Debt is always a risk when you borrow money. Unless you plan carefully, it is easy to become over-committed, especially when dealing with on-going forms of credit, such as credit cards, where credit can build up over time and the charges sneak up on you.

If you miss the occasional credit card or loan repayment then the consequences are unlikely to be severe - credit cards may charge you a penalty for a missed payment, and at the vary least the loan company will ask some questions. Any missed payment will show up on your credit report however, and may affect any future loans.

If you persistently miss payments however, you can quickly find yourself in trouble. Ultimate penalties might include court action, bankruptcy and, in some cases, your home or other property may be at risk.

These penalties will have a severely adverse effect on your credit rating and you will find it very difficult to find other sources of credit in the future. Some lenders will still lend you money even if you have a bad credit record, but expect to pay a much higher interest rate in these circumstances.

If you do find yourself unable to meet your commitments, you may be able to negotiate a lower repayment to the creditor. It is important to always offer to pay something, no matter how small an amount (called 'offering to treat'). This is pretty much what a court would order you to do anyway, so if you offer to pay a token amount freely there is little point in the lender taking you to court. Be aware that creditors will not always freeze interest in such cases however, so your total debt may continue to increase.

There are many agencies dedicated to help you with debt, which is a growing problem in today's credit-happy society. Don't worry and struggle alone - excessive debt is not the end of the world. Remember that for your creditor, bad debt is just a part of everyday business, and they are not out to get you personally.

For more in-depth information and advice on dealing with debt, check out the handy Guide to Debt.