Debt Help is the stepping stone
to debt elimination and financial recovery. Debt help analysis guides you to
save thousands of dollars in interest charges. Consolidation of your credit
card debts and other unsecured bills will allow you to get out of debt as
quickly as possible, save money on interest and late fees, stop creditor
harassment, save your good credit rating or begin immediately to repair bad
credit or negatives on your credit report.
In a recent survey it was reported that almost 58% clients vouched for Debt
Management Plan as the best way to settle their debts. Another 42% client
had filed bankruptcy since dropping off a Debt Management Plan or DMP.
Debt Management plans can reduce your monthly payments, interest charges,
penalties and some times even the repayment period. Even if bankruptcy seems
like your only solution, it may not be the right debt help solution and may
cost you for many years to come. The loss of a job, divorce, credit card
spending and family medical emergencies among other life style matters can
cause negative money issues. Statistics released by the administrative
office of U.S. Courts show that a total of 388,864 new non-business
bankruptcy filing in the United States during the quarter, ended on
September 30, 2004. This included 274,196 chapter 7 filings and 114,454
chapter 13 filings.
Most economists consider a ratio of unsecured debt to annual income of
40-50% percent or more, as being a strong indicator to bankruptcy. This is
taken as a ‘˜thumb rule’ in most of the cases. So in order to protect
himself from such crisis one should keep his unsecured debt to annual income
ratio lower than 40 to 50%. For example if someone has an annual income of
$5000, he should keep his annual debt minimum $2000 to $2500 in order to
avoid his bankruptcy.
36% or less: This is a healthy debt load to carry for most people.
37%-42%: Not bad, but starts to restructure your debt now before you get
into real trouble.
43%-49%: Financial difficulties are likely to occur unless you take
50% or more: Get professional help from debt counselor to aggressively
You should also control from having a large amount of unpaid outstanding
credit or using more than 80% of your available credit (which causes a high
debt to income ratio).
It is better to have a debt free life without having a savings rather than
maintaining debts along with savings. The reason is simple. As the return on
short term investment i.e. savings is lower than the interest payable on
accumulated debt, it is always advisable to pay the debt first rather than
go for the short term investment. Because a repayment of single debt
instantaneously may save a lot of money in future. In other word, One dollar
payment is better than one dollar saving.
From the Consumer Debt so published by Federal Reserve Statistical Release,
it is found that each and every year total consumer debt (both revolving and
non-revolving) has an increasing trend. In 2000 and 2001, total consumer
debt has a rising trend by 11.42% and 8.04% with respect to the year 1999.
However, in 2002 and 2003, total consumer debt increased to 4.45% and 4.52%
respectively, at a decreasing rate with respect to just previous year’s
total consumer debt. As there is no specific trend in total consumer debt we
may conclude that in 2005 also, the total consumer debt will have an
increasing trend of 4.49% which signifies that at the end of 2005 total
consumer debt will reach about $2109.85 Billion.
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About the Author: Janet
Williams is a contributing Writer to
And is currently working on a special section in the site called do it
yourself where you can eliminate your debts and become debt free...