Are you having trouble paying your bills? Are you worried about losing your house or car? According to the Federal Trade Commission, the Consumer Credit Counseling Service of Greater Chicago and the Better Business Bureau, you’re not alone.

The number of people carrying consumer debt is at an all-time high. People are charging up a storm, then ducking the bills as they come in. The average credit card balance today is about $4,000, and folks are paying it off at interest rates as high as 20 to 25 percent.

If you haven’t bought a home yet, poor credit and mountainous debts won’t help you get closer to qualifying for a home. If you already own a house but are spending more than you earn (putting your mortgage payment in jeopardy), you’ve got to get control of your expenses as quickly as possible.

A new, free booklet from the FTC might help. Called “Getting Back In The Black,” it is available by calling the CCCS of Greater Chicago toll-free at (888) 527-DEBT.

The booklet discusses legal alternatives to help you get back on your feet financially. It describes consumer credit protection laws, including the new Credit Repair Organizations Act, which prohibits credit scams that have you apply for an “employment identification number” from the IRS to use in place of your social security card. The third part of the booklet discusses some of the more prevalent consumer credit scams to watch out for, and the final section lists resources for additional help and information.

Here are some of the highlights from “Getting Back In The Black:”

Develop A Budget. Taking control of your finances means understanding how much cash comes in each month and how much you spend, and on what. Start by listing your income from all sources, and then list your “fixed” expenses. Fixed expenses are those that are the same each month, including your mortgage, car payment, credit card payment food, and insurance payments. Next, list expenses that vary from month-to-month, such as entertainment, recreation, and clothing.

No expense is too small to be excluded, so write down the $1.50 per day you spend on morning or evening newspapers, the $2.50 cup of cappuccino you enjoy each break, and the $3.00 beer you buy for yourself when you watch the basketball game with your buddies.

The idea behind writing down your expenses is to make sure you can afford the basics: housing, food, child care, health care, insurance, and education. Once you’ve got the basics, you can add in a few additional expenses, such as paying off your debt, clothing, transportation, savings, and entertainment.

Contact Your Creditors. If you can’t meet your basic expenses each month, consider taking another job to bolster your income. If that’s not possible, and you have a large amount of debt, you should contact your creditors as soon as possible. “Getting Back In The Black” suggests telling them why it’s difficult for you to meet your obligations, and ask them to work out a modified payment plan that stops the interest that is being charged, and reduces your payments to a more manageable level.

Experts suggest that it’s best not to wait until your account has been turned over to a collection agency. At that point, the creditor may not be as willing to help you work out a payment plan.

Seek Out Credit Counseling. Some folks can sit down with paper and pencil, and accurately recall every cent they’ve spend in the past month. Some can’t. Those that can often can structure a budget they can live with. If creating a budget seems more than you can cope with, you should contact a credit counseling service.

Your creditors may be willing to accept reduced payments if you enter a debt repayment plan with a reputable organization. In these plans, you send a check over the counseling agency and your cash is used to repay your creditors according to a predetermined schedule.

A successful repayment plan could take up to 4 years. Still, if you keep your nose clean and don’t apply for any additional credit, at the end of that time, you will have rebuilt your credit history and should have an easier time applying for new credit.

It’s possible to winnow even a huge amount of credit card debt. One expert described an individual who had more than $400,000 in credit card debt, and was able to dig his way out within a few years. A recent caller to my radio show, talked about how he was able to pay off $100,000 in debt, start a successful business, and have his wife stay at home with their new baby, all within an eight year period.

If you’re having trouble paying your mortgage, contact your lender immediately to avoid foreclosure. Most lenders will work with you if they believe you’re acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. Other lenders may change the terms of your loan to reduce the monthly debt. Often, additional fees will be assessed for these changes. You should know up front how much these extensions will cost you over the long run.

Consolidating Debts Works. If you could manage your credit card debt if only you had a lower interest rate, consider consolidating your debts on a new card to take advantage of the introductory interest rate. Often, these rates are a mere 6.5 percent rather than the 12, 15, or 18 percent that they charge after the first six months.

Many folks play the credit card switching game. Basically, every six months they switch their debt to a new card, and cancel out the old one. By putting the extra money they save each month toward the principal of the debt, they can seriously speed up the time it takes to pay off their debt in full.

Choosing Bankruptcy. The number of personal bankruptcies is rising in the United States because so many folks think it solves everything. While bankruptcy does relieve you of your current debts and obligations, it leaves you with difficult, long-term problems to contend with. It’s just that we don’t make it sound that bad. Well, it is. As one expert recently explained, if having too much debt is a gray mark, bankruptcy is a big black stain that doesn’t ever really go away.

Here’s what some folks don’t know about bankruptcy: It stays on your credit history forever, even though some people can qualify for a home loan as quickly as two years after filing. For a long time after, you may have trouble getting approved for credit cards and other types of credit. If you do get approved, you may pay a significantly higher interest rate than other applicants with “clean” credit. If you get approved for a home loan, your interest rate may be several points higher than a person with “A” credit, plus the lender may hit you up for additional points and fees. With a bankruptcy in your past, you may have trouble getting a job or buying life insurance.

Bankruptcy does give you a fresh start if you simply can’t pay your bills, but you should understand that it is a huge black mark on your credit history, one that will stay with you for the next decade to come. While most of your debts are wiped clean, some are not: You’re still required to pay child support, alimony, fines, taxes and some student loans.

Oct. 17, 2003.