Step 1:
Don't stick your head in the sand. No matter how tempting, trying to ignore a mounting pile of bills is the worst thing you could do. You'll end up with late fees, interest charges and a ruined credit score.

Step 2:
Complete a personal balance sheet to help pinpoint your current situation in terms of assets and liabilities and help identify possible steps you can take. You may want to use a simple note pad. However, it is recommended that you obtain a pre-printed form, which will allow you to record complete information. These are available online or through your local financial institution.

Step 3:
Develop a strategy for debt repayment. Calculate how you could pay each bill on a revised schedule by perhaps paying smaller amounts over a longer time period, or until your financial picture changes.

Step 4:
Contact the people you owe. Remember, if they do not know your situation, you could end up in court. So, with smaller, local organizations that know you personally, pick up the phone and call. Explain your situation and discuss options. The idea is to take the initiative by presenting your plan for repayment. You may be pleasantly surprised at the positive response. Creditors will appreciate your concern, and you'll be more likely to receive revised terms designed for your personal financial situation.

Step 5:
The same goes for dealing with larger, national creditors. Call first and talk to someone in the customer service department. Stress your interest in paying off the debt and ask about options. Remember, most companies have no more desire to lose a customer than you do to avoid your bills. The key is communication.

Step 6:
Get all agreements in writing. A verbal okay to debt restructuring is fine. But it still needs to be on record. Whether dealing with a large or a small organization, a written agreement may be all you have to prove that a revised repayment schedule was okayed.

Step 7:
Contact the credit bureaus to verify that your record remains clean and that it contains no blots. Also, you have the right to add a statement to your credit record explaining any discrepancies or disputes.

Step 8:
Be wary of debt consolidation plans. While these may be effective, the concept of borrowing money to clear up obligations is not a generally sound approach. In many instances, it simply pushes the problem a few months or years into the future. Remember, you cannot borrow your way out of debt.

Step 9:
Only declare bankruptcy as a last resort. Under bankruptcy laws, debts do not miraculously disappear without penalty. Bankruptcy will remain on your credit record for years. Avoid it if you can.