Credit card companies often mail college students credit card applications, or even actual credit cards. Many students use the cards without realizing that each time they do so, they are actually borrowing money: they are taking out a high-interest, short-term loan. Many also make a small down payment on a car and then take out a loan to finance the car. It's all too easy to get into debt, and as with most things in life, getting into something is easier than getting out of it. The following selection discusses debt, warning signs that you might be getting over your head in debt, the consequences of being in debt, and two consumer credit counseling services that can help those who are overindebted.

1 A sudden illness or the loss of your job may make it impossible for you to pay your bills on time. If you find you cannot make your payments, contact your creditors at once and try to work out a modified payment plan with them. If you have paid your bills promptly in the past, they may be willing to work with you. Do not wait until your account is turned over to a debt collector. At that point, the creditor has given up on you.

2 Automobile loans present special problems. Most automobile financing agreements permit your creditor to repossess your car anytime you are in default on your payments. No advance notice is required. If your car is repossessed and sold, you will still owe the difference between the selling price and the unpaid debt, plus any legal, towing, and storage charges. Try to solve the problem with your creditor when you realize you will not be able to meet your payments. It may be better to sell the car yourself and pay off your debt than to incur the added costs of repossession.

3 If you are having trouble paying your bills, you may be tempted to turn to a company that claims to offer assistance in solving debt problems. Such companies may offer debt consolidation loans, debt counseling, or debt reorganization plans that are "guaranteed" to stop creditors' collection efforts. Before signing with such a company, investigate it. Be sure you understand what services the company provides and what they will cost you. Do not rely on verbal promises that do not appear in your contract. Also, check with the Better Business Bureau and your state or local consumer protection office. It may be able to tell you whether other consumers have registered complaints about the company.

Warning Signs of Debt Problems

4 Bill Kenney, in his early 30s, has a steady job with an annual income of $40,000. Bill, his wife, and their two children enjoy a comfortable life. A new car is parked in the driveway of their home, which is furnished with such modem conveniences as a new microwave oven, a new freezer, an electric washer and dryer, a videocassette recorder, and a large-screen color television set.

5 However, Bill Kenney is in debt. He is drowning in a sea of bills, with most of his income tied up in repaying debts. Foreclosure proceedings on his home have been instituted, and several stores have court orders to repossess practically every major appliance in it. His current car payment is overdue, and three charge accounts at local stores are several months delinquent.

6 This case is neither exaggerated nor isolated. Unfortunately, a large number of people are in the same floundering state. These people's problem is immaturity. Mature consumers have certain information; they demonstrate self-discipline, control their impulses, and use sound judgment; they accept responsibility for money management; and they are able to postpone and govern expenditures when overextension of credit appears likely. Overextension of credit is the second most common reason consumers are unable to pay their bills on time.

7 Referring to overindebtedness as the nation's number two family financial problem, a nationally noted columnist on consumer affairs lists the following as frequent reasons for indebtedness:

1. Emotional problems, such as the need for instant gratification, as in the case of a man who can't resist buying a costly suit or a woman who impulsively purchases an expensive dress in a trendy department store.
2. The use of money to punish, such as a husband who buys a new car without consulting his wife, who in turn buys a diamond watch to get even.
3. The expectation of instant comfort among young couples who assume that by use of the installment plan, they can have immediately the possessions their parents acquired after years of work.
4. Keeping up with the Joneses, which is more apparent than ever, not only among prosperous families but among limited-income families too.
5. Overindulgence of children, often because of the parents' own emotional needs, competition with each other, or inadequate communication regarding expenditures for the children.
6. Misunderstanding or lack of communication among family members. For example, a salesperson visited a Memphis family to sell them an expensive freezer. Although the freezer was beyond the means of this already overindebted family and too large for their needs anyway, the husband thought his wife wanted it. Not until later, in an interview with a debt counselor, did the wife relate her concern when she signed the contract; she had wanted her husband to say no.
7. The amount of the finance charges, which can push a family over the edge of their ability to pay, especially when they borrow from one company to pay another and these charges pyramid.

The Serious Consequences of Debt

8 Just as the causes of indebtedness vary, so too do the other personal and family problems that frequently result from overextension of credit. Loss of a job because of garnishment proceedings may occur in a family that has a disproportionate amount of income tied up in debts. Another possibility is that such a family is forced to neglect vital areas. In the frantic effort to rob Peter to pay Paul, skimping may seriously affect the family's health and neglect the educational needs of children. Excessive indebtedness may also result in heavy drinking, neglect of children, marital difficulties, and drug abuse. But help is available to those debtors who seek it.

Consumer Credit Counseling Services

9 If you are having problems paying your bills and need help, you have several options. You can contact your creditors and try to work out an adjusted repayment plan yourself, or you can check your telephone directory for a nonprofit financial counseling program to get help.

10 The Consumer Credit Counseling Service (CCCS) is a local, nonprofit organization affiliated with the National Foundation for Consumer Credit (NFCC). Branches of the CCCS provide debt counseling services for families and individuals with serious financial problems. It is not a charity, a lending institution, or a governmental or legal agency. The Consumer Credit Counseling Service is supported by contributions from banks, consumer finance companies, credit unions, merchants, and other community-minded organizations and individuals.

11 According to the NFCC, every year millions of consumers contact CCCS offices for help with their personal financial problems. More than 225 CCCS offices opened in 1996, bringing the total number of locations to about 1,300. Now more than 90 percent of the U.S. population has convenient access to CCCS services.

12 To find an office near you, check the white pages of your local telephone directory under Consumer Credit Counseling Service, or call l-800-388-CCCS. On the Web, you go to their website, www.nfcc.org. All information is kept strictly confidential.

Source: Jack Kapoor, Les Dlabay, and Robert J. Hughes, Personal Finance, 7th ed. New York: The McGraw-Hill Companies, Inc., 2004, pp. 214-19.

The Senate did not like the first version of the proposed bill, but eventually passed a modified version of it.

Because he lost his job and has not been able to find another one, my roommate is delinquent on his phone bill and on his half of the rent.

Because Dominic did not take algebra in high school, he is floundering in his college math class.

Under the terms of the installment plan, we will pay $30 dollars every month on for the next two years in order to buy a new washer and dryer.

In many states, employed "deadbeat dads" face garnishment until they catch up on the overdue child support payments they have missed.