Millions of people have been suckered into credit card offers only to find they are in over their head. People enter into the world of credit with the best of intentions, paying off the balance routinely and taking advantage of low or no interest rates. What they find out fast is that one late payment or one dollar over the limit and their plans dont work out and they cannot figure out what or how it happened.

1-stop using you credit cards!!

2-Take a good look at your financial situation by completing a budget worksheet. Find out if your income is less than your expenses payed out monthly or how much room you have left.

3-Make a budget and stick to it no matter what. If your monthly income is not enough to cover your basic living expenses make some quick changes. If you have enough monthly income to cover your basic living expenses and credit payments tighten your belt and consolidate some debt.

4-Talk to a credit counseling agency. Stay away from the people who promise to negotiate the debt amount or to get a settlement for less. Work with those who will negotiate lower interest and make the payments for you while you need only make one payment to them.

5-Take classes on how to manage and control credit. Prevent history from repeating itself by making yourself wiser.

6-Sell some of your stuff. If you can sell some unwanted things in your home do it. Sell any of the stuff you bought on credit or otherwise. If you can take out a loan on your 401K do that. At least you will be paying yourself back at a better interest rate than you are paying the creditors. Consider taking a second mortgage on your property to take advantage of that interest on your taxes.

7-Pay a more than the minimum if possible. Once you have a budget down and are sticking to it and you come into extra money put it toward your debt dont splurge on yourself just yet. When your minimum balance due is less because of your payments don't reduce your payments but maintain them. Credit card companies are literally banking on you making only the minimum payment due each month. They know that they have a long term cash in you.

If the debt collectors start calling, talk to them. It probably won't help your situation much but at least they will be more willing to work with you than if you ignore them. Credit card companies must follow the Federal Fair Credit Reporting and Debt Collections Act. This means that if you do not wish to speak to collections or receive communications from them, you have a right not to be harassed or contacted by them. You must send the agency or credit card company a certified letter in writing requesting that they stop contacting you immediately. If you get calls at work you can tell them to stop contacting you at your workplace and they must stop contacting you there or you have the right to sue them. These steps in no way remove your obligation to repay your debt but it will stop the annoying phone calls they make. If you can pay some but not all of your debt and you are trying to avoid a bankruptcy pay your highest balance credit cards first. The interest rates on these cards will add up more quickly than on the cards with a lower balance. If you choose to take out a loan on your 401K and you quit your job get laid off or otherwise stop paying it back you will be responsible for paying at least 20 percent in taxes on the money you borrowed. If you get a second mortgage or a home equity line of credit you must be disciplined not fall into the debt again. This time it is your house on the line. If you fail to meet your financial obligations on your second mortgage you run the risk of foreclosure and may lose your house. Stay away at all costs from those companies who claim to be able to settle your debt for 40-60 percent of what its worth. They are doing nothing for you that you cannot do on your own. Credit card companies will make a settlement offer to you directly for a fraction of what you owe them. This however will remain on your credit report negatively for seven years or slightly more. The amount you settle for minus the amount of your debt is the amount that you must claim as income on your taxes for that given year. If you settle your debt for $6000 less than what you really owe you will have to claim that $6000 as income and pay taxes on that money. The companies who say that they can settle your debt will often stockpile your money until they have a lump sum in which to make a settlement offer. Since they are taking over the debt collection phone calls you have no idea that they aren't paying a dime to your creditors until they make the payment offer. If you decide to part ways with these companies they might keep your money and pay nothing and you still owe the entire amount even though you thought the payments were being made.