The dreaded D-word: debt. All of us have it at some time or another, and we would all like to get rid of it. Although it is probably not possible to live 100% debt free, you can manage the debt you have. Depending on your circumstances, you need to consider whether you should manage your debt yourself, seek professional help, or when - and whether - you need to consider bankruptcy.

am i in trouble?

Steve Rhode, cofounder of Myvesta.org, says you can feel crunched whether you have debt of $3,000 or $300,000. "You're in trouble if you feel you are, or if you're afraid to open bills, can only afford minimum payments, or if you time checks until the last possible minute so you can pay your bills," Rhode said.

Thankfully, there are ways to get a handle on your situation. Rhode recommends the following steps:

STOP GOING FURTHER INTO DEBT And watch everything, not just the plastic. "Lots of people think credit cards are the biggest problem, but it is also other debt, such as mortgages and car loans," Rhode said.

TRACK THE CASH A simple pad and pencil can help you track your spending. Or try a software program such as Quicken or Microsoft Money. Total it up at the end of the day, week and month.

DON'T MAKE A BUDGET Instead, make a plan. "Budgets don't work," Rhode said. "With budgets, you create a wish list of how you would like to spend your money, not the real way it is spent." Set real, quantifiable goals you can achieve. For example, one goal of your plan could be to pay down half of one credit card by the end of this year.

DON'T EXPECT INSTANT MIRACLES Remain patient, and stick to your plan until you reach your goal.

SAVE Plan to sock away even a little bit as you're trying to get out of debt.

"I have people tell me they can only do $50 a month," Rhode said, but even less than $50 is enough as long as you have started.

tips for doing it yourself

Besides a trip to the library, or checking out the Internet for tips and advice, you can consult certified credit counseling or debt management agencies. These non-profit firms provide expert advice on how to manage your debt.

For people with extensive debt, these organizations will help you formulate a debt management plan. One of the largest is the National Foundation for Credit Counseling (NFCC), a national nonprofit network of 1,450 centers across the U.S.

Among the other leading agencies are Myvesta.org, American Consumer Credit Counseling, and Consumers First.

Credit or financial counseling agencies should provide you with information free of charge. There should be no minimum amount of debt required. Most organizations will offer help with types of debt, including secured debts such as car loans and mortgages.

Ask for an agency's costs, credentials and qualifications before making a choice.

when to consider bankruptcy

In 1999, 1.3 million people filed for bankruptcy. Although bankruptcy might seem a tempting way to clean the slate once and for all, most financial experts agree it is, at best, a last resort. When you file for bankruptcy, your debts go into "automatic stay" - that is, they are frozen.

What happens next depends on the type of bankruptcy.

There are two options: Chapter 7, called liquidation, and Chapter 13, also known as "wage-earner" bankruptcy.

In Chapter 7, your assets are sold to pay off creditors. With Chapter 13, you lose no property, and your trustee establishes a payment plan, usually lasting three to five years. Sounds easy, right?

But bankruptcy's aftereffects are long and damaging. Filing remains on your credit report for up to 10 years even if you don't go through with the entire process. Bankruptcy remains tied to your record whenever you apply for a job with a salary above a certain amount, insurance or a loan above a certain amount, even after the 10-year period has passed.

Most importantly, bankruptcy does not change your financial management habits. If you do not change your attitude and habits, you may find yourself faced with financial crises again and again.

alternatives to bankruptcy

Bankruptcy is a complicated process involving you, your creditors, lawyers and courts. To avoid it, you might want to find ways to increase income or sell assets to pay off debt as part of an overall repayment plan.

If you're thinking of using your retirement savings, such as an IRA or 401(k) to pay off debt, you must consider penalties.

Will the income tax and penalties involved create new debt in place of the old?

Finally, consider enrolling in a debt repayment plan sponsored by a nonprofit counseling agency before turning to bankruptcy.

Copyright 2002 Diana Estigarribia