You are probably reading this because you are looking for some strategies to avoid bankruptcy. If so, keep reading, but you must be willing to make some sacrifices now to avoid the pain associated with 7 to 10 years of tarnished credit and high interest rates when you finance anything. The following are tips about how to avoid bankruptcy and how to rebuild your credit.

Tip 1 – Create a written plan

Take a simple folder labeled “debt-free plan”. Since you are entitled to one free credit report per year, run a report to find out exactly why you have bad credit. There may be outstanding payments that are inaccurate. If so, you must write the company and the credit bureau and, if possible, provide proof that the credit report is wrong. Also, decide which bills to decrease, and which bills to eliminate. For example, decrease eating out and eliminate premium cable channels.

Tip 2 – Take Decisive Action

After you communicate with the crediting agencies and credit bureaus, be sure to send a certified letter to ensure that your letter doesn’t get “lost”. In separate letters send each agency a summary of your conversation. When you call, gather the following information:

• First and last name of the contact person and the first and last name of their supervisor
• The team number (Equifax) of the person you spoke to
• Ask for written confirmation of any promise they make
• Get a copy of the universal data form. This is the document the crediting companies use to update your credit report. If they deny your request, ask them to send a letter to you confirming that they notified each bureau to change the discrepancies on your credit report.

Tip 3 – Consider a Debt Relief Company

You will notice people disagree with this perspective, but sometimes the amount of credit card debt that you have accumulated becomes too overwhelming. With all of the conflicting points of view about whether or not to consider a debt settlement company, here are some simple ways to determine whether or not you are a good candidate:

Do not consider debt relief if:

• You have less than $10,000 in credit card debt
• If you are planning to finance a house or car within two years
• If phone calls from collections agencies bother you

Consider debt relief if:

• You are thinking about filing bankrupt because of unsecured debt (Student loans don’t apply here)
• If the burden of bad credit and higher interest rates is overwhelming
• If you want to reduce your credit card debt by around 40 to 50 percent
• If you want to be credit card debt free

Regardless of the choice you make, just be sure to explore all of your options and consult an expert before you file for bankruptcy. Keep in mind, any choice you make to get out of debt will require some element of pain. If you have the right mindset to (1) make some strategic sacrifices; (2) remain disciplined in your spending; and (3) stick to your written plan, you will spend the rest of your life debt free. Begin this difficult journey with the end in mind and you will emerge victorious.

As a country we are addicted to debt. Just like a drug addict, we need the debt to avoid pain, but our pleasure is also leading to our demise. The same is true for millions of people who are in credit card debt, and have no idea about how to escape it. If you or someone you know is suffering from the suffocating grip of credit card debt, perhaps you can apply some very simple concepts to get your financial freedom back.

Consumer Ignorance = Massive Profits

The first concept to understand is that credit card companies are itching to give you credit as long as they feel that you will make payments. The source of their revenue is dependent on your lack of understanding. When you have a credit card, companies charge interest if you allow an outstanding balance to remain longer than 30 days.

A popular tactic that department stores use is the 12 months same as cash approach. Let’s say that you wanted to buy a product that costs $2,000, but don’t have the cash to make the purchase. You decide to make affordable monthly payments throughout the year. If there is an outstanding payment of $300 at the end of the 12 months, it makes sense that you would pay interest on $300 right? Wrong. Not only do you owe interest on the $300, you also owe interest that accrued throughout the year on the entire $2,000.

Consumer Ignorance is massive among college students. Credit card companies smell new blood in the water every fall when a new crop of freshman enters college throughout the country. According to Huffington Post, banks spend roughly $83 million a year to lure college students to start amassing credit card debt on top of their student loan debt.

Staggering Amounts Of Credit Card Debt

The Federal Reserve revealed an outstanding credit card debt (at the time of this writing) of $748 billion. To put this in perspective, if a person paid $100 every second to pay off this credit card debt, his payments had to have started back in 1781. That is assuming that no interest accrued during the payoff period. Unfortunately, interest does accrue on average, at around 15%, which is broken down into a finance charge based on an average daily balance.

For example, if your daily charge rate was .02805, $748,000,000,000 would be charged $209,814,000 per day. Therefore, the outstanding balance would be $748,209,814,000 the following day, which adds up quickly. With the existing amount of credit card debt, 100 credit card companies would be making an average of a little more than $2 million per day just on daily interest on the existing debt.

How To Pay Off Credit Card Debt

In my experience, I found that most have taken a logical approach to paying down the revolving balance on their credit cards. In other words, they tend to pay over the minimum amount on each of their credit cards with the belief that this strategy will minimize the overall interest they will pay. Unfortunately, logical thinking will make them pay more. On the contrary, the most efficient way to pay down debt is to pay as much as possible toward the credit card with the highest interest rate, and pay the minimum on all of the other cards. After the first card is paid, then all of the money dedicated toward that card is redirected toward the next card with the highest interest rate. This process continues until all of the cards are paid.

Obviously, this strategy requires consistent discipline. People who have over $10,000 of credit card debt who lack the discipline may need help to structure a very strict plan. There are companies that provide this type of service, but there are specific criteria that you must meet to make this approach a fit for you. It would behoove you to look into a good debt relief company before you declare bankruptcy. The key to paying off debt your debt is to gain an understanding about how it works. Be sure to connect with an expert who can help you make informed decisions about your financial future.