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card.

Do not close credit card accounts. Don't use the accounts, cut up the cards, but closing accounts looks bad on your credit rating.

If your credit is still fairly good and you have been making your payments on time each month, you are probably receiving offers in the mail for no interest or low interest credit cards, as a "teaser rate," for six months, for example. After the low interest teaser rate expires, the interest on the card will go up extremely high. You can transfer balances from your highest-rate cards at the top of your list, to a new card in order to take advantage of the teaser rate.

Transfer credit card balances ONLY IF you are able to pay-off the transferred balance that you have moved to the new card within the time frame of the teaser rate. If you stick to a payment schedule that will allow you to pay-off your debt within a planned time frame, you have bought yourself some time to pay off your debt at a reasonable interest rate. If you don't stick to the plan, however, you have accomplished nothing. Be disciplined about the payments. The point is to get high interest bills paid off in full.

Once you transfer a balance to a new card, or an existing one with a lower rate, CUT UP BOTH CARDS. Don't close the accounts, just cut up the cards. You are only keeping ONE emergency card. It may not be possible to qualify for a new card if you have let your debt problem go too long and your credit is already in trouble. Hopefully, you've begun your recovery plan while your credit is in tact. If not, don't lose heart. Just stick to the plan and you will emerge out of debt in the end.

Avoid using a service that promises to consolidate your debt. You may just be making a bad situation worse. Instead, get on the phone yourself with your non-credit card creditors; particularly those in the medical sector. NEVER let your debt go to collections. Pull yourself together and call the creditors. Work with them to come up with reasonable payment plans. Then stick to your payments. Pay them off.

Communicate with those to whom you owe money. Don't ignore their calls; in fact, you call them first. Hospitals and medical creditors are so much more willing to help you if you approach them and let them know that you intend to keep up your end of the deal.

3. MAKE IT HAPPEN!

In order to make this plan work, you need to be willing to take your budget seriously. We're now in the stage where you will make your debts go away. This is also known as the "cutting-back phase".

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