When you find yourself in serious debt and realize that you are in over your head, the most important thing that you can do is to work with a debt consolidation agency to work out the best possible debt settlement that you can. A debt settlement is a way to satisfy your creditors by paying a pre-negotiated lower payment which they agree to accept as full payment for your debt.

The first thing you should do when negotiating a debt consolidation settlement is to ask that the interest being charged on your account be waived or greatly reduced. This is important because if you don't get your creditors to agree to this up front they will continue to charge interest and late fees and instead of your payments going towards reducing your debt, it will go to interest and late payments and your debt itself will hardly be touched.

Next you will want to roll all your credit card accounts into one account with one monthly payment. If you are rolling all the balances onto one card, be sure to roll them onto the card that carries the lowest interest rate. It is important when you do this to NOT use the credit cards anymore.

As you pay off each of your creditors, you will be able to use the money you have set aside to make that payment and pay an additional amount on another debt. In doing this you can pay off each creditor one by one.

Even if you have bad credit you can still consolidate your debts. It can be a shock to find out that you can't get the credit you need to even take out a debt consolidation loan. This of course results from not paying your bills on time in the first place. If you find yourself in this situation you will want to contact a debt consolidation company to help you negotiate reduced payments to each of your creditors.

Once you are on a debt consolidation plan and your creditors realize that you are serious about reducing your debt and paying off your bills, your credit rating will get better and better. However, at this point you should not go out and get more loans or credit cards or you may find yourself in the exact same predicament as you just got yourself out of! This would definitely defeat the purpose.