Perform a Self-Assessment

• Take a hard look at your finances. Does your income match your expenses? If not, cut expenses and get a second job. Look at the structure of your debt and expenses. Is a large chunk of your monthly earnings going out the door for debt? If so, create a plan to funnel all of your extra income into paying off one account at a time, beginning with the account with the lowest balance and paying the minimum on the remaining accounts. When you have paid off your first lowest-balance account, divert all extra income to the new lowest-balance account.
  
  

Credit Counseling

• Credit counselors can negotiate with credit card companies on your behalf and may get them to cut interest rates and forgive penalties. It may also get creditors to stop the harassing phone calls. The big benefit is that you will not see a bankruptcy on your credit report. On the other hand, credit counselors may ask you to give up all use of credit cards until you have repaid your debts.
  
  

Sell Some Property

• If you have an extra car and can sell if for more than you owe, get rid of it. If you are thinking of declaring Chapter 7 bankruptcy, some of your assets--depending on state law--may be sold to satisfy creditors. Guns, boats, and other luxury items may bring immediate cash. Remember to divide the proceeds of the sale in a fair manner because creditors may seek to reverse some payments if you declare bankruptcy.
  
  

Do Nothing

• If your expenses are low and you have no assets to sell, it may not be worth the effort for creditors to try to collect debts. This is a relatively difficult, and risky course of action. Creditors cannot throw you in jail, but they may be able to garnish your paycheck if you have one. Research laws on garnishment in your state to see if this is a possibility. It also imperils future earnings; if you come into money through inheritance or lottery, creditors who have gone through the trouble of securing judgments may seek repayment.