Stay away from settlement companies. They take your money and let all your accounts go 90 days past due. Then they offer lowball settlements under threat you will file bankruptcy. Not only does this trash your credit, but many credit card companies refuse to play and will immediately file suit. The settlement company won’t help with the lawsuit either.

Have you considered credit counseling? Check here for a NFCC member near you: . These are legit, non-profit companies that offer debt management programs for a nominal fee, if you qualify. They don’t settle your debt. They negotiate lower interest and payments so you can pay off the debt. While in the program, it is noted on your credit. However, upon completion, the notation is removed and you have a good payment history and decent credit.

If you’re really deep in debt, you can save up some money…several thousand. Then call your credit card companies and say you want to settle your debt. They will accept because they will see that you have so much debt and you may file for bankruptcy if they don’t settle with you.

Debt consolidation or “restructuring” companies usually do this same thing except they contact the credit card companies themselves. They also tell you to stop paying your credit card companies and pay them instead.

So basically stop paying your credit card companies, save the money (DON”T SPEND IT). Then call your credit card companies and offer to settle for whatever you have saved. Many times you can settle for 25-50% of what you owe.

You can consolidate all you want and pay money to a company that offers to reduce your debt… chances are you will still owe it and be out of a lot of money you could have used paying down your debt.

Things you can do:

Cut them Up… dont cancel them… just stop using them NOW.

Call each of your Credit Card Accounts and explain to them that you are in financial difficulties and could they please accept lower payments and could the APR please be reduced to ZERO so that you can catch up?

If you don’t want to call them and want to deal with it the tough way:

Take all your Credit Card Statements and find the one that has the highest outstanding balance and highest interest. You will send twice the min. payment every month to that account.
All other cards get the min. payment requested.

Once you have that card paid off apply the now “freed up” money to the next card and pay the min you pay on that card plus the “freed up” money you used to send to Card No. 1.

Once you are past your first and second card this will get a lot easier.
You will still spend the same amount every month on paying off your cards (do not reduce it… just aply the remainder on to the next card).
and the balances will drop faster and faster.

When you are done… transfer your “monthly credit card payments” to a savings account and accumulate enough money to pay for 6 months worth of living expenses….

After that… it is up to you. By now you should be such a serious saver that you will crinche on wasting money and probably keep going with the savings.