Facing a Difficult Debt SituationAs the most recent financial crisis shows, it is easy for anyone to find themselves in more debt than they can handle, especially if unusual circumstances arise. This can include the loss of a job, medical expenses or divorce. When you do get behind on your debt, it can create a difficult situation, especially when debt collectors are calling all the time.Once you are behind on your debts, it can seem like the situation is impossible to resolve. However, the first step in dealing with your debt is to understand it is not the end of the world. Whatever your circumstances, there are ways to deal with it and you can recover from a bad situation. It may take time and effort, but it is often possible to restore your credit within a couple of years if you take the right steps.

Dealing with DebtEven if you are in the middle of a difficult financial situation, there are several steps you can take to deal with your debt problems. The important thing to do is to avoid making some common mistakes. These include:

Settling Your DebtsOnce you are behind on your debts, it does not do further damage to your credit to settle debts for less than the amount owed. Settling can stop interest charges and fees and help you stop any further collection actions. Depending on your situation, it is often possible to settle for as little as 50 percent of your debt or less. When you settle a debt, it will show up on your credit report for seven years. If your debt went to collection, it will show up for seven years and six months.