Many times we don't see the signs of a financial crisis until it's too late. A financial crises doesn't occur overnight. There are five warning signs which indicate that your credit card debt may be getting out of control:

• Paying bills late
• Transferring balances from one account to another in order to obtain lower interest and payments
• Depending on overtime at work to cover minimum monthly bills
• Hoping that checks you've written don't clear the bank before payday
• Borrowing from friends and relatives to cover basic living expenses

You should contact your creditor(s) and explain your financial situation honestly before your account becomes seriously past-due and/or gets referred to a collection agency. The earlier you contact your creditors the better it will be for you in solving your financial problem. Here are some suggestions you can present to the creditors:

• Suggestion 1 - Before you call your creditors, try to come up with a realistic monthly payment plan that fits into your budget... a payment that you can afford to pay each month.
• Suggestion 2 - You can suggest that they defer (postponing payment) your payments for a specific time (3 or 4 months) until you get your finances back on track.
• Suggestion 3 - If suggestions 1 & 2 don't work and your creditor is unwilling to work with you, we recommend that you contact a reputable non-profit credit counseling agency, a bankruptcy attorney or other professional for help.

As a card holder and consumer you can do several things if a creditor is calling your house and work harassing you and your family several times a day and night. We suggest that you:

• Step 1 - Tell the creditor or collection agency to stop calling you at your home and/or work.
• Step 2 - If they continue to call your home and/or work after you have verbally told them to stop calling, you need to send a certified letter to their collections department reiterating your early conversations not to call your home and/or work. In addition you should call the creditor and speak to a supervisor to complain about the harassment.

Note: If Step 1 or 2 doesn't stop the harassment you may need to contact a reputable non-profit credit counseling agency or consult with an attorney familiar with the Fair Debt Collection Practices Act (FCDPA) for help. Remember, the calls may go away, but your debt won't!

Yes. If your debt is large enough a creditor may refer your account to an attorney and take you to court. Often a creditor will win if they file a lawsuit against you in court. The only time they would not win is if they file suit and do not appear at the hearing on the specific court date. Creditors realize that court can be a scary place so many file suit hoping that you won't show up at the hearing date. Therefore, they win their case by default and may have the ability to garnish your wages (up to 25% or more) or take your property. Keep in mind that a creditor has nothing to lose, but only to gain by taking you to court. Try to avoid this if possible.

This is when a creditor has tried every angle to collect payment on your past-due account from written notices, to phone calls to having a collection agency contact you. At this point the creditor has given up, and rather than take you to court, they write off your uncollected debt as bad debt. This is known as a charge-off. These charged-off accounts are charged against the creditor's revenue on their income taxes. Even though your account is charged-off, you still owe the money and a charge-off will be noted on your credit report. This is a negative mark that could keep you from obtaining credit or purchasing a car or renting an apartment. A charged-off account will haunt you until you pay it in full.

Settling a charged-off account can take some work and patience on your part. Follow these guidelines to deal with a charged-off account:

• Step 1 - Come up with a payment amount that fits into you budget that you can pay (a lump sum) to the creditor for that charged-off account. In most cases a creditor will accept between 30% to 60% of the charged-off debt.
• Step 2 - Contact the creditor and make them an offer to settle the charged-off debt. This may take some negotiating and patience before you reach a settlement amount. Refer to Sample Debt Settlement Letter, located in the "Worksheet" button above. You should print this sample letter and use it as a reference when drafting up your settlement offer to a creditor.
• Step 3 - Once you have reached a settled amount, make sure before you send the payment that you obtain it in writing from the creditor outlining the settled amount and a signed statement that the agreed amount is for payment in full.
• Step 4 - Once you have the signed statement and have paid the settled amount you can send copies of that statement to the three credit bureaus. Doing that may change your negative rating on that account to a positive rating.

Everybody has their own theory when it come to getting out of debt. Getting out of debt takes discipline, planning and sometimes significant changes to your spending habits. The first and most important step a person can take is to realize they are in debt and sincerely want to eliminate that debt. Here are two strategies that you can follow to power down your debt:

• Strategy 1 - For people that are making the minimum payment or paying more than the minimum payment.
  • Stop using your credit cards and create a spending plan to pay them off. You should start by making a list of your credit cards with an outline of their balance, minimum payment and finance charge. Next take the minimum payment called for on the statement and add it with the finance charge. By doing this you now will create your "new" minimum payment that will be fixed each month until, your debt is eliminated. Remember by adding the finance charge to the minimum payment you are satisfying the creditors profit each month and any over payment will go directly to the principal balance. If you can stick to this method for each of your cards you will be debt free before you know it.
• Strategy 2 - For people that are having trouble making the minimum payments each month.
  • Within this strategy a person has several options to choose from if they are having trouble meeting their monthly payment obligations to their creditors. Options include:
    • Option 1 - Contact creditors and present a settlement offer (like 70% of original debt).
    • Option 2 - Transfer debt from a high-rate credit card to a lower-rate credit card.
    • Option 3 - Contact a reputable non-profit credit counseling agency for help.
    • Option 4 - Consult with a bankruptcy attorney to consider filing bankruptcy protection if all other options are not feasible.