Climbing Out of Debt

The new bankruptcy law requires people to seek credit counseling before they can file for court protection from their creditors. The Justice Department, which supervises the nation's bankruptcy courts, maintains a list of approved organizations on its Web site.

But credit counseling groups have generated hundreds of consumer complaints over lofty fees and high-pressure tactics. Consumer advocates charge that some firms have abused their nonprofit status and seek to profit from the fees charged to their debt-ridden clients.

Some financial planners question the wisdom of paying someone else to make arrangements with creditors. Walbert, the USAA financial planner, said Coon could have done everything that Consolidated Credit did for him.

"You can call all of the credit card companies and tell them you have every intention of paying off this debt and paying in a timely manner," but that a lower interest rate would be of great help, Walbert said.

Of course, when you have six kids and numerous bills to deal with, perhaps the monthly fee is worth having someone else wait on hold with the credit card companies. Coon set up a monthly payment of $550, and his debt is down to about $8,000.

"I got a lower payment and lower interest rates," he said. "They began fielding the phone calls and managing the payments for me."

Regaining Control

After a decade spent struggling with his finances, Coon is starting to feel control over his mistakes and says his credit rating is improving.

"It's still not where I want to be, but I'm better off than I was a couple of years ago," he said. "I don't live in fear of opening the mail or answering the phone."

I know that fear well. Since my father's learn to manage your money message, I have had varying degrees of success. I am not ashamed to say that I have bungled my credit rating at one point or another. I have forgotten to pay bills on time, and, yes, I have answered the phone to find a creditor on the other end.

Luckily, I have always been able to quickly recover from my mistakes, paying bills off before they totally wrecked my credit report. My wife and I bought our first home last year, landing an excellent interest rate. The mortgage payment is deducted directly from our bank account, assuring that we won't be late. In the past few months, we have talked several times about how much we spend and where we could cut back. To control our spending, we each get a certain amount of money every month to spend on ourselves. If we run out -- tough. And we'll be crunching the numbers again when it comes time to have kids.

When it comes to his new financial life, Coon thinks one of the most important steps he has taken is to involve his children, now teenagers and 20-somethings, in what the family is going through, so they can avoid making similar mistakes down the road.

"They understand this is a family matter," Coon said. "Hopefully it will pay off in the long run and give them a better perspective on their own financial lives. They seem to get tired of hearing me saying that they need to control their expenses and watch their money."

He tells them: "I already went through that. I'm trying to teach you better."

That sounds like a message I should deliver to my own kids one day.