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 so that you don’t need to
scream “Get
me out of debt” anymore... 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 immediate action. 50% or more: Get professional help from debt counselor to
aggressively reduce debt.
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.
For better insight in this topic please view:
http://www.debtconsolidationcare.com/debt-management.html
Source: http://www.ArticlePros.com/author.php?Janet Williams
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