Nationally‚ credit card debt in the U.S. is down a fair amount from its peak back in 2009-2010.
Granted‚ we still have collectively about $800 billion‚ spread over about 1 billion credit card accounts. If that were divided evenly‚ it might not be so bad – about $800 per account. The reality‚ however‚ is that it varies immensely from person-to-person. Not to mention‚ while a $30‚000 debt load might be no big deal for some borrowers‚ for others‚ it would be the equivalent of a financial drowning.
That’s why our Los Angeles bankruptcy lawyers can’t offer a one-size-fits-all amount of debt that should red flag borrowers into seeking third-party help to resolve that debt.
However‚ in the many years in which we’ve been doing this‚ we have come to learn that there are often glaring warning signs that can alert consumers to real trouble. A combination of these signs in particular should have you on the phone with a bankruptcy lawyer to help determine your options.
The best option may or may not be bankruptcy. Nader‚ Naraghi & Woodcock‚ APLC offers credit counseling and help with bankruptcy alternatives. Going with a lawyer rather than an as-advertised-on-television service can save you from being victimized by a debt settlement scam – of which there are many.
But how do you know that it’s time to seek help in the first place? Consider whether you have been affected by any of the following:
- Your credit limits have been either lowered or maxed out. Credit limits are lowered when you have exceeded your optimum credit utilization ratio. This affects your overall credit score and is grounds for banks to lower your spending limits. This drives your credit score down even further and can send you into a rapid downward spiral. At this point‚ you may max out your cards‚ which will leave you no longer able to use them to help manage your other monthly payments. So you end up with these huge monthly payments and no real way to pay them off.
- Your interest rates are at or near 20 percent – and you aren’t even in default. Most credit cards carry an annual percentage rate of around 12 percent. It’s not unheard of that APRs will be sometimes as high as 20 percent for purchases – even if you aren’t in default – or as high as 25 percent if you’re taking out a cash advance. If you rack up even a moderate amount of debt at this rate‚ it could take you years of hefty payments to pay it off. If you’re paying the minimum‚ it will never happen. If default interest rates have already kicked in – sometimes as high as 29 percent – you have essentially been pushed over a financial cliff.
- The amount you are paying in credit cards is over 15 percent of your gross income. This is true whether you’re in default. If you aren’t below this level‚ get yourself there if you can. If you are unable to do this‚ you may have a bigger debt problem‚ which will become especially apparent if you have an unexpected financial emergency – i.e.‚ an emergency room bill‚ a car repair‚ etc.
- You aren’t putting money into your retirement accounts. If you can’t afford to do this because all that income is instead going toward your credit card balance‚ you need to consider getting help. It’s not sustainable‚ and you will end up working well into your 80s.
- You find yourself incessantly stressed about debt. To some extent‚ you have to learn to trust your gut. Some people cope better than others when it comes to stress. But if you are having trouble sleeping or having anxiety attacks‚ the time has come to get the situation under control. Otherwise‚ you’re putting your health in jeopardy – which is one more thing you really can’t afford to lose.
Call us today to learn more about how we can help.
If you are contemplating bankruptcy in Los Angeles‚ contact Cal West Law to schedule your free consultation. Call (818) 446-1334.