You’re in a tough spot all right. Collections agencies are merciless, will have no sympathy that you don’t have any income, and will make your life a living hell until your debts are resolved one way or another. Assuming the debts are unsecured (from credit cards), you have two options:

• Find another source of income, negotiate with the collections agencies, and pay them off
• Declare bankruptcy

Repaying your debts: Morally speaking, finding a way to repay your debts is preferable. Even if you can take a part time job nights or weekends to make an extra couple hundred a month, you may be able to use that keep the debt collectors at bay. Furthermore, I’d consider looking for additional income anyway to avoid going into anymore debt. A monthly income of $50 is hard to live on, even when your room and board is paid for.

The fact that your debts are in collections is bad in some ways, but good in others. It’s bad because these debts are marked as “in collections” on your credit report, which will hurt your ability to get new credit for years to come. The good news is: Collections agencies purchase your debt from your creditors for a fraction of the original amount. Therefore, they may agree to settle the debt for less than you originally owed. They won’t concede this easily, but if you are persistent in telling them you want to pay the debts, but are working with a very limited income, they may listen.

Bankruptcy: With your limited income, you’ll quality for Chapter 7 bankruptcy, which will discharge your unsecured debts. It’s not free though: Expect to pay $300 to file the papers in federal court, and $1,000 or more in attorney’s fees. Plus, Chapter 7 bankruptcy can stay on your credit report for up to 10 years.

If you absolutely cannot find additional income, bankruptcy is probably the way to go. You’re young enough that you probably won’t loose many—if any—assets in the liquidation process and, if you get this debt and bankruptcy behind you now, your credit history will be clear again in your early thirties.

A note about student loans: Any federal student loans (such as Stafford or Perkins loans), will not be discharged in bankruptcy, and there are dire consequences for not repaying these debts. Defaulting on federal student loan will make you ineligible for federal benefits of any kind including social security, Medicare/Medicaid, and more.

As long as you’re still a student, these loans should be deferred (i.e., you don’t owe any payments). If you left school and went back, for example, you may have to let your lenders know so they can suspend the payments.

You’re in a sticky situation, but taking action on your debts in one way or the other is the right thing to do. Ignoring them will only create more headaches down the road. Good luck!

Chances are your credit score is still too poor to qualify for the best balance transfer rates like a 0% APR for 12 months from the Chase Visa Platinum card or 4.99% for the life of the balance from Blue from American Express.

You can try applying for these or other so-called prime cards (credit cards marketed to those with good or very good credit), but do not be surprised if your application is declined. Typically these cards want applicants with FICO scores of at least 700, or at least above 650. That’s not to say, however, that somebody with a lower score would never be approved, or somebody with a high score would be approved. Credit cards look at other factors besides your score, like your income and job history, and your current level of indebtedness.

For example, if you make good money and that $3,000 balance is your only debt, you may very well be approved for cards despite your weaker credit score.

If you do apply for these cards, note that every application for credit will lower your score, but only slightly. Making timely payments to your creditors and reducing your total debt are the most important things you can do to improve your score.

Another option is to look at Capital One credit cards for average credit. Capital One doesn’t currently offer any killer balance transfer rates, and some cards have annual fees between $19 and $39, but they offer a higher chance of acceptance for somebody with weak to average credit, and the regular APRs on these cards are pretty good.

The Capital One Platinum Visa for average credit, for example, offers people with average credit a low 8.9% regular APR on purchases and balances transferred. Even with the annual fee, swapping your $3,000 balance from 19% APR to 8.9% APR for a year could save you up to $300 in finance charges, and even more should you take longer than a year to pay it off.

Whatever you do, avoid applying for credit cards with high fees and/or high interest rates just to get a new credit card. While adding one or two new accounts and managing them responsibly will help your credit score, it shouldn’t cost you an arm and a leg to do. Worst case scenario, wait for your credit to improve and reapply for a “prime” card.

Two final tips: If you are successful transferring your balance, don’t close that old card just yet, as closing a credit card can hurt your credit score. By all means avoid carrying a balance on it; just don’t close it.

If you aren’t successful transferring your balance, try calling your current card company and asking for a better interest rate. Point out that you have been responsibly paying on time and mention that you are shopping for new cards.

Have you been approved for good credit card deals with less-than-perfect credit? Turned down for any cards even though you have good credit? I’d love to hear.

Stop charging. It sounds simple, but if you’re nearly behind on payments and can’t put an immediate end to using debt, your finances need a major overhaul. You’re on the road to disaster.

Call your creditors. It’s never pleasant to admit you can’t pay a bill, but it’s the smartest move you can make. Most creditors will be happy to help you through tight months with reduced or deferred payments – or even an entirely new payment plan. Talking with your creditors before you have a problem may even save you from high penalty interest rates or black marks on your credit report.

Consider credit counseling. Credit counseling or a debt management program can help. Depending on your situation, some plans can cut interest rates, reduce monthly payments, and save you money in the long term. Others may charge a monthly fee and offer little, if any, assistance. Keep in mind that credit counseling requires you to stop using credit and may hurt your credit score – though not as much as defaulting on an account or declaring bankruptcy.

Resist bankruptcy. Bankruptcy can seem like an easy way out of financial difficulties, but bankruptcy is a quick fix that may provide temporary relief only to cause more problems down the road. Declare bankruptcy, and you may not be able to get credit for a home or car for another seven to ten years. Worse, bankruptcy does not address the real problem: how you got so behind in the first place. If you don’t take a look at your spending and why you’re in debt, you may just go into debt all over again.

Related Articles

• Debt Free in Seven Steps
• You’re in Debt; So What?
• 5 Questions to Ask Yourself Before Transferring a Credit Card Balance

Have you been on the brink of credit card disaster and been able to stave off a delinquency—or worse? Please share your story.

1. If I transfer a balance, what will I do with the old credit card?

You can’t get out of credit card debt if you don’t stop using your credit cards for new purchases. If you are close to or beyond your total credit limit on one or more credit cards, transferring a balance to a new credit card will put available credit back onto your old card. Can you avoid the temptation to use it?

If you do transfer a balance, destroy the old credit card. Only cancel the account if it is a credit card you have held for less than a year. Keeping the credit card open – even if you do not use it – will give you a higher credit score.

2. Can I get approved for this credit card?

Credit cards offering good balance transfer offers typically require good to excellent credit. If your cards are maxed-out, or if you have had recent credit problems, you may not be able to get approved for a new card, and applying for a card can further lower your credit score. Not sure where your credit stands? You can get your free credit report and score from several sources.

A credit card company may also approve you for the card you applied for and transfer your balance, but at a higher-than advertised rate, based upon your credit risk. Read the fine print of any credit card offer to see if you might get stuck with a higher rate.

If your credit is shaky, hold off on trying to transfer a balance and work on paying down your debt and possibly negotiating a better interest rate on your existing credit cards.

3. What fees will I incur?

Most credit cards charge a fee to transfer a balance – usually around 3% of the balance transferred and up to a maximum of between $150 and $200. If you pay off your balance within a year, this can still be a good deal, but you should be aware of the fees that will be assessed – especially if you have a large balance and there is no maximum fee.

Why? If you have a credit card with an APR of 15%, you are paying $150 a year in interest for every $1,000 of credit card balance. Three percent of that is $30, so you are saving $120 – assuming you pay off your balance that year.

4. Would I benefit from a fixed balance transfer APR?

Most balance transfer credit cards offer new applicants a 0% APR for a certain number of months. If you have a small balance that you can pay off within a year, these offers are the ideal way to eliminate paying further finance charges on your balance.

If, however, you cannot afford to pay off your entire balance in a year, keep in mind that the credit card’s regular APR will kick in on your transferred balance. If that APR is higher than what you’re paying now, the balance transfer isn’t such a great deal.

If you think you need more than a year to pay down your balance, consider a card with a fixed balance transfer rate. Clear from American Express offers a 4.99% fixed rate on transfers with no balance transfer fee. For small businesses, or individuals with excellent credit, a great option is the Advanta Platinum Rewards Card, featuring a 0% rate on balance transfers for 15 months, and a 7.99% fixed APR thereafter.

5. Can I avoid new charges?

Finally, you must ask yourself if you can avoid making new charges on the new credit card to which you transfer the balance. This is a big no-no, because the credit card will take your payments and apply them to your low-rate transferred balance before your new purchases, which will be at a higher regular rate (unless the card also features an intro rate on purchases).

Almost always, it’s best to transfer a balance to a card and then keep that card out of your wallet until the transferred balance is paid off.

Is a balance transfer right for you? Review, compare and apply for balance transfer credit cards at my other site, Arrive Financial, now.

Related Articles:

• Are 0% Six-Month Balance Transfers Really a Deal?
• One Unique Credit Card
• Credit Card Balance Transfers: The Art of Moving Debt

Vacations, whether on a local beach or exotic foreign city, are important rewards. Getaways both motivate and rejuvenate, and after a year of hard work, we deserve it.

Unfortunately, what we deserve and what we can afford can be two entirely different things. Here are six ways to save on your next vacation, so you don’t have to say: “I’ll have another Mai Tai and $623.94 in finance charges please.”

Start Saving Now – Even if your vacation is a year away, now is the time to start putting some cash aside. Start a separate savings account just for your travel fund and add $100 - $200 a month.

Online savings banks make this easy, often giving you the option of creating several accounts with different designations for no charge.

Book in Advance – The sooner you purchase your airfare and reserve your hotel rooms, the more you will save. Not only will you get advance-purchase rates, you will also divide up the total cost of the vacation, paying for some of it now (airfare, for example), meaning you will have great financial flexibility as the actual trip draws near.

Create a Vacation Budget – It’s dangerous to take off for paradise without having an idea of how much you are able to spend on your trip. While it’s good to have an overall cap on your vacation spending (say $1,500 or $2,000), you’ll also want an idea of where that money will go. If $400 of your $1,500 went to airfare and another $500 will go to your hotel, how will you spend the rest of your $600?

Will you eat cheaply and spend the rest on local tours and transportation, or stay in one spot and splurge on nice meals? Don’t forget to add in the costs of gratuities and souvenirs.

Travel Together – You can significantly reduce your vacation costs if you travel with at least one other person. Even if you’re not traveling with your sweetheart, consider planning a trip (and sharing a hotel room) with a buddy.

Watch Your Currency – If you’re traveling abroad, currency exchange rates (and fees) can eat into your budget. With a weaker dollar, many destinations – particularly Europe – are more expensive for Americans. Wherever you’re headed, figure out how you are going to pay when you arrive. While Visa and MasterCard are accepted worldwide, they may charge currency transaction fees for credit, debit, and ATM withdrawal transactions.

You can order foreign currency, up to $1,000, online from American Express, and have it delivered via to your home. The cost is $15.00 plus shipping.

You may want to check with your bank and credit cards to see what their currency exchange policies and fees are before you go, and pick the most affordable option available.

Pack Smart – Forgetting important personal items – whether toiletries, clothing, or even your camera – can through a wrench in your vacation budget should you need to purchase replacements upon arrival. Not only are you buying something you already have, you may be forced to pay more if you are in a touristy area. Not to sound like your mother, but you might consider making a list, and checking it twice.

That said, be wary of over packing. Many airlines charge $50 or more if your checked baggage exceeds their weight limit – usually 50 pounds. Remember that you may be returning with more stuff than you left with.

How do you save money on your vacations?

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