Settle your debts yourself

"If they try to pressure you into paying something right away, tell them, 'I'm sorry, I can't afford it,'" she advises. "If they persist, you may have to say, 'I will bring you up to date in a month,' and hang up the phone.

"Keep good written notes of any conversations you have with creditors -- who you spoke with, when you spoke and what was agreed."

"You need to step up and communicate," Phelan says, "because this is what gets the job done. It's going to take a series of conversations. Tell them you're aiming to avoid a bankruptcy and would like to work something out. In the early months there will not be a lot of willingness, but if you persist, repeating this almost mechanically, eventually they will start talking settlement."

Very often in this early stage, says Boulton, the creditor will say they don't do settlements and suggest a payment plan instead.

"Don't take no for an answer," he counsels. "Let them know they can take what you're offering or they won't get anything. Tell them, 'The negotiation is there and it is available, but I have other creditors and if they settle first, you will be out.'"

Negotiating the settlement

"Normally after the six-month mark the creditor turns the account over to a collection agency," Phelan says, "or sells the debt to a third-party agency. That begins the second phase of the collection process."

These third-party collectors, he says, work on contingency. "They get paid by doing deals, and settlements are normal. It's just a business deal."

This phase can go on indefinitely, Phelan says, though many sell the account to a debt purchaser sometime in the second year.

But he says it's a good idea to settle within 12-18 months if possible. The longer you wait, the higher the risk that the creditor will decide to litigate.

If your debt is more than $10,000, Detweiler says, "It becomes more worthwhile for a creditor to take legal action.

"If you completely stop communicating with them -- change your phone number, stop taking calls -- that's also putting yourself at risk of a lawsuit, because you leave them with no other option."