the creditor’s specified address. The consumer must identify specific information, including the basis for the dispute and also include all supporting documentation needed. The creditor has 30 days to complete the investigation. If they find that the information reported on the credit report is incorrect, they will notify each credit reporting agency to which they reported the information.

If a consumer chooses to dispute information with the credit reporting agency, the credit reporting agency must investigate the dispute by contacting the creditor. The creditor has 30 days to respond to the agency. In their response, the creditor must certify that the information they reported is correct. If the creditor cannot verify the account, or fails to get back to the credit reporting agency within 30 days, the information must be removed from the credit report. However, if the credit grantor follows up after the 30 day period, the data may be returned to the file.

Once a correction has been made on your credit report, you can request that the bureau send corrected copies of your credit report to creditors who have received a report during the last six months or any employer who has received a report during the last two years. If your request to correct an error on your credit report is refused, you can report their refusal to the Federal Trade Commission. You can also seek assistance from the Office of the Attorney General in your state. If you are unable to resolve a reporting dispute with a creditor, you may add a one-hundred word personal statement to your report regarding the negative item. This statement will remain on your report for seven years, but may be revised or removed at any time.

Your responsibilities as a consumer:

Below are a list of your some of your responsibilities as a consumer:

* Pay bills on time because late payments are reflected negatively and hurt your credit.
* Borrow only what you can repay.
* Read and understand any credit agreements.
* Notify the creditor if you cannot meet the payment arrangements.
* Store credit cards in a secure place and report lost or stolen cards promptly.
* Never give your credit card number over the phone unless you initiate the call.
* Shred any document that contains your account number.
* Sign credit cards as soon as they arrive.
* Remember to request your card and receipt after every transaction.
* Notify your creditor promptly if your statement is incorrect or was not received.
* Know what is on your credit report.

National banks such as Citibank have branches across the country. Generally they tend to offer the widest selection of consolidation loans at lower rates than those of regional banks. You may or may not get the customer service that you may from a regional bank, however, the trade-off is usually a lower rate and a wider selection of different loans.

Regional banks often referred to as local banks typically offer personalized service, though their rates may tend to be a little higher. Many borrowers or debtors like to work closely with a bank representative to guide them through the process. For those people, a regional bank is probably the best choice.

Internet banks normally offer the lowest rates but do not offer anything in the way of personalized service like traditional banks. Essentially you will make a loan application and everything will be processed online. For persons in search of a debt consolidation loan Internet banks probably aren’t the best choice. There are many details to be worked out and speaking with someone in person makes more people feel comfortable about the transaction.

Credit unions in most cases offer the best opportunity for debt consolidation loans. Credit unions are owned by their members and not corporations. However, most credit unions will likely accept new members with severe debt problems. Most credit unions will however accept new members that meeting one or more of the following criteria, a personal connection, employer connection, or a public service connection.

Friends and family loans in most cases are not a good idea. For many friends and family loans have cost them friends and family. If you must secure a loan from friends or family make the arrangement as official as possible by drawing up a loan agreement, including a promissory note, and make the arrangement a formal agreement.

Debt consolidation services are typically private, for profit companies that pay off your debt and then charge a monthly fee. Some debt consolidation services have questionable business practices and take advantage of debtors by charging exorbitant fees for failing to deliver on promises. Still debt consolidation services can be beneficial for some.

As stated getting out of debt and debt consolidation loans is not an easy process. There are many choices to be made many loans to consider in many lenders to decide upon. You must have a go for retiring your debt. If the mechanism you choose to retire your debt is a debt consolidation loan make sure you practice due diligence from start to finish

Debt consolidation

Credit counseling

Debt settlement

While these approaches can help you pay off your existing debts they won’t necessarily help you avoid getting back in debt. The strategy you choose depends on the amount of debt and urgency of your financial situation. Filing bankruptcy is a legal proceeding that has gained popularity recently. Once reserved for the most extreme debt situations, bankruptcy and personal bankruptcy have reached epidemic proportions in many states. If you have tried conventional approaches to getting out of debt then it might be best for you to consider bankruptcy. Remember bankruptcy should be used as a last resort.

The spiral of debt is often reborn after managing or paying off debt. Once you settle your debts, you can prevent future debt by tracking your spending and following a monthly budget that prevents you from spending more than you earn more that you can afford.

This is where the rubber meets the road for many people. Living in debt or living beyond your means becomes a way of life. This culture and its philosophy is often born with your first new credit card, usually around your 18th birthday. Credit card companies insist through their advertisements that your life will be better, especially if you buy the things you’ve always wanted and that you deserved with a credit card. That simple strategy in advertising unfortunately loops in many people to an introduction to debt.

If you have spent a number of years living the life of a credit card abuser or a personal loan abuser you can expect the challenge of living without credit cards to be significant. If you are married it will take a total commitment to living debt free. If you are single it may be even more difficult. We have talked with many people in their 50s who have gone through several debt spirals. The cycle of debt is vicious and relentless. Use caution when you get a handle on your debt not to get back in.

Obviously debt problems almost always lower your credit score. While that will not be a priority when you are involved in managing your debt it is something you should consider once on solid financial ground. Improving your credit score is best accomplished by simply paying your bills on time. That sounds too easy doesn’t it? You will likely find many companies that offer credit repair services. The fact is you do not need a credit repair service if you structure a plan and follow your plan to pay your bills on time. Over time your credit score will improve naturally and prove to lenders that you are indeed a good credit risk in the future.

Once you are managing your current debt you can begin to build your cash reserves again. One of the most common things that we hear from people in debt is that they do not have enough money to pay their bills, how could they possibly save money. Again this is part of the new process you must adopt. Quite simply if you want to save money, pay yourself first. Think about that.

Let’s assume your paycheck is $500 for the week. A modest savings plan of 5% and you would take $25 and deposit them in a savings account or savings instrument of some type. That does not sound like a lot of money but over time you can increase the amount and what you are doing is developing a discipline of saving and not spending. That bears repeating develop the discipline of saving and not spending. Before you know it saving money will be the new priority in your life, and managing your debt will become much easier.

That tendency for people that are in serious is to think of hopelessly. To some extent it does feel that way. You must look beyond the present and to your future. As you know if you are in debt or in that hopeless situation, the stress and anxiety you feel on a day-to-day basis is overwhelming. Imagine yourself and your financial situation without that stress. That may be the motivation that you need to make a concerted effort to getting out of debt and staying out of debt.

Whether you choose debt consolidation, credit counseling, debt settlement or find it necessary to file bankruptcy, you must choose a plan that will get you on the road to recovery.

Do not fool yourself into thinking that you do not have debt problems because you are paying your bills. If you are paying the minimum payments on your credit accounts it is likely you will spend years and years paying off the debt. Generally speaking paying the minimum payments is risky. What if you miss a paycheck? What if you become unemployed? Both of those scenarios are happening to thousands of people every day.

If you can make your mortgage payments, may cure car payment and pay off your credit card in full each month then you are among the minority. Essentially if you make your payments on time to your good debts and pay off your bad debts in full each month you may not need to use the debt strategies we have outlined.

Determining where you are with regard to debt is not difficult. Simply ask yourself and answer this question honestly. Am I in debt? An honest answer should provoke an honest action. Whether that is continuing on your present course or charting a new course for debt free living is up to you.

Consolidation loans are good if we have a lot of debts but not too much. If we take a loan to pay the others it will cost us more money in the long run. Considering all the backsides of debt consolidation, it still can bring good things. Think about the psychological side of the thing. If you have only one debt to pay in a month, it’s so much easier and you can manage better your credit in this way. It also saves time for you. You do not have to calculate a lot and to run from a bank to another to pay. A debt consolidation loan is not good for everyone. If you think about consolidating your debts, first of all you have to see if it’s worth it for you.

If you decide to make this choice, you will have to consider some factors that influence such a loan and you have to follow some steps in order to get the perfect one.First of all you have toad up all the debt you have. This includes credit card debt, too. It’s always good to know how much you have to pay, it helps put thing in perspective. This is useful especially when you want to take an unsecured consolidation loan, because in this case lenders will extend only a limited amount of money. After this you have to check the interest rates on your debts. If you want an unsecured loan, it’s also good to make sure you have a stable income and also to get papers that show this thing.

Now the search can come. You have to look for a lender with good offers. The best thing to do is to look for several offers and compare them. You can do the search in your town, in yellow pages or on the internet. If you found the best offer that fits your needs than all left to do is to apply.The loan process can last a bit long, but after you’re trough it, you will be freed of the many debts and will have to pay only one

First you need to be clear about what it means to consolidate a loan. This is a kind of loan that is secured by way of some type of property you own. A new type of loan comes into creation that is able to pay all or most of the debt you presently have owing. This in turn then saves you money and makes it easier for you to live on the money you are bringing in. It also helps to ensure that your bad credit does not get any worse.

If you are seriously thinking about consolidating then you need to add up the money you currently owe. Consider the loans you have as well as your present balances on your credit cards. This will make things so much easier when you start the application process. This will also make paying the one debt payment a month easy to manage and also easy to keep a concise record of.

Once you have recorded all of your debts you then need to find out what the interest rates are for each one. Not all credit cards have the same interest rates. For example, department store cards tend to have higher rates than do credit cards issued by banks. In general, most credit cards have interest rates that range from 12 to 21 percent. In the same way, you need to know the interest rates that are attached to your loans.

Once you are armed with all of this information, it then becomes necessary to compile a list of lenders and go talk to each one. Find out what they have to offer in terms of debt consolidation loans for bad credit. Check the Internet for names of lenders. You can also check the yellow pages of your phone book.

You might want to start your search at your own financial institution, be it a bank or credit union. You might find that your bank is more than willing to help you to consolidate your debts. Be aware however that having bad credit will probably make getting this type of loan somewhat trickier than if your credit was fair to excellent. It is also important to note than many banks charge application fees to apply for these types of loans that are high- anywhere from $50 to $200.

If you need more debt help then you are able to find then visit Care One on the web for the help you need. This is a consumer credit counseling company

Before you go ahead and apply for a loan whereby you can consolidate all of your debts, remember that your credit is not good and that you don’t want to do anything to make it worse. Are in a position to apply for another loan or would doing so only cause you to get deeper into debt?

Find out what the current market rates are and then compare them to the rate you are presently paying. Would you be saving much money if you were to consolidate? This is something you must know before you forge ahead.

Bad debt consolidation loans are only a good idea if interest rates are lower than what you are currently paying. If they are higher then all you are doing is trading one financial problem for another.

If your present loan and/or other debts are getting close to being paid off then you would be better off to pay them off without starting a new loan term and having to think about interest rates. If the amount you have left to pay on your loan(s) is minimal then taking out an entirely new loan would be more expensive in the long run.

It never hurts to speak with an expert in the field of finances to get some advice as to what your best course of action would be. Educating yourself to the best of your ability when it comes to delicate financial matters is imperative but speaking with an impartial person who can advise you as to which direction is preferable for you to go in for your unique situation is also a very smart and strategic move.

If after careful consideration you decide that a consolidation loan is best for you then be aware that there may be some lenders that will be hesitant to give you a loan but on the other hand, there will be other lenders who will be open to do so.

Just make sure that you look for good loan terms and an interest rate that is affordable for you. When it comes to your money you should never take chances. Always be a shrewd fact gatherer before you jump into the pool!

In an effort to preserve your credit, it is best that you do what is necessary to avoid bankruptcy.  It may not be easy but it will always be worth it.  There are websites around that can offer you help in avoiding bankruptcy. Many financial experts offer some great financial advice and some of the following tips for avoiding bankruptcy.

Total all of your debt

The only way to take the second and third steps in avoiding bankruptcy can only be taken when you have an honest and accurate picture of your debt.  Put together a list of every bill, statement, document, or anything else that can have an impact on your finances.  Figure out your assets and your debts.  As an example, the mortgage on your home would be a debt and the value of the home would be an asset.  Once that’s done figure out which debts are good and which are bad.  Good debts would be things like home loans or student loans.  Bad debts are things such as credit card debt, medical bills, or high interest car loans.  And while you’re at it list the interest rate and minimum payments for all of your debt.

Reduce expenses

Now that you know how big of a hole you’re trying to climb out of, you need to know how much you spend so make a list of your expenses.  Even if it’s a dollar to get a soda at the vending machine, include it on this list.  This can then be divided into two lists, necessary expenses and optional expenses.  Necessities are the things you need to survive very day, a house payment, groceries, or prescribed medications.  Non-essential items are the things you can live without like new clothes or cable television.  This is when you add in all those minimum payments you listed earlier.  This list is the minimum amount of money you need to pay your bills every month.  If you don’t have enough its time to start reducing non-essential items and reducing your spending.  Even if you can cover the amount, cutting back on your spending can help you make up for some of that debt.

Consolidate debt.

If you have a lot of small items that you owe then paying them out one at a time is a challenge.  By consolidating these debts you’re reducing your payments down to one and can reduce the interest rate so you can pay it off quicker.  Another simple way to get out of debt, in addition to consolidating, is to pay more then the minimum payment.  After the minimum payment ever cent goes to paying off that debt, so even an extra five dollars can help.

Consult with a credit counselor

This can all be complicated stuff, if you need help totaling up your debt, consolidating that debt, or reducing your spending then don’t hesitate to call a credit counselor.  They can help you with money management or find out what kind of consolidation loans you qualify for.  Some credit counselors can even help you with a debt management program.  There will be fees associated with the credit counselor but it may be necessary to avoid bankruptcy.

Consider debt settlement.

If you have vast amounts of debt that outweigh your income by a considerable amount then you may have to think about debt settlement.  A credit counselor can help you with this by dealing with your creditors and negotiating the amount owed.  Debt settlement will hurt your credit but not nearly as much as a bankruptcy would.  Debt settlement should never be your first option; it’s a very serious decision to make.  But if you’ve exhausted all other options, you may have no other choice to avoid a bankruptcy.

It doesn’t matter how or why you got into debt, it is possible to get your finances bank in order without filing for bankruptcy.  There can be situations where bankruptcy is the only feasible or reasonable option but its best for your credit and future to avoid it if you can.