Topics on this page

• Warning Signs of a Debt Problem
• What if you can't pay your bills?
• Protecting Your Assets

Warning Signs of a Debt Problem:

You may have a debt problem if:

• your required monthly payments to creditors total 20% or more of your take home income (not including your rent or mortgage);
• you cannot consistently pay all your bills;
• your credit cards are maxed out;
• you can only pay the minimum payments on your credit cards;
• you are using your savings to pay for daily expenses;
• you do not have savings;
• you overdraw your bank account;
• you are getting cash advances from credit cards to pay other creditors and/or daily expenses;
• you do not know how much you owe;
• you are arguing with family members due to money problems; and/or
• you have creditor lawsuits, repossessions, or garnishment of wages.

What If You Can’t Pay Your Bills

Credit Counseling Service - If you cannot pay your bills, consider contacting a credit counseling agency or service for assistance. Credit counseling services can help you control your debt more effectively, teach you how to manage your money, and help you create a debt repayment plan. There are both nonprofit and for-profit debt counseling services here in Maryland as well as national organizations that can provide you with advice. Learn more about credit counseling agencies.

Payment Plan - If you cannot pay your bills, try contacting your creditors to work out a payment plan. It may be helpful to explain your situation and reiterate your willingness to work with the creditor to catch up on your overdue bills.

If you can't work out a payment plan with the creditor: 

• Send the collector a notice by certified mail and tell them that you cannot repay the debt and that you do not want to hear from the collector.
• Once the collector receives the notice the collector can call or write you one last time to tell you what will happen because of your non-payment. Federal and Maryland law protects you from any unfair collection practices used you by your creditors.
• Contact a credit counseling agency.
• Only file bankruptcy as a last resort. Bankruptcy is very complicated. Learn more about bankruptcy..

Court - If the creditor decides to sue you, the creditor will file a claim in court. A hearing date will be set. At the hearing, you may tell your side. You can also file your own claim if the collector violated state law or the Federal Fair Debt Collection Practices Act.

If you did not pay a debt just because you could not afford to pay it, the creditor will win a judgment against you. A judgment is a ruling by a court. The creditor wants a judgment because the judgement gives them a right to take action to collect the debt and various options to do so. Learn more about collecting a judgment.

Protecting Your Assets

There are laws that protect certain income and assets from debt collectors. This is sometimes known as being “Collection Proof” or "Judgment Proof." This means that, although you still owe a debt, your creditor has no legal way to collect that debt or enforce a court judgment against you. Learn more about income and assets protected from creditors.