New York -- Are you having a credit crisis? About 5 million to 7 million people are financially overextended today, says Becky Cutler, chairwoman of the National Foundation for Consumer Credit's National Education Committee.
Even careful spenders can run into trouble. You might have borrowed money when your income was good, then suffered a pay cut. Your ex-husband might have stopped sending child support. Sometimes, spending just creeps up on you.
It's not unusual for those in trouble to refuse to face credit problems. You cross your fingers and hope the debts will go away. But they never do. Left unattended, over-indebtedness gets much worse.
If two or more of the following sentences apply to you -- despite the fact that you're regularly employed -- you desperately need to change the way you're handling money.
* Your required monthly payments to creditors (not counting your mortgage or your rent) are greater than 20 percent of your take-home pay.
* You're borrowing to pay for items that you used to buy with cash.
* An increasing percentage of your income is going to pay debts.
* You have little or no savings. If you do have money in the bank, you're eating into it every month to meet your bills.
* You can make only the minimum payments on your bills each month. Sometimes you can't even make that.
* You don't have a clue how much money you owe.
* You're near or at the limits of your lines of credit.
* You have to take out a new consumer loan before your last one is paid off.
* You use cash advances from your credit cards to pay other creditors, or to meet daily expenses.
* You pay off your credit cards with a debt-consolidation loan, then run up credit card bills all over again.
* You're being dunned for overdue payments. You're arguing about money at home.
* You're working a second job, or overtime, to keep your spending up.
* You're turned down for credit.
* If you lost your job, you'd be in instant financial trouble.
When your debts loom large relative to your income, thoughts of bankruptcy may drift into your mind.
But life after bankruptcy isn't as simple as many bankruptcy lawyers would have you think.
Some landlords won't rent to a former bankrupt. Some employers won't hire you because they think you're irresponsible about money. Bankruptcies stay on your credit report for seven to 10 years, during which time you may have no major source of credit.
You'll find it tough to get a mortgage. You'll need large cash down payments for major purchases such as a car and appliances.
The first step toward curing a credit crisis is to admit to yourself that you're having one. After that, here's what Cutler suggests you do:
* Find out how bad your financial situation really is by listing your income, expenses, assets and debts.
* Try to get back on track by stopping most new purchases for a while and using more income to pay down debt. Reducing your debts also lowers your interest payments, which leaves you with even more money for paying off bills.
* If you can't find a way to make your income match your obligations, call the Consumer Credit Counseling Service at (800) 388-CCCS, which will refer you to one of its 617 local offices.
If your finances can be salvaged, CCCS will show you how. Its services are low-cost or free. Often, it negotiates with creditors to reduce your monthly payments. In return, however, you'll have to live on a strict budget until your debts are all paid.