Becoming debt free is a major task for most people. While it’s easy to get into debt, getting out of debt is much harder. The fastest and best ways to become debt free will depend on your situation.

The first step is to get a handle on your overall financial condition. Make a list of all of your debts, and rank them in order of annual percentage rate, starting with the highest-rate debts. These are the accounts you should work on first, with the goal of eliminating all of your high-interest debts, then your lower-interest debts. At this stage, focus on your unsecured debt, such as credit card accounts and installment debt, not secured debt, like cars or real estate.

The easiest way to eliminate the high-interest debts is to pay them down at a higher rate. Keep in mind that the minimum payments on charge card accounts are kept low to keep you in debt longer. If you increase your payments, then you will be able to pay off the debt faster. This is especially true for high-interest credit card accounts. These accounts should be paid off as quickly as possible, and then closed. That will keep you from being tempted to use those high-interest cards again in the future.

If you have steady income and some savings, you might consider debt settlement. Today, charge card companies and banks are making deals to settle your outstanding debt. In some cases, you can pay as little as 30% of your outstanding balance to pay off your charge card or installment debt. Be prepared to explain your financial hardship, and make sure you have the cash on hand to make a lump sum payment. You may also be able to break up your settlement payments, but this option is not always offered by creditors.

Selling assets to pay your debts is an option, but the market is not so good for sellers these days. Many people have had to sell their belongings in this economic crisis, so you are competing with others who are having to sell their possessions to recover as much as they can. If you have items that are easy to sell and you can find buyers, then it may be a good option for you.

If you have a 401K or other retirement savings, you could cash that account in to pay debts. However, that should be a last resort, because you will pay tax penalties, and it will be harder to rebuild your savings in the future. Also, keep in mind that 401K accounts are exempt from bankruptcy. That means that you could file bankruptcy and keep all of your 401K savings.

Bankruptcy is also a think aboutation for becoming debt free. Although it is a drastic step compared to the other options discussed here, bankruptcy is a legal and practical option for those who have little or no income and high debts from medical bills, lawsuits, or other serious debt problems. If your situation seems unlikely to change in the future and you want to eliminate all of your unsecured debt, then bankruptcy is a realistic think aboutation.

If you make an honest evaluation of your situation and follow these guidelines, you can set a course to become debt free in the near future.