When President Barack Obama speaks in Albuquerque on May 14, he's expected to talk about the credit card reform measure he wants Congress to pass this month.

"Americans know that they have a responsibility to live within their means and pay what they owe," Obama said in a May 9 address. "But they also have a right to not get ripped off by the sudden rate hikes, unfair penalties and hidden fees that have become all-too common in our credit card industry."

But for many people, any changes to the law will come too late. And it will be difficult to undo the damage Congress did in 2005 with a law that made it harder to declare bankruptcy. New Mexico's entire congressional delegation—except for US Rep. Tom Udall, now a senator—voted for that law, which banks supported.

That same year, 12,400 New Mexicans filed for bankruptcy. After the revised bankruptcy law, filings dropped to 2,500 but have been rising steadily since, to more than 4,500 last year.

The law meant that people who would have been able to discharge their debts and start over remained instead under their creditors' collective thumb.

This fed the market for credit consolidation, debt management and so-called "settlement" outfits—which rarely deliver on their heavily advertised promises.

"Many of them are scams, even the ones that aren't outright scams. A lot of times they'll take your monthly payment and won't pay your bill on time, so your credit ends up getting screwed. A lot take your money and never do anything with it," Andrea Slatopolsky, a financial trainer with the local nonprofit Homewise, says.

Homewise (505-983-9473) offers regular financial fitness courses, which teach people how to manage and consolidate their own debts, though "it takes a lot of discipline," Slatopolsky says.

Homewise also refers people to one of the few above-board credit counselors: Consumer Credit Counseling Service or CCCS Southwest. Confusingly, it's also known as Money Management International (228-C St. Francis Drive, 505-984-8707). Most people come to MMI through referral. "We don't do a lot of advertising," Anne Maez, who works in the local office, says.

It's easy for people to wind up in trouble. "They lose a job and it's trying to pay grocery and utility bills with credit cards," Maez says.

SFR spoke to one woman who did the MMI program in Albuquerque, who says it helped cut her credit card interest rates. "I would've been able to pay them off in three years—if I had been able to make the payments," she says.

Even the reduced payments ran up to $1,100 a month, making debt by far her biggest expense. She had little choice but to declare bankruptcy. "There's still a stigma attached to it, even though lots of people are doing it," she says. "The thing I feared most in life, other than dying, was having to go into bankruptcy."

For all the fear it inspires, bankruptcy is a good option for many people. There's also haggling. In some ways, this is a good time to be a debtor. There are so many of them that they have leverage over the banks.

Clayton Hargrove, one of the few licensed collections agents based in Santa Fe, has played on the debtors' side for friends who were "hip-deep in credit card debt." After they signed a release, he negotiated with creditors on their behalf.

"I'd tell 'em flat out, 'You can take 25 cents on the dollar or you can have a bankruptcy notice,'" Hargrove says. "Twenty-five cents on the dollar is better than zero."

Hargrove suggests debtors try this hard-ball negotiation tactic with their own credit card companies.

"You'd be surprised. People you don't think would go for it will go for it like a ton of bricks," Hargrove says. "I've negotiated with Chase, Visa, MasterCard—the only people that would not discount are American Express."

Hargrove doesn't work for credit card companies. And when it comes to their practices, the bill collector sounds angrier than Obama.

"A lot of times what they do, it's not necessarily, according to the law, criminal," Hargrove says. "But people make payments every single month, they're not late, they always pay above the minimum, and all of a sudden you jack their interest rate up to 20 percent? That sounds like usury."