6) Get a Credit Counselor

Be careful when you consider using a credit counselor, as some of them will just take money from you without much or any service in return.

Basically, there are 2 types of credit counselors out there to help you, and they are for profit and "nonprofit". They are both the same and do the same job and both will charge you with a fee. Credit counselors can help you in trying to teach you how to control your debt.

I must however warn you that many people don’t completely comprehend all the implications involved in turning to them, such as:
How it will affect your credit rating.

The credit bureau will register that you put a plan in place.
Are your payments too high?

Your payments should be high enough to help you reduce your debt but not so high that you don’t have anything left over. If you do not have money left over at the end of the month to pay for anything else you might find that you end up defaulting on your payments.

Many people agree that your repayment term should be between three to four years. It is a condition in the new Bankruptcy Reform Bills that the term be between 3-5 years. Any time longer than this is proven to have a failure rate which is very high, as people cannot see their debts ever being gone and just decide to skip it.

7) Informal Agreements- Timely Payment Agreement.

In a few cases you can make a payment agreement with your creditors in order to set up a payment plan that will enable you to pay them back. This will help safeguard your credit rating. This is a lot like getting a loan for debt consolidation except that you don’t borrow the money in order to pay them off.

8) Informal Lump sum Agreement.

You might be able to pay less than 100 cents on the dollar if you choose to take this route. For instance, you might be willing to pay a lump sum to the creditor of say 50% of the amount owed in order for the balance of the debt to be written off. This method is the best on to use if you have only a reduced amount of creditors.

Keep reading for more tips on how to recover from bankruptcy on our next page: Getting out of Debt 3