Don't Avoid Communication
Speaking with creditors or collection agencies is never a pleasant experience. The act of having to admit your financial shortcomings doesn't boost self-esteem, but it's an essential aspect of dealing with outstanding debt. The most important rule to remember when dealing with debt is to retain open communication with creditors. You'll probably be surprised with how flexible creditors and collection agents are when you simply communicate your current financial standing. When you speak with creditors to inform them of the following:
(1) Current Financial Standing - While you may be aware your bank account only has $10.00, creditors are unable to have access to this information. As far as they know, you're sitting on a mountain of cash and are simply refusing to pay your bills. Upon initial communication, let them know how much money you actually have. This may not only clarify your current ability to make a payment, but given your specific situation, the creditor may be more willing to establish low monthly payments with low-to-no interest.
(2) Explain Your Desire for Repayment - When you avoid communicating with creditors, it's easy for them to believe you wish to avoid making payment. While you may not be able to make a payment that day, whenever you communicate with creditors inform them of your true desire to eliminate this debt.
Make a Payment of Any Amount
While you may not be able to afford full repayment, especially of an auto loan for example (http://your650score.com/650-credit-score-auto-loan/), never simply forget about your debts. When communicating with creditors, inform them what you can pay on the debt that day. Even if you're only able to pay $20, your willingness to put some money on the debt is essential to keeping your account in good graces. You'd be surprised how caring creditors can actually be.
The most important element to remember when dealing with debt repayment is to never simply write off the debt. While you may not be able to feasibly repay your debt at the current time, with open and honest communication as well as a genuine desire to eliminate this debt, you can work with your creditors instead of against them. This may not completely eliminate negative marks on your credit report, it may keep your account from going into collections, or worse, from being sued for non-payment.