Understanding how to get out of credit card debt can make the difference between financial prosperity and declaring bankruptcy. If you are in excessive debt and feel overwhelmed, there are options available to begin moving forward from the immediately crisis. Following the correct steps will help you rebuild your credit score and achieve financial freedom.

Stop Using Your Credit Card

The first step to getting out of credit card debt is to stop spending. If you are using your credit card for luxury purchases, such as clothing or vacations, cut the card or lock it in a safe. Stop these luxury purchases by eliminating your access to credit. If you are forced to use the card for basic living expenses, you need to determine how you can reduce your expense to afford your lifestyle. This may mean moving into a smaller apartment, leasing a less expensive car, driving less, not running your heat or air conditioning or buying groceries from a bargain store. Keep the card for emergencies only.

Assess Your Ability to Pay

How much can you realistically provide for a lump-sum settlement? Can you borrow money from a family member for the payment? Aside from a lump-sum payment, consider how much you can spare each month to pay off your principal. For example, if you can afford to pay $175 a month toward your credit card debt, then you may need to seek a lower payment over a longer period of time. If you can cut costs and afford $600 a month, then you may be able to opt for a shorter payment plan and lower interest rate.

Consider Debt Settlement and Alternatives

There is more than one way to get out of credit card debt. First, think about debt settlement. If you have a lump-sum to provide a lender promptly, you may be able to negotiate your remaining debt to a much lower amount. Many people in your position will not have the cash for a lump sum, though. Here, it is better to consider refinancing and consolidation. This means you will pay off your existing debt with a new loan, hopefully at a lower interest rate. You can also consolidate all of your debt into one monthly payment. This is easier to manage and budget for many people.

Talk With your Lenders

Talk with your bank or credit card company about the options available. Most will be flexible once you show your desire to pay. They do not want you to declare bankruptcy because then they do not get a penny. Be honest but professional about your situation. Talk about the possible solutions you have considered such as settlement or refinancing and any penalties you would incur through these processes. You may provide a personal statement explaining your situation or references to vouch for your character. Bottom line: work to keep collections agencies out of the process. Once your debt goes to a collections agency, you will take a hit in your credit score.

Talk With a Credit Counselor

Credit counseling and negotiation services can often provide better results than you can working alone with your lender. It is important to ask good questions and build a relationship with any potential credit counselor. They do profit off of your financial situation; not all companies have your best interest in mind. Get a recommendation from your lender, lawyer or accountant. Read reviews and come to the meeting prepared with questions. For example, ask: How long has your company has been in business? Can you provide references? Are you rated by any associations or agencies? Developing trust is as important as securing a good interest rate.