How You Know If You Have a Serious Debt Problem

Believe it or not, there are actually several people who don't realize what kind of debt they are in until it is too late. They just don't realize that they are not getting anywhere by only paying the minimum payment on their debt. Here are four signs to know that you are in debt and you need to consider credit consolidation loan options. If you meet any of these scenarios, you may consider getting a credit consolidation loan to put all of your debts into one account and pay it off.

The first clue is when you are making minimum credit card payments that exceed 15-20% of your paycheck minus your rent and necessary bills.

The second clue is that you have several revolving credit accounts that are delinquent. This means you were unable to pay them and they have defaulted and gone to debt collection agencies. If you are unable to pay your bills, it is a pretty good sign that you are in debt trouble.

The third clue is when your credit cards are maxed out, which by the way, lowers your credit score and makes it harder to get additional credit. It may also make it difficult to get a credit consolidation loan without any collateral such as a car or a house.

The fourth clue is when you have to take cash advances to pay your bills. Cash advances may be from the paycheck you will be getting or off of your credit cards. This is not reducing your debt because you are paying with credit to pay bills and making an even bigger credit card bill. This is not a smart strategy.

What can you do to get out of this financial bind? A credit consolidation loan is the most viable option for many people in debt. A credit consolidation loan can be sought at your local bank or credit union and typically has a lower interest rate and a longer repayment period. This allows the individual in debt to put all of their debts in one place and pay one payment and one interest rate. If you are a homeowner, you should investigate if you have enough equity in your home to take out a second mortgage or home equity line of credit, but remember you are borrowing on your home so you have to make your mortgage payment.