Have Your Debt Problems Reached Crisis Levels?
Before you set your financial goals for the new year, it is time for some debt triage. Paying your debt down to zero by 2024 is an appropriate New Year’s resolution for someone who is new to debt, but you have been trying to pay down your debts since 1993, and they only keep getting bigger, so it would be naïve to think that you can make them all disappear within one year. Now that a large percentage of Americans with household incomes in excess of $100,000 live paycheck to paycheck, it is a more realistic goal to get through 2023 without your total amount of debt getting bigger. Are you setting yourself up for disappointment if you make another attempt at the debt snowball this year. Is it time for a more wide-reaching strategy, such as debt consolidation, filing for bankruptcy protection, or negotiating with creditors to settle your debt for a lower amount than you originally owed? A Miami debt lawyer can help you set realistic goals for reducing your debt in the coming year.
When Housing Costs Make It Impossible to Pay Down Your Debt
According to Leslie Tayne, a debt settlement lawyer from New York State, the sharp rise in housing costs is contributing to Americans’ inability to repay their debts. She identifies 50 percent of the renter’s or homeowner’s income as the tipping point at which housing becomes unaffordable. When half of your income goes to rent or your mortgage payment, it is difficult to have enough money left to keep up with the minimum payments on your credit cards, buy now pay later (BNPL) purchases, and installment payments on medical bills. If you are spending 50 percent of your income on a mortgage loan, you are in a better position to pay down your debts than if half of your income is going to rent. When you own your home, you can negotiate with the lender to extend the term of your loan and lower your monthly payments, and you might be able to have roommates move in and pay rent to you.
Credit Card Balance Transfers: A Canary in a Coal Mine
Another sign that your debt problems are out of control is if you have too many credit cards; Tayne says that anything above ten is too many. It is a sign of trouble if you keep opening new credit card accounts in order to transfer your balances, but then the balances on both the old card and the new card keep getting higher. It is an even bigger sign of trouble if you apply for balance transfers, but the credit card companies deny your applications.
End the Year With a Realistic View of Your Debt
A South Florida debt lawyer can help you if your debt problems are so severe that credit cards will not lend you any more money, and after paying for rent and other necessities, you have almost nothing left to make payments on debts. Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.