If you have bad credit, the first thing you will want to do is talk to a credit counselor. Many counselors understand that unforeseen problems like unemployment, medical issues, or other problems often take people by surprise. Lenders are often willing to work with you to setup a payment schedule that can allow you to begin making payments.

If you find that you have a large amount of debt, there are a number of things you can do to get it under control. The first thing you will want to do is start getting rid of bills you don't need. While this may be tough, there are sacrifices you will have to make. If you have a second car, you may have to sell it. If you have certain valuables such as jewelry or electronics, you may want to sell them as well. If you have a large phone bill, you will want to look for ways to get it reduced. You may even have to take funds from your 401K.

While you may not want to do the things above, doing it will allow you to save a large amount of money every month that can be put towards paying off your debts. Most people end up in debt because they have too many unnecessary bills to begin with. If your credit is so bad that the methods above won't help you, it may be best to go to the Consumer Credit Counseling Service. The number for this service can be found in your local phone book.

The good thing about the CCCS is that they will treat your situation as if you're filing for bankruptcy, but it won't be necessary for you to file. If the CCCS is not able to assist you, it may be time to start considering filing for bankruptcy. You should speak with your attorney prior to doing this. If you decide to file for bankruptcy, filing Chapter 13 will hurt your credit less than filing Chapter 7. Chapter 13 takes longer, but will give you about 5 years to pay off your debts. The problem with Chapter 13 is that in addition to the first 5 years, your credit report will show your bankruptcy for another 7 years, even if you've paid off all your debts.

If you are in a situation where you feel you can never pay off your debts, it may be best to look at Chapter 7 bankruptcy. Filing for a Chapter 7 bankruptcy will put your credit in worst standing than filing for a Chapter 13. Despite this, you will be out of debt in about half a year and you won't have to pay back anything. However, it will be on your credit report for about a decade, and most lenders will not give you loans or other credit products.

If you have paid off your debts, but want to get rid of your bad credit, the best way to do this is to make sure your monthly payments are made in a timely manner. Instead of sending your payments by mail, pay them electronically if possible. Most companies now offer this option. It will insure that your payments are received on time. You should avoid sending cash through the mail at all times.

While loans and credit cards can be convenient, not using them properly can lead to financial danger. While it may be possible to use your life insurance or retirement to get out of heavy debt, there are consequences to this that should be considered beforehand. It is important to realize that being responsible with your finances is a key to being financially successful.