By Debt Consolidation US - Chosen by voters as Yahoo's "Best Answer", you might find this debt relief advice incredibly helpful for you as well. Here is the original question: "My husband and I have high credit ratings and are not behind on our bills. But are overwhelmed with the amount of debt we carry, credit card debt that is. Should we turn to debt settlement or continue making minimum payments for the following 5 years. At this point we are only able to make minimums. Great question! It will depend upon your situation, your objectives and what's most important for you.
Let us begin with your situation...
The fact that you have high credit scores and have not fallen behind implies you have something to lose (your ideal payment history) if you choose debt settlement.
Although debt settlement is able to adversely impact your payment history in case you have a history of late payments, it could also have a good effect on your debt-to-income ratio and utilization because of the accounts currently being paid to a zero balance on your own credit report. Right after completing debt settlement, you might be able to perform credit repair and credit rebuilding, usually within 6-12 months.
First, let's clarify how your credit will be impacted. The other 2 crucial areas of your credit are your debt-to-income ratio as well as utilization and both are significantly enhanced through debt settlement.
How Important Is Your Credit Score?
Keep in mind that according to debtcafe.com credit "score" is not everything... Credit "worthiness" (your ability to obtain a loan) is more crucial, particularly long term. A question to consider is this: Just what exactly do you need your credit for? Most keep their credit in good condition so they are able to enter deeper as well as deeper debt, only to pay increasing amounts of interest.
But Is Your Credit Really Even "Good" At this time?
Possessing a perfect payment history (about 35 % of your credit) and a great credit score is nice, but other factors could be crippling you. Let's have a look
Debt-to-income ratio (DTI) is the amount of cash that you are obliged paying every month towards your debts. Divide your net earnings by the payment due on every bill you have. Example:
Mortgage - USD 1450, Utilities - USD 300, Credit Cards - USD 600, Autos (payments and insurance) - USD 1200, Student Loans - USD 300. The sum is USD 3850. This particular individual has a DTI of roughly sixty four % in case his total income after taxes is USD 6,000, and he is in an extremely bad spot if he must borrow money. In contrast, his DTI is just 16 % if his monthly net income is USD 24,000. This is a fantastic place to be!
In case you are able to maintain your DTI ratio at or under a third (thirty three %) you will be in a fantastic spot with lenders. Over 45-50%is crippling on your credit, irrespective of credit score, since you just can't afford any more debt. What this means is you're not "credit worthy."
If your debt-to-income ratio is too high now, then you are essentially crippled, and worries about debt settlement impacting your credit simply do not make any sense since your excellent payment history has only gotten you in to a great deal of debt that lenders will no longer extend you much more credit. Many people find themselves in this very situation.
Being in debt is a situation we all don’t want to find ourselves in.
But when the going gets rough, you’re not left with many options.
Sometimes, you really need to borrow some money or even apply for a loan.
The next thing you’ll need to worry about after is to find debt help and pay off that amount.
To Stop Interest Payments and Wage Garnishments
Once your proposal has been accepted, the accumulation of interest will stop.
