For anyone who is in serious debt, the first thing he should be doing is to hire a debt consolidation agency to help him get the best possible debt settlement. You'll receive a large lump sum of money through a debt settlement, which you can then use to pay off your debts and at the same time restore your credit rating.

That certainly sounds very easy, but exactly how does one go about consolidating your debt? The first thing to do would be to ask your creditor to either eliminate or lower the interest brought forward.

What often happens is that debtors feel guilty for falling behind on their payments and hence don't approach the lenders for help. The result of this is that creditors increase the monthly-equated payments, most of which results from raised interest rates. So, when the debtor is unable to pay off the raised interest rate, he is slapped with a penalty.

The actual amount to be paid may be insignificant; however, when added to his already ballooning debt, those unnecessarily added extra dollars will significantly increase his mental burden.

If you or anybody you know finds yourself in the position, you must as a matter of urgency take steps to eliminate your interest and penalty. As soon as you do this, the creditor will respond and give you the benefit of the doubt, as he no longer risks losing his capital.

The next thing to do is consolidating all your credit card accounts by turning them into a single debt. Then calculate the average interest added to one credit card account and apply this formula to the combined debt in order to settle the optimum (lowest interest rate) amount only, and hence decreasing the average interest rate.

Things can get even better and you can even repair your credit history if you settle with all your creditors at once. As soon as the amount you got is distributed to all your creditors, you'll begin to recover as each creditor clears your debt. All participating creditors will help themselves and you as you'll restore your credit and they'll recover the capital amount they almost lost.