When the counseling service opened 11 years ago, about 60 percent of its clients were swamped by credit-card debt, Call noted. Now it's more like 75 percent. Others in the industry see the surge in family financial problems brought on by high credit-card debt. There was a tremendous increase in people nationwide seeking help since October, said Dan Borkowski, a counselor with Credit Counseling Centers of America , which have offices throughout the country. Nonprofit credit-counseling groups try to set up payment schedules so overburdened consumers can take care of their obligations over a period of years, typically five but sometimes longer.
Consumer debt is a major factor in personal bankruptcies.
Bankruptcies in the United States peaked at 1.4 million in 1998, followed by 1.3 million in 1999, and 1.2 million last year. However, about 9 percent don't make even the minimum monthly payment. Consumers inundated by credit-card debt often have a choice between credit counseling and bankruptcy. Sometimes, it's not an easy choice, said Call. Credit counseling, funded by creditors, aims for 100 percent payment to creditors through negotiated terms.