Are you borrowing on one credit card to pay off the bill on another? Are you paying just the minimum amount due each month rather than making a substantial payment to reduce your outstanding balance?

If so, you may be among the growing number of casualties from the ongoing recession.

Increasing numbers of Americans are finding it difficult, if not impossible, to make ends meet. Debts and credit card bills that were manageable a few years ago when the economy was booming can push you over the brink if you lose your job, or if the overtime you counted on to pay for all those little extras dries up.

'We definitely are seeing that families are impacted by the recession,' says Jan Amling, executive director of Consumer Credit Counseling Service of Linn-Benton Inc. in Albany. 'Jobs have been lost, and overtime has been cut.'

Her company, which serves individuals in the Portland area as well as those who live farther south, intercedes with creditors to work out debt repayment plans for people who join its program. But fewer debtors are taking advantage of the program these days.

'Many of the people we are seeing now either need additional income just to meet their regular bills, or must file for bankruptcy' because they owe so much that it's unlikely they can repay their obligations anytime soon, she notes.

Not surprisingly, consumer bankruptcy filings across the nation are at a record high. There were nearly 1.6 million nonbusiness filings in the 12-month period ending March 31 (more than 23,000 of them in Oregon), a 7.4 percent increase over the same period last year, according to the Administrative Office of the U.S. Courts.

Modifying bad habits

Credit counseling agencies help clients draw up feasible budgets and work out repayment plans with creditors, who typically provide most of the counseling services' funding. These agencies usually try to consolidate many different debts so that clients have to make only one monthly payment.

Often, but not always, creditors will agree to reduce interest rates on the outstanding balances in return for clients' promising not to incur any more debt. More and more counseling agencies 'meet' with their clients over the phone or via the Internet, rather than face to face. For some people, this may provide welcome anonymity, while others may miss the personal contact.

A major emphasis of all these programs is to help participants modify their spending behaviors.

'It's very much like a treatment program for drug or alcohol abuse,' says Nancy Judy, a spokeswoman for Myvesta, a national debt counseling service that has no local offices and deals with clients over the phone. 'You need to talk about the underlying problems that cause people to spend too much in the first place.'

The National Foundation for Consumer Credit, a network of consumer credit counseling agencies, has some sobering statistics on families who sought help from its members last year. Their typical client is 39 years old, makes about $30,000 a year and has average total debt of more than $29,000, which represents a staggering 97 percent of the individual's annual income.

What to ask an agency

If you find yourself dodging phone calls and ignoring letters from bill collectors, you're probably a candidate for credit counseling. But before you simply flip open the Yellow Pages and randomly commit to an agency, Amling suggests you ask the following questions.

• Are you licensed to do business in my state? This is important because the state of Oregon sets limits on how much licensed agencies can charge for their services.

• What fees do you charge? Fees that these agencies charge are voluntary, not mandatory, but frequently this is not made clear. Furthermore, in regard to counseling for debt repayment, Oregon law is unambiguous, Amling says: 'You cannot be charged a fee.'

However, she adds, agencies can impose a variety of costs for related services such as education (for example, how to draw up a budget or how to read a credit report) or financial planning.

If you sign up for a repayment plan, they can charge a one-time setup fee, which involves contacting creditors to establish the payment plan. They also can collect a monthly processing fee for handling your account, but it can be no more than 15 percent of the total amount you pay to the agency each month.

Some agencies may charge a flat dollar amount per creditor on the program, which can add up quickly. The best option is to look for a service with a reasonable cap on its monthly fee, say a maximum of $35 or 15 percent, no matter how many creditors you have.

• What creditors will you accept in your program? Amling says some agencies will cherry-pick their creditors, accepting easy debts such as bank credit card bills but refusing to take on more time-consuming obligations such as student loans, collection agencies or bills from medical providers. Some agencies may accept only large debts, say above $5,000, but refuse to take on an assortment of small bills that may be equally troubling.

Some credit counseling agencies like to advertise the fact that they are nonprofit organizations, but this may mean less than you think. A recent study by the National Consumer Law Center in Washington, D.C., found that some credit counseling agencies have abused their nonprofit status by paying inflated salaries to top executives. Others failed to pass on clients' payments to creditors.

A safe bet is to begin your search with agencies that are affiliated with the National Foundation for Consumer Credit and must meet certain criteria (calling 1-800-388-2227 will connect you with the counseling service closest to you).

In Oregon, there are affiliated local programs in Salem and Albany but none in the Portland area; those operations have been taken over by Solutions, a Seattle-based organization.

Deborah Rankin, an award-winning former personal finance columnist for The New York Times, is based in Portland. Contact her at This email address is being protected from spambots. You need JavaScript enabled to view it..

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