Being kept awake at night by debt-related anxiety is a terrible feeling. Your credit card and medical bills have piled up and now even the minimum payments are more than you can manage. Instead of avoiding calls from your creditors and hoping it all works out somehow, it's time for a more proactive approach. By choosing the debt reduction strategy that fits best for your situation, you will soon regain control of your finances. Here are three options to explore when you're facing unmanageable debt:

Handle Your Debts Yourself

If you have a smaller amount of debt that has simply become a bit more than you can manage at this time, it may not be too late to manage it yourself. Call your creditors and explain that you would like to get caught up on payments, but can't make the minimum payments right now. They may be able to work with you to lower your minimum payment, temporarily pause late fees, or break your payment up into a few smaller payments. Another option is to transfer high interest debt to a 0% credit card or personal loan, and then begin aggressively paying it down.

Debt Settlement

Debt settlement involves negotiating with creditors to pay a percentage of your debt owed in lieu of the full amount. In exchange for receiving the agreed upon settlement payment, your creditors will mark your account as paid in full and those harassing phone calls and letters will cease. The best way to approach debt settlement is usually via a lawyer specializing in debt relief. They will go over your debts, help determine if debt settlement makes sense for you, and then negotiate directly with your creditors on your behalf.

Your lawyer will also ensure any settlement agreements are properly documented and legally binding so the creditor can't come back for more money in the future. Many debt relief lawyers only charge a percentage of the amount you save in your settlement case, which gives them an incentive to make sure you save as much as possible and makes it more affordable to hire a lawyer.

Bankruptcy

In cases where you are unlikely to get out from under your crushing debt payments in other ways, bankruptcy may be the best option. In Chapter 7 bankruptcy, you are allowed to keep certain assets (such as a personal vehicle, your home, and personal belongings), and most of your debts will be eliminated. In Chapter 13 bankruptcy, your debts remain, but they are significantly restructured to be more manageable. Bankruptcy is a major life decision and calls for the guidance of a trustworthy and experienced bankruptcy attorney.

By discussing your debt-related options with an attorney, you will be able to more easily decide which of these options is best for your unique financial situation. for more information, talk to companies like Clinger Richard S.