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Debt Management
By: James Banks
Debt Management is the first step to remove debt and recover financial stability. Debt Management helps you eliminate interest charges. Consolidation of your debts including credit card debts and various bills, will let you get free of debt quickly, save money on late fees, end creditors persecution, maintain good credit rating and start repairing the damage done to your credit life.
Statistics show that near 58% of clients chose Debt Management plans as the best solution to their debts; another 42% had filled bankruptcy since they retired from a Debt Management plan.
Debt Management plans can set your monthly payments to be as low as possible, to reduce your interest charges, repayment periods and penalties. Declaring bankruptcy may seem like the only solution, but it is not the right one and will cost you more than you think. Many events in life, divorce, credit card spend, loss of a job, medical emergencies, among others, can harm your credit history. The Administrative Office of US released some statistics showing that 388.864 non-business filled for bankruptcy in the first quarter, 2004; including 274.196 chapter 7 and 114.454 chapter 13 fillings.
In order to protect oneself or your own company from bankruptcy, economist recommend to keep unsecured debt to annual income lower than 40% to 50%. For example, if someone has $5000 of annual income, this person should maintain annual debt in a maximum of $2500 to avoid bankruptcy.
36% or less, considered normal debt weight; 37% to 42%: not bad, but think of reorganizing your debt, before grows anymore; 43% to 49% you are in the edge to have financial difficulties, also control the use of your credit, never exceed more than 80% of your available credit.
People always prefer having a life free of debt with no savings, rather than pay off your debts with your savings, because savings have lower rate compared to interest accumulated debt, so it is always better to pay off debts rather than to go for the short term investment. A repayment of a single debt may save a lot of money in the future.
Statistics show that every year total consumer debt is increasing. 2000 and 2001 had a rising trend by 11.42% and a 8.04% respectively. Total consumer debt increased 4.45% and 4.52% in 2002 and 2003 respectly, but they show a decreasing rate in comparison with the previous year.
To find out more about this topic, please visit:
http://www.commercialdebtcounseling.com/avoidbankruptcy.shtml
http://www.commercialdebtcounseling.com/process.shtml
http://www.commercialdebtcounseling.com/businessbenefits.shtml
James Banks is a contributing Writer to http://www.commercialdebtcounseling.com, and is currently writing some special articles to orient business on how to manage debt and avoid bankruptcy
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