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subject: Help Getting Out Of Debt – The Best Consumer Debt Relief Options [print this page]

Help Getting Out Of Debt The Best Consumer Debt Relief Options

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.

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