The credit crunch that started last year is beginning to have a serious effect on many people's debt situation. It's hard sometimes to figure out why a person can be working very hard and even turning a fairly good income.

But despite this, somehow, there is never enough money to meet all those payments that come in every single month. Most people are not surprised that they have a serious debt problem. It's just that they may be shocked to realize how much they owe in total, and how long it will take them to play it off.

The big problem comes when a person reaches a point where they cannot make one or more of their payments in a particular month. This situation concerns credit companies and can seriously hurt your credit record, possibly for years to come.

Many people seem to allow situation to get away from them, without attempting to deal with the growing debt problem. It is as if they believe that if they sit back and ignore the credit time bomb, it will simply go away.

Alternatively, they somehow think that their circumstances will radically change and that will make it easier for them to cover their debts. Most people have a habit of spending money that they do not yet have. They are expecting a bonus check for a big sale to go through, that will clear of all their immediate debt problems.

When the sale doesn't go through that is when they are left facing a pile of debt that they cannot deal with. In addition, apart from buying a winning lottery ticket, there doesn't seem too much hope of resolving the bad credit situation, any time soon.

Realistically, the worst thing that these people have done is nothing. They have already done nothing to try to sidestep the trouble that they know is coming. But now there is no choice but to face the situation head-on and try to deal with the problems in the best way possible.

Unless you have a rich daddy that can write you a check, you have to think of more realistic options to fund paying off these debts, as quickly as is practical. Before your credit, history becomes a problem that will stay with you for many years.

The first step is gather together all of your bills and statements and make a detailed account of exactly how much money you owe, and how much interest you are paying for each debt.

Armed with a total figure, which will probably shock you. You are now in a position to least start to deal with the realities of your past spending habits. Consolidation of your loans is probably the only realistic option available.

Consolidation means paying off all your existing debts, and replacing them with one low interest deal. You could get a personal loan from your bank but the interest rate will be high, and you will have to pay it back in three to five years.

This means that you will probably not make much of a saving on interest you pay or your monthly total outgoings to cover the loan. You will need a debt consolidation loan that has a low interest rate and a payment period, over a similar period of time as your regular mortgage.

These loans work well, because the total amount you will pay each month will be considerably lower than the total you are paying for all your loans at the moment. This is due to the fact that the interest rate is much lower than for example, a credit card. Because of the extended period of payment, this further reduces the monthly amount due.

You will need to give all the information you have gathered to a debt consolidation loan officer, who will be able to find the right company for your particular circumstances. These loan brokers are easily found online, and can provide a quick service with very little in the way of difficult paperwork. This will let you put your financial house back in order in just a short time.