Make the Minimum Payments
Do everything to keep making the minimum payments on credit cards to avoid large penalties and interest. This will also keep the debt with the credit card company and avoid having it turned over to a collection agency. Of course it's better to pay more, but at least pay the minimum.
Negotiate with Creditors
If even making the minimum payments is too much, go directly to the credit companies and try to negotiate for a lower minimum, lower interest rate, or different terms. Creditors want to get paid and at least one or two of the creditors may make a reduction. Remember to be polite and non-argumentative, and tell them how much can paid every month. If the response is not satisfactory, ask to speak to a supervisor.
If that doesn't work, then contact a credit counseling service. They will help create a personal spending budget and most offer debt management services where they'll contact and negotiate lower payments and rates for the debtor. There are some disreputable firms in this field so start with the National Foundation for Credit Counseling (NFCC.org), a non-profit that includes the reputable Consumer Credit Counseling Service.
If funds are constantly being juggled to make payments then debt consolidation might be the best solution. By consolidation, all balances are combined into one big loan. This reduces the monthly debt and the amount of time it takes to pay it all off. There's one catch: Credit scores need to be decent in order to get a debt consolidation loan.
Settle with Creditors
If the credit account is way past due on a credit account, try making an offer to the creditor, especially if the account has already been turned over to a collection agency. Call the credit card company and offer to settle the debt by making a reduced one-time payment. Settling the debt can prevent a lawsuit and even the resale of the debt to another creditor. Offer 50 to 70 cents for every dollar owed. Debt settlement will show up on a credit report, but there will be far more damage by having an open delinquent account on record.
Bankruptcy as a Last Resort
When all other options have been exhausted, bankruptcy may be the last resort. Bankruptcy certainly isn't something to jump into lightly. It will ruin the debtor's credit for several years, and will affect the ability to rent a home and secure a new job, If it will take longer than five years to pay off everything, then bankruptcy may be necessary. For information on the different types of bankruptcy, see the U.S. Bankruptcy Courts website here.
Communicate with Creditors
Ir's important to keep the lines of communication open with creditors. Address phone calls and letters immediately. Avoiding calls and letters will only increase the difficulties. Be open about the situation, and communicate that the main goal is to work on repaying the debt in some form. The more upfront the debtor is, the less likely they'll be harassed. There will also be a greater chance of working out a reasonable payment plan.
It is also wise for a debtor to be aware of their rights involving collection agencies. For a thorough look and debtors rights, go to the Federal Trade Commission website.