We often refer our listeners to reliable sources for debt help. One is the National Foundation for Consumer Credit, an organization of nonprofit counseling agencies. It's on the Web at www.nfcc.org, or you can call their 24-hour hotline at 800-388-2227 (800-682-9832 for service in Spanish). The NFCC has 1,000 counseling centers around the country. Operators will find a member office in your area or, if there isn't one near you, will set you up with a telephone counselor. The initial consultation is free; after that, you will pay a monthly fee of up to $50 while you are in the program.

Also, get a copy of Surviving Debt: A Guide for Consumers , 6 th edition , published by the consumer group the National Consumer Law Center (NCLC). The book can be ordered through the NCLC at 617-523-8089 or www.consumerlaw.org.

There is also very helpful information at www.gerridetweiler.com from our friend Gerri Detweiler, who has been a guest on our radio show many times.

If you try to go it alone, you'll have to negotiate with the collection agencies. Have your credit report in hand and be honest. Tell them you have a problem, whatever it is that's preventing you from making the payments. You need to contact them; don't wait for them to contact you. Start paying more than the monthly minimums required on your cards (as we talked about in Part I). Otherwise, it could take you 35 years to get rid of the debt! Then, of course, you have to budget. A credit-counseling agency can help you do all of this.

Emergency Sources of Money

There are some other steps you can consider if your debts are truly out of control. None of them are ideal, but sometimes they are necessary. Here are a few you may need to look into, in descending order from most desirable strategy to least desirable :

 1. A "Consolidation" Loan. We generally discourage taking on new debts to pay off old ones. However, if you're burdened with a lot of high-interest credit card bills, it is a good idea to go to a credit union or local bank and get a low-interest loan to pay off your other loans (in short, consolidate everything). This way you'll be spending less money in the long run because your monthly interest rates on the new loan should be lower.

Whatever you do, don't start running up new charges and don't let the low-interest loan lead you into the temptation of spending again! The purpose of this loan is to get you out of debt and improve your credit rating. Make this your mantra.

 2. A Home Equity Loan. Using the roof over your head as a piggy bank to pay off other debts has become the most popular form of a consolidated loan. Equity is the difference between your home's appraised—or fair market—value and your outstanding mortgage balance.

Dolan Smart Money Move : A home equity loan might be a good idea if you haven't tapped into your equity before and you're willing to lock up those cards and not use them again until the loan is paid off. But the odds are against you; statistically, one year later people who have used home equity loans to pay off credit card debts are back in plastic debt to the tune of as much as before or even more. Plus, they now have an extra home loan to contend with! This is a situation that can be costly if you're not careful. Once again, let it not lead you into temptation.

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