It is this time of year when the holidays are over with and tax season is upon us that many of us are forced to take a look at our household spending. For many that means reassessing our debt loads, especially credit card debt. The average American reports they carry about $8,000 in credit card debt. According to reports, personal bankruptcies have doubled in the past decade and about 40 percent of American families spend more than they earn each year.

According to the New York State Banking Department, people don’t have to go on a wild spending spree to create a debt crisis. Debt can arise from emergency situations. However, more often, debt is created through a consistent pattern of spending even just a little beyond the household income. Over time, this can lead to an unsafe or unmanageable amount of debt.

The key to gaining control of your debt is to first identify what is good debt and what is bad debt, and then pay off the bad debt. According to the NYSBD web site, good debt is debt on items people need but can't afford to pay for with cash. It is debt that can be seen as an investment and can help you build your credit rating if paid on time, such as a mortgage, car payments or student loans. Bad debt is debt you've taken on for things you don't really need and can't afford. The worst form of bad debt, of course, is credit card debt, since it carries the highest interest rates.

Here are a few recommendations provided for those who feel overwhelmed with bad debt by the New York State Banking Department. Remember, whether it’s good or bad debt, it takes time to pay off.

• Do not continue to borrow if you can’t make monthly payments. Reserve your credit cards for emergencies. Try not to add to your debt load by making additional or unnecessary purchases.
• Do not use your credit card to borrow cash.
• Create a budget for income, and a debt payment plan. Do not spend more than you earn.
• Use your debit card, not your credit card, to make purchases.
• Pay more than the minimum amount due on your credit card(s) every month.
• Talk to an authorized account representative at your credit card company as soon as possible about lowering your interest rate and, if possible, arranging a payment schedule.
• As soon as a credit card account is completely paid off, destroy the card and close the account.
• If all else fails, consider using the services of a licensed credit counseling company that might be able to help you pay off your debt.

There are risks involved with credit counseling service agreements so be sure to read the fine print, which will disclose hidden fees and penalties for not making prearranged payments. Consumers should only use credit counselors that are licensed by the New York State Banking Department. A list of these companies can be found by visiting the Banking Department website at http://www.banking.state.ny.us/sibudget.htm or by calling 1-877-BANK NYS (1-877-226-5697).

Also, to find the lowest credit card rates go to the New York State Banking Department’s Credit Card Survey at http://www.banking.state.ny.us/nyschome.htm.

If you have any questions, comments or concerns regarding this or any other state matter, I can be reached by mail at 200 North Second Street, Fulton, 13069, by e-mail at barclaw@assembly.state.ny.us, or by phone at (315) 598-5185.