Free advice on debt

If you're having trouble paying your bills, you're not alone. In fact, millions

of Americans have difficulty paying their debts. However, there is hope.

The important thing is to act now. Doing nothing can lead to much larger

problems, including even bigger debts, the loss of assets such as your house

and a bad credit record.

Are you in financial trouble? If bill collectors are calling you, it's

a sure sign. But what if you're just having difficulty stretching your paycheck

to pay monthly bills? If you answer yes to any of the following questions,

you should take action now:

1. Do you routinely spend more than you earn?

2. Are you forced to make day-to-day purchases on credit?

3. Are you able to make only the minimum payments on monthly credit

card debts?

4. If you lost your job, would you have difficulty paying next month's

bills?

Review your specific obligations that creditors claim you owe to make

certain you really owe them. If you dispute a debt, first contact the creditor

directly to resolve your questions. If you still have questions about the

debt, contact your state or local consumer protection office or state attorney

general.

Make sure you let your creditors know you're having difficulty making

your payments. Tell them why you're having trouble — perhaps it's because

you recently lost your job or have unexpected medical bills. Try to work

out an acceptable payment schedule with your creditors. Most are willing

to work with you and will appreciate your honesty and forthrightness.

The Fair Debt Collection Practices Law prohibits a debt collector from

showing what you owe to anyone but your attorney, harassing or threatening

you, using false statements, giving false information about you to anyone

and misrepresenting the legal status of your debts.

If you are unable to make satisfactory arrangements with your creditors,

organizations can help, including the Consumer Credit Counseling Service.

CCCS counselors, certified by the National Foundation for Consumer Credit,

have professional backgrounds in money management and counseling. They can

work with you to develop a budget to maintain your basic living expenses

and outline options for addressing your total financial situation.

If creditors are pressing you, a CCCS counselor can negotiate with them

to repay your debts through a financial management plan. Creditors often

agree to reduce payments, lower or drop interest and finance charges, and

waive late fees and over-the-limit fees. After starting the plan, you deposit

money with CCCS each month, and CCCS distributes it to your creditors.

With more than 1,100 locations nationwide, CCCS agencies are available

to nearly all consumers. Supported mainly by contributions from community

organizations, financial institutions and merchants, CCCS provides services

free or at a low cost to individuals seeking help. To contact a CCCS office

for confidential help, look in your telephone directory white pages or call

(800) 388-2227.

Meantime, consider these changes to help you better manage your debt:

* Budget your expenses. Create a spending plan that allows you to reduce

your debts. Itemize your necessary expenses such as housing and health care,

and optional expenses, such as entertainment and vacation travel. Stick

to the plan.

* Try to reduce your expenses. Cut out any unnecessary spending such

as eating out and expensive entertainment. Clip coupons, purchase generic

products at the supermarket and avoid impulse purchases. Above all, stop

incurring new debt. Consider substituting a debit card for your credit cards.

* Use your savings and other assets to pay down debts. Withdrawing savings

from low-interest accounts to settle high-rate loans usually makes sense.

Selling a second car not only provides cash but also reduces insurance and

other maintenance expenses.

—Zall, Bureaucratus columnist and a retired federal employee, is

a freelance writer based in Silver Spring, Md. He specializes in taxes,

investing, business and government workplace issues. He is a certified internal

auditor and a registered investment adviser.