Debt Management Guide
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5-step emergency plan for dealing with debt

The same strategy can be used for fixed-loan payments. Remember, though, that this is a short-term strategy. You'll pay more interest to extend the repayment schedule, but it allows you to stay current and save your credit rating. Use the extra money to pay off debts one at a time, gradually increasing payments to other debts.

You may be surprised at the help that is available. "Obviously, with student loans there are forbearance programs, there are mortgage programs for people who are having hardships," Davidson says. The important thing is to work with your creditors throughout your struggle.

When you just can't even come close to paying your debts, declaring bankruptcy is an option. The long and costly process will, if successfully completed, discharge most of your debts and let you build up your credit again.

"Chapter 7 stays on your credit for 10 years and Chapter 13 for seven years. It's a long, long time of impact," says Sweet. Generally, most people are surprised at how easy it is to regain their credit in the aftermath, but it can be an uphill battle.

5. Add stability to your credit file

If you have really bad credit -- perhaps even filed bankruptcy -- don't let your credit status go dormant. "The faster you begin to re-establish good credit, where you pay on time, every time," says Craig Watts, public affairs manager at Fair Isaac Corp., "the faster you'll improve your credit score."

"After you've gotten out of the real danger zone, check your credit reports," Davidson says. "See what's happened, don't just assume that you destroyed your credit. Once you do that, you'll have a better idea of how you can continue your recovery."

"For example," she continues, "if you've filed for bankruptcy, you can see exactly what your credit score is and then evaluate what kind of products you can apply for that will help you re-establish your credit."

A secured credit card is one option for consumers seeking to build a solid credit history. One caveat -- make sure your credit grantor reports to the credit bureaus. Not all do.

Lastly, open a savings account at your bank. This shows creditors that you are working to save and that you have reserves to repay debts.

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