• Lower your monthly payments
  • Reduce stress and live your life
  • Avoid personal bankruptcy court

You Might Need A Credit Counselor If …

Payment overdueI read an article the other day that I thought would be helpful to people being pummeled by debt. The article appeared on Bankrate.com. One of the points it made was that if you haven’t had much success coping with debt on your own, you shouldn’t necessarily feel bad about it. Some people are able to shed weight on their own through dieting or by working out regularly but others need the help of a health club or a fitness trainer. So, how can you know whether or not you need the help of a credit counselor? Here are some questions that could help you figure this out.

If your credit card balances are going up while your income is going down

This can be a sure sign that you need some credit counseling help. It’s tough enough to get out of debt if you can keep both it and your income stable. But if you have the two going in opposite directions, you may have a very hard time dealing with that debt on your own.

If you’re paying only your required monthly minimums

Credit card companies just love it when you pay only the required minimum monthly payments on your accounts. The reason for this is because it can keep you in debt practically forever. I saw one example recently of where it would take 28 years to pay off a $10,000 credit card debt if the cardholder made only the minimum monthly payments.

If you’re juggling bills

An example of juggling bills is if you were to get a new credit card and then take a cash advance against it to pay off an existing card. This can start a vicious cycle where your debt ultimately spins completely out of control. The only exception to this is that if you were to do a balance transfer. Transferring the balances on credit cards that have high interest rates to one with a lower rate can make sense – assuming you don’t immediately take a cash advance on the new card.

You’re close to the limit on all your cards

This is not only financially dangerous but can have a nasty effect on your credit score. This is because 30% of your score is based on “credit utilization.” In turn, this is based on the ratio of your debt to the total amount of credit you have available. Supposing that you had $15,000 in credit card debt and a total of $20,000 in available credit (the total of your credit limits). In this case your debt to credit ratio would be 75%, which is way too high and would have a very negative impact on your credit score.

If you’re working overtime to keep up with your payments

The fact that you’ve taken on extra shifts at your work or a second job speaks well of how seriously you take your financial responsibilities. However, this can lead to a lot of physical and emotional stress and can even have a bad impact on your family.

If you don’t know how much you really owe

Sticking your head in the sand and refusing to figure out how much you really owe will only get you deeper and deeper in trouble. You might want to ignore those debts but your lenders won’t. If you ignore them long enough, you could be sued and have liens put on your property.

Do you see a pattern?

It’s not critical if you saw yourself in several of these instances. What would be critical is if you could see a trend. As an example of this, making the minimum payments on your credit cards occasionally might not be a cause for concern. But if you’re making only the minimum payments and are close to the spending limits on your credit cards, you might be a candidate for credit counseling. This would be especially true if you also don’t know how much you really owe.

For more information on this subject, you can read the entire article on Bankrate.com by clicking here.