How much debt is considered too much debt? It really depends on a few factors such as how much money you make and how much total debt you have.
(prHWY.com) November 28, 2011 - Charlotte, NC -- If you are finding yourself in a lot of credit card debt and don't know how to get rid of it, you might qualify for debt relief services. Lowering your credit card debt can make it easier for you to get loans in the future and it will raise you credit score. Don't be afraid to ask for help as it could be the very thing you need in order to get out from under your credit card mountain.
Debt Management Or Debt Settlement
How much debt is considered too much debt? It really depends on a few factors such as how much money you make and how much total debt you have. A person who makes 100,000 dollars will have an easier time paying off a 5,000 dollar credit limit as opposed to someone who makes only 20,000 dollars a year.
If you don't make a lot of money, a lower amount of debt can still be hard to overcome. When you don't make a lot of money, or have a lot of other debts, it can be really hard to pay your bills. However, it still might not be enough to qualify for a traditional debt settlement with your creditors.
The amount of debt that you have also plays a factor into whether or not your should seek
debt management plan as opposed to debt relief. If you have less than 5,000 dollars in debt, you might not even get a second look from a debt relief agency. This route is usually reserved for those who are in more serious debt. However, that doesn't always help you, or make your situation seem any easier to overcome.
What Is A Debt Management Plan
A DMP is when you don't need a debt settlement, but you cannot afford to pay off your bills simply by budgeting better. A DMP is when a debt relief company will work with your creditors to reduce the amount of interest that you owe and will waive the late fees. You still owe the debt, but you have less of it to pay off.
This can help the borrower who just needs a little bit of help to get back on track. Paying late fees and higher interest rates can add up to hundreds of dollars more a year as opposed to someone who can pay off the debt without assistance.
Who Should Get A DMP
If you have a stable income, it is usually better to go with the DMP as opposed to a debt settlement. The affect on your credit is usually less and you don't have to pay in a lump sum. You can continue to pay in monthly installments, but you don't have to pay as much interest or late fees.
For those who can still not keep up with debt payments even with a lower interest rate, it might be worth looking into a debt settlement. Overall, it is much better to keep paying your bills off each month as your creditors will be easier to work with if you are willing to pay your entire balance.
It is never easy to be in debt. However, knowing your options can help you get out of debt and help you get back on track. Sometimes we just need a little bit of help when it comes to paying off our bills. Knocking a bit off that interest rate, or waiving all those late fees can significantly reduce the amount owed. Combined with good budgeting skills, it can go a long way toward paying down your debts without having to resort to a settlement, or even bankruptcy.
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