DRACUT, Mass. — American families were carrying $18.8 trillion in debt at the end of 2025, up $191 billion from the previous quarter, according to the Federal Reserve Bank of New York.
The bulk of that debt is in mortgages, but a significant percentage is also tied to credit cards. As household debt increased, calls from debt collectors skyrocketed 200% last year, according to the Federal Trade Commission.
“I was out of work for probably about a year,” Sam Fernandez told Boston 25 News from his home in Dracut.
It was in the aftermath of COVID that Fernandez found himself so deeply in debt that he didn’t know how to get out from underneath. Faced with sporadic, uncertain employment, he relied heavily on credit cards to pay for everyday expenses.
He soon found himself owing $55,000 after depleting his savings accounts.
“It was the first time where it just snowballed,” Fernandez said. “It got completely out of hand, and then I just ran out of funds.”
“Financial wellness is typically not something we discuss. It’s always been something of a taboo topic,” says Tara Alderete.
Alderete works with Money Management International, a nonprofit credit counseling service that helps people climb out of mountains of debt. While credit cards and Buy Now, Pay Later programs can help consumers temporarily bridge a financial gap, Alderete warns that failure to pay in full every month can trigger steep interest rates, adding hundreds of dollars to each bill.
It’s a lesson Sam Fernandez learned the hard way.
“Our monthly interest charge alone was $700-$800 a month,” Fernandez recalls.
Frustrated and realizing he needed to find a way out of debt, Fernandez contacted Money Management International. He says it turned out to be the right decision.
The organization worked with Fernandez and his credit card companies to negotiate a lower interest rate on his payments, slashing a nearly 20% interest rate to just 2%.
The extra $700 a month in interest suddenly dropped to around $70, freeing up the difference to begin making a sizeable dent in Fernandez’s actual debt.
He’s now on a steady, predictable payment plan that will see all of his debt paid off by 2030.
“It’s definitely a huge sense of relief because you kind of feel like there is a light at the end of the tunnel,” Fernandez says.
Tara Alderete says it’s important to have an honest conversation with your credit card company if you’re behind on payments and struggling to get ahead on your debt. She says they’re more interested in working with you to facilitate repayment of your debt than chasing you down to collect it.
“Any time you know you’re going to miss a payment or find yourself past due, it’s critical to reach out to your service provider or your creditors,” Alderete told Boston 25 News. “Ask for a reduced interest rate and ask for hardship assistance. Ask them what payment options they have to help you get back on track.”
You can also negotiate with a debt collector. The Consumer Financial Protection Bureau offers tips online. Among them, suggest a one-time payment to settle the debt outright for less than owed. You can also propose a steady repayment plan. Just make sure you’re not agreeing to pay more than you can afford.
While debt collectors have a right to call you, you have the right to set limits on when. They can attempt to reach you through your employer, but are not allowed to discuss your debt with anybody other than you. They also cannot threaten or harass you. You can file an online complaint against a threatening or harassing debt collector with the Consumer Financial Protection Bureau and the state Attorney General’s office.
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