The effects of overpowering credit card bills can spill over into all parts of life, affecting your job, your family life and even your health. In fact, if you have large credit card debts, you may feel completely overwhelmed already and circumstances may appear hopeless.

Don't despair, there are many options available to help people free themselves of debt. If you're in over your head, read on for some tips to help you stop sinking and start swimming.

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Get a grip

The out-of-control mall shopper is a caricature of the imprudent credit card user. But you don't have to be reckless to amass large credit card debts. Perhaps you tapped financial resources to advance your education, or your job was unexpectedly outsourced. Maybe a long-term illness touched you or your partner, or you started a business that never quite caught on.

When individuals use credit cards, they generally think it will be a short-term safe passage. Unfortunately, life has a way of taking twists and turns, which is often how credit card debt becomes a longer-term trap.

Credit card users, therefore, must remain alert and vigilant about their spending; even very small balances can quickly and unexpectedly balloon out of control.

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In March of 2007, the US Senate looked into the practices of credit card companies, including the perceived lack of disclosure, universal default practices (in which a consumer can be severely penalized by one credit card account for being late on a separate account), and the interest charged on the entire credit card balance, even when customers have made timely payments.

In response to the Congressional inquiry, large credit card companies voluntarily changed some practices. Despite this, now more than ever, it's "borrower beware" when it comes to credit card use.

Get the lay of the land

If credit card balances and their corresponding payments have made your financial life unsustainable, you might consider taking some of these steps:

First steps:

Prepare yourself: Taking back the control over your financial life involves educating yourself about personal finance and taking a hard, honest look at the decisions you made to get yourself into your current situation.

Discipline, focus and personal stamina will be required for any debt relief effort. There are no quick and painless fixes.

Ask for help: Hire an independent financial advisor, such as a Certified Financial Planner, who can look at your particular situation, help you to develop a plan and select a specialist.

The kind of credit card debt management specialist that will be right for your situation will depend on many factors, including the amounts owed, the interest rates involved, the assets you possess and the particular creditors involved. Credit card use can be dangerous but the path to debt relief is also fraught with peril. As such, it's worthwhile to have an independent advisor at your side.

In addition to calling in professional help, you might also consider confiding in close friends or family members about your situation to assess all of your possible resources. Help can come in many forms, and who better to talk to then those that care for you?

If you can replace high interest debt with a personal loan, you may be able to get out of debt more quickly. You may need to swallow your pride to admit your situation, but a much lower interest rate can give you some badly needed breathing room.

Some available options:

Consolidate the debts: Debt consolidation involves taking out a loan to combine all of your credit card debts and personal loans into one single loan (with one payment). This is generally done to simplify your debt situation and to lower the overall interest rate you are paying.

Debt consolidation companies generally present themselves as nonprofit organizations but this should not lull you into believing they are working for you. Like all participants in the financial community, they are intent on making money from the situation.

It's best to explore the details of debt consolidation only in conjunction with the help of an independent financial advisor. There are many risks involved with loan consolidation (such as the decision to move from unsecured debt to a debt that is secured with collateral). You will want to make sure you're moving into a situation that puts you into less financial risk, rather than more.

Settle the debts: Debt settlement may be an option if you have large credit card debts and can demonstrable a hardship situation of some kind, such as income volatility. In the case of debt settlement, you will hire a debt settlement company to negotiate on your behalf with the credit card companies you owe.

It is generally not advised that you call your credit card companies to try to settle debts yourself, as it may make the situation worse. In most cases, a competent debt settlement company can reduce the amount of the debt you owe by 25-50 per cent.

The debt settlement company takes a fee for its services, usually a percentage of the total outstanding debt. The debt settlement alternative is one to consider if you are missing credit card payments and are on the way to complete default.

Debt settlement appears on your credit report as a collections or settlement and as such, adversely impacts your credit rating for the period of the time you are accumulating the agreed upon settlement amount to the credit card company, plus six months. In practical terms, this means a black mark on your credit report for three to five years (or even more).

It is advisable to first seek a personal financial planner to help you examine whether this option makes sense for you and to help you select the best debt settlement company for your unique credit card debts.

Bankruptcy: No one likes to think about declaring bankruptcy, but the truth is bankruptcy is a legal financial tool that adults can use to gain a fresh start. In some cases, bankruptcy is the only way to get financial resources productive again.

Bankruptcy can legally appear on your credit report for up to 10 years but its effects on your overall credit score depends on many factors, including how you go about rebuilding your credit history as soon as your bankruptcy case is closed.

Changes made to bankruptcy laws in 2005 made it more difficult for individuals to declare bankruptcy, although rules vary by state. If you are seriously considering this option, see an independent financial planner before you consult a bankruptcy attorney for advice.

Conclusion

Eliminating overwhelming credit card debt can be difficult and complex. The first step is to educate yourself, ask for help and seek advice from an independent financial planner who can look at your unique situation and help you to navigate the array of debt relief choices that exist.

Debt consolidation, debt settlement and bankruptcy are a few possibilities that are available to you. Taking responsibility for your own financial education, planning and financial decisions will help you to gain the strength to help you to avoid a difficult debt situation in the future.

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