By: Attorney Ray J. Bulaon
Are your growing debts starting to worry you and cause you sleepless nights? Are you trying hard to pay what you can every month but feel like you’re just running on a treadmill and not getting anywhere? Do you dread getting those credit card statements every month knowing that you don’t have the money to pay them?
According to a recent study, about one-third of households in this country are either just barely making it or are having trouble paying their debts each month. The Federal Reserve Board reports that consumer credit card debt is now about $1.1 trillion! In the last decade, credit card debt has increased 81 percent while the average family’s income grew only by 9%. This is scary.
If you are like the rest of the population and your debts are growing a lot faster than your income, how can you avoid debt from creeping up on you? The banks and the credit card companies know that when income is short, most people will resort to loans and credit cards to make up for the shortage in income. So now you know why consumer credit card debt is steadily increasing. Unless you get a handle on your finances and control your borrowing, before you know it, you would be buried in debt and it would be difficult for you to get out.
A lot of people owe so much in credit card debt that they will never pay off their debts in this lifetime. What’s sad is that because these people are just so used to being in debt, they have reached a point where they don’t even realize what their debts are actually costing them. So, like robots, they just continue to work long hours, sometimes 2-3 jobs just so they could continue to make the banks richer with the interest that they are paying on their debts. These people have zero savings and no money for unexpected emergencies. Any unexpected disruption of income can turn into a major catastrophe.
Financial planners tell us that we should try to keep our debt-to-income ratio below 36% (about 28% for housing and 8% for other recurring debt payments). To calculate your own ratio, divide your total monthly debt payments by your total monthly gross income. In your monthly debt payments, include your mortgage, car, loan and credit card payments. What do you get? What I usually find is that some people are way above this amount, sometimes as much as 70-80%!!!! And then they wonder why they never have enough money for food, utilities and other basic living expenses.
If your debts are out of control and you need help in figuring out what your options are, we can help you explore all your non-bankruptcy and bankruptcy alternatives. Bankruptcy is not always the solution to debt problems. If it is, we will explain to you how this may be your best option in getting a fresh financial start so you can start rebuilding your credit. If you have other options available, I will point them out to you as well if they are worth considering. Bankruptcy should be your last option, not the first.
NOTE: Due to COVID-19 pandemic, I am offering free consultations BY PHONE to anyone who needs help in dealing with their debt problems.
(None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 5,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call RJB Law Offices at TOLL FREE 1-866-477-7772).