Federal student loans. The IRS can collect what you owe when you fall behind on your federally guaranteed student loans. Your health insurance, if you're responsible for the payments. Keeping up with your health insurance is especially important if you or a family member has an ongoing health problem. Without insurance, an expen- sive illness or accident could push you into bankruptcy.

Medical bills. A growing number of healthcare providers, including hospitals, are getting very aggressive about collecting on their patients' past-due accounts, even suing patients in some instances. If you owe money to a healthcare provider, contact the provider to try to work out a plan for paying what you owe.

If one of your unsecured creditors turns over your debt to a debt collector, no matter how much the debt collector may hound and threaten you, do not give in to the collector's demands if paying the unsecured debt means you won't be able to pay your priority debts or living expenses. In Book III, Chapter 1, we tell you how to deal with debt collectors.

Examining a Budget Surplus

If your monthly spending and income comparison shows that you have money left over each month, don't break out the champagne just yet. You may have a surplus because you're not paying some of your bills or you're meeting some of your obligations by using credit cards. If this is the case, you must still reduce your spending so your income covers all your bills and living expenses each month.

A key aspect of getting out of debt is not using your credit cards. We certainly understand that sometimes you may have to use a credit card to pay for a financial emergency if you have no extra money in your budget and you have nothing in savings. But you should resolve to pay off the amount you charge as quickly as possible - the next month, if possible. And you should try not to charge anything more until you've wiped out the new credit card debt.

You may also have a surplus because you're paying only the minimum due on your outstanding credit card balances each month. You'll never get out of debt that way! If you have any surplus in your budget, use it to accelerate the rate at which you pay off the balances, starting with the highest-rate card.