If your debt has gotten out of control, you may think you're running out of options. As you look over the numbers it may appear that the only thing left for you to do is to file bankruptcy. But don't be too hasty. There may be another option that you can use to possibly keep your credit intact and simultaneously appease your creditors. It's called debt negotiation, whereby instead of throwing your hands up in the air and giving up, you sit down and talk with your lenders to work out a solution that everyone can live with.

Many people have plausible reasons why they fell into debt. They may have been financially responsible, always making their payments on time. Then, suddenly, they might have been the victim of a layoff, a family illness or other crisis that caused them to be unable to work as they had before or produced an overwhelming strain on their finances. These are all reasons that a creditor is willing to listen to.

So, instead of running from your bills or ignoring them, take a deep breath, pick up the phone and call the credit card companies or other lenders. Ask to talk to someone who can help you with your situation and explain in detail what has caused you to fall behind. Don't make up a story in an attempt to gain sympathy from the person on the phone. They've likely heard it all before. Simply be straightforward and honest with him or her.

Keep in mind that it's better for lenders if they work with you to facilitate their payback – even if it's over a longer period of time – than to send you to a collection agency. The agency will receive a cut of any monies that they successfully recoup, which means a loss for the lender. Therefore, if you contact your creditors and explain that you really want to pay but need a bit more time, they'll likely be more willing to work out a payment plan that you can handle.

If you want to increase the chances of your creditors working with you, offer some cash at the time of your initial conversation. This will show that you're making a sincere effort to pay, and will be viewed as a good faith gesture. They may also be willing to completely settle your account with less than you owe. This is one of those times when you can actually haggle with your creditor. Some people have been able to successfully negotiate their debts down to half the original amount.

The most important thing to remember when negotiating with creditors is to keep your cool and perspective. Many people get frustrated at their overall financial circumstances and take it out on the creditor's representative at the other end of the phone line. You have to remember, however, that this is your debt, not theirs. Whether intentional or not, your expenses are your responsibility and you must not take out your anger on someone else. Doing so will only make them less likely to want to help you, and it always takes two to negotiate.

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