1. Negotiate with creditorsIt only makes sense to ask the people you owe for a break. Use your credit report and recent billing statements to come up with a list of all the people you owe and the amount you owe them. Then, figure out how much you're able to pay each. Call each creditor and let them know you're willing to pay the debt but can only afford to pay $X. If the customer service rep says no, don't fight or argue, simply ask to speak to a supervisor. Make sure to get any agreement in writing, preferably on company letterhead, before making a payment.
2. ConsolidateCombining your debt using a debt consolidation or home equity loan can give you a lower monthly payment. Average the interest rates on your current debt and look for a loan that has a lower interest rate than your current average. Be careful about getting a loan that simply lowers your payments by extending the repayment period. You'll likely end up paying more interest over time than you would otherwise.
Consumer credit counselors are sometimes better skilled at negotiating lower interest rates and payments from your creditors. They know just the right thing to say. Enrolling in a credit counselor's debt management plan, DMP, will allow you to get lower monthly payments making it easier to pay off your debt. Credit counselors can also help you make a budget and teach much-needed money management skills.
When you're choosing a credit counselor make sure you choose a reputable one (hint: they're usually non-profit). Be careful not to confuse them with debt settlement companies who often make your credit worse.
There are times when the debt you owe is just too much to pay. In this case, you might consider filing bankruptcy. The new bankruptcy law prevents people from abusing bankruptcy. It requires an income-debt comparison in addition to consumer credit counseling before you can file bankruptcy.
Chapter 7 bankruptcy will allow you to completely wipe out certain debts while Chapter 13 bankruptcy will create a payment plan.