Debt Management Guide
A big, fat roll of money and a dirty white background
5-step emergency plan for dealing with debt

Intense panic, possibly accompanied by stifled screams and helpless flailing, is a monthly ritual for people drowning in debt.

And there are a lot of them. The Federal Reserve announced that as of June 2007, Americans are carrying $904 billion in revolving debt, up from $879 billion at the end of 2006. That does not include mortgages and loans for such things as cars, mobile homes, education or boats, trailers or vacations.

But, it's never too late to turn things around.

First and foremost, be committed, says Howard Dvorkin, founder of Consolidated Credit Counseling Services Inc., and author of "Credit Hell: How To Dig Out Of Debt."

"People have to want to get out of debt. They aren't going to get out of debt just to get out of debt, they have to want it."

Here's an emergency plan to help you do just that.

Emergency plan to get out of debt
  1. Establish your bearings
  2. Chart your path
  3. Put the plan into action -- the dreaded 'B' word
  4. Pay your bills
  5. Add stability to your credit file

1. Establish your bearings
Once you're absolutely, unconditionally prepared to do whatever it takes to pull your credit rating out of a nose dive; you're ready for stage one.

"Take a step back and evaluate the situation," advises Emily Davidson, corporate communications director for "It's very common for people to skip over this and go straight into crisis mode. It's really difficult for people to face the problems that they might be having."

The best way to assess the condition of your finances is by pulling your credit reports. This can be accomplished three ways.
Get your credit report
  1. Go to, which is the only authorized source for consumers to access their annual credit report online for free.
  2. Call (877) 322-8228.
  3. Complete the form on the back of the Annual Credit Report Request brochure, and mail it to: Annual Credit Report Request Service, P.O. Box 105283, Atlanta, GA, 30348-5283.

You are entitled to one free credit report a year from each credit bureau -- Equifax, TransUnion and Experian. As long as the reports are ordered from the centralized agency, they can be ordered all at once or at different times of the year.


Learn how to read your report. It can be illuminating. According to Dvorkin, "People tend to underestimate rather than overestimate -- probably about 20 percent lower than what they actually owe. The average debt is $9,000, 20 percent of $9,000 is $1,800 -- so that is a pretty significant fluctuation for most of us."


Show Bankrate's community sharing policy
          Connect with us

Debt Adviser

Don't be seduced by this debt plan

Dear Debt Adviser, I have about $50,000 of debt on credit cards. My credit rating is still high. I am thinking about a debt consolidation loan. Will that adversely affect my credit rating? -- DT Dear DT, The cliche... Read more


Connect with us