Do You Know Your Credit Card Indebtedness?

Getting credit card indebtedness under control is not as impossible as it

may seem at first glance. After all, the mountain of outstanding debts and

the ever increasing phone calls from debt collectors – just as the dunning

letters from the creditors – may make it hard to believe that there is a

way out of debt that does not involve bankruptcy. Of course, before you

can get a good handle on your credit card balances, you need to know where

you stand.



Start off your fact finding mission by truly understanding the size of the

problem; tally your outstanding credit card balances and then jot down the

amount of money you actually earn each month. Next, make a list of the

actual expenses you face each and every month. These expenses should

include payments on secured loans as well as on unsecured loans. An

example of a secured loan is a mortgage or a car payment. A student loan

payment is an example of an unsecured loan, as are your credit card

payments.



Are you ready for some math? Take the sum of all of your debt payments and

divide it by the sum of your monthly earnings. The result is your debt to

income ratio, a figure that lenders utilize to determine if they will

issue you credit or decline your credit application. The target figure for

a good debt to income ratio is 35%. If you find that your number is more

in the 35% to 50% range, you are considered a questionable credit risk,

and you may have a hard time finding new credit. What is more, this number

should alert you that you are in danger of taking on more debt than you

can comfortably handle.



It is the 51% and over debt to income ratio range that is in danger of

facing bankruptcies and poor credit notations. Moreover, if you fall into

this category there is a good chance that in spite of your best efforts,

the debts are continuing to pile up rather than decreasing. You need to

take steps now to get out of debt and reduce your credit card

indebtedness. Effective immediately, stop using your credit cards and

allocate each spare penny to paying down the credit card debts you have

already accumulated.



In the past, bankruptcy looked like an attractive option to shed mountains

of credit card indebtedness, but with the change of the bankruptcy laws,

this option has ceased to be a good choice. Of course, in addition to the

stigma of declaring bankruptcy comes the credit profile notation that will

follow you around for about 10 years. A debt consolidation loan pays off

the outstanding credit cards, keeps your credit profile intact, and makes

the payments a bit easier to take – if you can get a loan.



Consumers who can no longer qualify for a debt consolidation loan may wish

to investigate debt settlement negotiators that work with the consumer and

the creditors to lower the overall outstanding indebtedness and at the

same time make the payments a lot lower and easier to handle. It makes the

payoff fast, but there is a slight bit of damage to the credit profile,

although it is not as severe as a bankruptcy notation.



In order to find out more about credit card debt settlement, you can visit our site www.debt-settlement411.com.

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