P r i n t   M e d i a   C o l u m n   S a m p l e
 

This Usable News-drafted article was distributed to small- and mid-size daily and weekly newspapers throughout NationsBank's seventeen state franchise.

WASHINGTON, D.C.—While credit gives us convenience and flexibility to accomplish many things in our lives, too much of a good thing may be hazardous to your wealth.  Personal bankruptcy filings have nearly doubled since the beginning of this decade.  Last year alone, 1,404,145 people filed for bankruptcy, a 19% increase from 1996.  In the very near future, a vote in the U.S. Congress to change federal bankruptcy laws is expected.  Bankruptcy filings cost creditors billions of dollars every year.  These losses translate into higher credit costs for the rest of us.

Some people with credit problems may be tempted to file for bankruptcy as an easy way out.  Bankruptcy protection, however, should be viewed as a last resort.  It is only appropriate for a very small percentage of people – those with debts so overwhelming there is no realistic prospect of repayment.

Don’t be misled into thinking bankruptcy is the “in” thing to do.  It has some very serious consequences.  A bankruptcy will place a significant negative mark on your credit report for the next ten years.  As a result, obtaining credit or gaining employment may be difficult, if not impossible.  If you are able to get credit, it probably will be very costly.  In addition, declaring bankruptcy may not necessarily dissolve all of your debts.  What’s more, bankruptcy allows you to skip important steps you probably need to take to learn effective money management skills.

To protect yourself, it’s important to be able to recognize warning signals that might alert you to credit danger.  Ask yourself the following:

Are your credit cards charged to their limits or are you unable to estimate how much you owe?

Would you be in immediate financial difficulty if you lost your job, had major home or auto repairs, or if there was a death or illness in your family?

Do you have more than 15% - 20% of your annual take-home pay outstanding in consumer debt?

If you’re having credit difficulties or fear you may be heading in that direction, don’t despair.  A few easy steps can help you build a stronger financial future.

Whatever your circumstances, keep the lines of communication open with your creditors.  If your problems are just beginning, you may simply need to explain the reasons for your current bind and give assurances of your intent to pay.  For problems that are more pronounced, it might be best to negotiate repayment plans with your creditors.  If your problems have progressed even further, you may need to seek competent professional assistance.

If you’re like most people, an essential step may be to create a budget by re-evaluating your spending habits and identifying ways to maximize your available resources.  After expenses have been reduced and minimal spending levels have been identified, the remainder of your available funds should be earmarked for creditor payments.

The next step is to develop a plan.  Whatever your financial goals, write them down.  Identify a time frame for the accomplishment of each goal as well as the monthly amount needed to reach each one.  While dealing with credit problems may be a top priority, other goals (like planning for retirement, saving for your children’s education) may also need to be established.

Then, develop repayment plans with your creditors.  Treat all creditors fairly by making pro rata payments – payments that bear some relation to the size of your debt with each creditor.  Once you’ve developed a repayment plan, stick with it.

For helpful tips on recognizing and dealing with credit problems, check out Bank of America Credit Education Site.  This consumer-friendly web site offers practical, easy-to-understand, purely educational information.

If you feel you need free professional assistance, contact Genus Credit Management.  This non-profit counseling service can be reached from anywhere in the United States by calling toll-free 1-800-955-0412 (www.genus.org).  This number is answered by a caring and knowledgeable staff 24-hours-a-day, 7-days-a-week.  The professionals at Genus will help you set-up a budget, deal with your creditors, and develop a repayment plan.  They may even be able to negotiate lower payments, reduced interest rates, and/or waived fees.  Once a repayment plan that is acceptable to both you and your creditors has been developed, you’ll make monthly payments directly to Genus, which, in turn, will make payments to your creditors.

The bottom line?  Don’t be seduced by the siren song of bankruptcy.  There are a number of ways to avoid it.  But, the earlier you start taking steps to resolve your credit problems, the more available options you’ll likely have.

William Kent Brunette, a financial author and consumer advocate who once worked through his own credit problems, is the consumer advisor to NationsBank.