Does this sound painfully familiar?

You get a sick feeling every time the phone rings because you know on the other line a collector wants money.

You dread going to the mailbox because you know the past due notices are waiting for you and there’s not enough money in the bank to barely make a dent in the payments.

You sit alone at the kitchen table at night facing a stack of unpaid bills… feeling helpless, hopeless, and like there's no way out.

If so, you're certainly not alone. Especially in today's chaotic economy, more and more people are facing some type of financial crisis. And as the rate of unemployment skyrockets, as the rate of foreclosures remain a dismal reminder of the mess the economy is in, it's incredibly easy to find yourself overwhelmed. However, there is a safe harbor where you can get your life back on track.

Debt consolidation -- is it right for you?

If you want to avoid filing for bankruptcy, put a halt to credit harassment, cut your debt payments up to 50% and make one monthly payment, debt consolidation could be your lifeline in troubled waters.

A lot of times when people hear the term "debt consolidation" the first thing that comes to mind is a home-equity loan. While this is a viable alternative, it does come with some risk. A home equity line of credit or second mortgage means that you have to put up your home as collateral. If for some reason you are unable to make the payments, or you pay late, you could very well lose your home.

However, loans such as these do offer tax-advantages that other types of credit do not. You'll have to decide what is best for you, and if after weighing all the options you decide a loan is not the smoothest path to take, there are other choices including debt consolidation without a home equity loan.

But before you take any action, there is one thing you need to do first.

Communicate With Your Creditors

Any time you are struggling to make payments you should be in contact with your creditors. When they see you are trying to get back on track and you're serious about reducing your debt, they're often willing to work with you. The last thing they want is for you to declare bankruptcy, which means they may end up with nothing. Companies may lower your interest rate if you agree to pay a specified amount every month.

What To Do If Communication Fails

If you are unable to reach an agreement with your creditors, or you need guidance to help you while paying off your debt, credit counseling could very well be what you need. There are credit counseling organizations out there that are nonprofit and will work with you so you can get yourself out of financial hot water.

The best credit counseling organizations advise you on managing your money, sit down with you to develop a workable budget, and offer ongoing education so you understand how you got into trouble in the first place. These expert counselors must have certification and specialized training in consumer credit, budgeting, and debt management. Where appropriate for your situation, a counselor will suggest a debt consolidation plan that will help get your credit management burdens under control. They help you see the big picture so you fully understand where you are with your finances. Best of all, they help you develop a personalized plan so you can put your money problems behind you and move forward.

Debt Management Plans

In some instances, your financial problems are the result of too much debt you simply cannot repay despite exhausting other options. In these cases credit counselors may suggest a debt management plan. A debt management plan goes beyond credit counseling, and it may or may not be the best option for you. However, when people speak of debt consolidation for unsecured debt they are generally referring to a debt management plan. A certified credit counselor will help you decide if you should sign up for one of these plans. In any event, you will still benefit from a reputable credit counseling center. You’ll learn to create a budget, stick to it, and learn how to manage your money – skills that will serve you well in the future.

Bankruptcy -- The Last Resort

Personal bankruptcy is usually the last resort when it comes to managing debt because the results are a long lasting black mark on your credit report. When a court grants bankruptcy to someone that means they are discharged from certain debts and don’t have to repay them. While you may be in a situation where this seems to be an answer to a prayer, keep in mind that bankruptcy information can stay on your credit report for as long as 10 years. Also, the bankruptcy blemish makes it very hard to get credit, buy a home, or sometimes even get a job. However for some people, it does boil down to the only option available.

Changes To Bankruptcy Laws

In October of 2005, Congress approved broad changes to bankruptcy laws. Basically, these changes were put into place to provide more incentive for Chapter 13 bankruptcy relief rather than Chapter 7.

Chapter 13 bankruptcy allows people to keep their home or car as long as they have a steady income. With Chapter 7 bankruptcy, however, it's possible to lose both your house and your car during the bankruptcy process.

If you declare Chapter 13 bankruptcy, you'll be put on a repayment plan so you can pay off your debts within 3 to 5 years. You don’t have to surrender any property. Once you've filled your obligations under the Chapter 13 plan your debts are discharged.

Chapter 7, or straight bankruptcy, means all of your assets that are not exempt (such as basic household furniture, tools you need for work, and sometimes automobiles) are liquidated. Also, in some cases some your property may be sold or turned over to your creditors.

Since the new changes to bankruptcy laws have come into effect, consumers must first go into a credit-counseling program within six months before filing. You must also be able to prove your income does not go beyond a certain amount.

Once again, a credit counselor can provide you with the best information for your particular situation. Why worry and lose sleep over your crushing debt when there is help available to you right now? The counselors at the non for profit Debt Consolidation Connection are available to sit and talk with you, answer your questions, and help get you headed back towards your dreams and the life you were meant to have.