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Do You Have Way Too Much Credit Card Debt? Consider a Debt Settlement Solution

By DebtSettlements.com Staff

“Getting out of debt” is a catch phrase in the financial world today, because far too many people are so deeply into debt that they cannot see a way out. If you are like the average American, you likely have $10,000 or more in credit card debt. If you are inching closer to $20,000, you may find that making those monthly payments is becoming very difficult. After reaching this situation, you have to start considering different options. If you face the threat of bankruptcy due to high credit card balances, credit card debt settlement is one solution to evaluate.

How Much Debt Is Too Much?

In reality, any credit card debt is too much if you are regularly spending more than you make. However, sometimes using credit cards is necessary to take care of life’s expenses. To figure out if you have too much credit card debt, calculate your debt-to-income ratio. Do this by taking the amount you are paying in credit card debt each month and divide it by your monthly income. Multiply the decimal answer by 100 to get your debt-to-income ratio. If this percentage is higher than 10%, you have too much credit card debt, according to many financial experts.

While the experts claim that 10 percent is too much, for many families, having a debt-to-income ratio of over 10 percent is simply reality. It does not necessarily mean you need the services of a debt settlement company. It may simply mean that you need to be more responsible and start working toward paying down that debt load. When you have reached the point when you simply cannot make your payments, even minimum payments, then the time has come to consider a credit card debt settlement.

When Credit Card Debt Settlement Makes Sense

Credit card settlements offer those who cannot pay their credit card bills the chance to pay down credit card debt in a relatively short period of time at a fraction of the total amount owed. Creditors are willing to negotiate these kinds of deals when it appears that bankruptcy is the only real solution left for the consumer. The credit card company would prefer to get something from the consumer rather than lose it all in bankruptcy court, or at least face that possibility.

Because of the money lost in the process, most creditors are only willing to consider a settlement with those who are already significantly behind on their debts. Because of this, those who have too much debt but are managing to squeeze out those minimum payments month after month may not qualify for debt settlement. However, for those who just cannot make even the minimum payments any longer, debt settlement provides a real, workable solution to the problem. It allows the consumer to pay off the debt, free up their finances, and begin to rebuild their financial situation again.

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