Latest news with #debt management
CBS News
11 hours ago
- Business
- CBS News
Want to enroll in debt management? You'll need to meet these 3 requirements first.
Americans are carrying record levels of credit card debt right now, with the average cardholder owing about $8,000 in total. While carrying this type of debt is never ideal, especially at today's elevated rates, the recent uptick in credit card debt makes quite a bit of sense. Sticky inflation has caused the prices of essentials to skyrocket, and because budgets aren't stretching nearly as far as they should, it has become common for cash-strapped Americans to rely on their credit cards to get by. And, as the credit card debt issues compound, more people are searching for solutions to getting rid of what they owe, ideally without wrecking their credit. There are a few ways to do that, but debt management, in particular, may be worth considering. Unlike other types of debt relief, debt management doesn't require you to borrow more money or default on what you owe. Rather, the goal is to help you pay off your debt by streamlining the payment process and working with your creditors to lower your interest rates and fees. But while debt management programs have helped millions of Americans get rid of their debt, they aren't the universal solution that some assume them to be. These programs are designed for people in particular financial circumstances, and that means there are qualification requirements that determine whether you're a good fit. What exactly are the eligibility rules, though? Find out what debt relief strategies are available to you today. While program requirements can vary, in general, you'll need to meet the following to take advantage of what debt management can offer: The foundation of any successful debt management plan is your ability to make consistent monthly payments. The credit counseling agency you work with on this type of plan will need to see that you have a reliable income source that can cover both your essential living expenses and your proposed debt management payment. During the initial consultation, the credit counselor will review your income from all sources, whether that's employment, Social Security, disability benefits or other regular payments. They're not just looking at the total amount, though. They want to see stability and predictability. For example, someone with a steady $3,000 monthly income might be a better candidate than someone earning $4,000 but with highly variable or seasonal work. The credit counselor will also calculate your debt-to-income ratio and determine whether you'll have enough left over after essential expenses to make meaningful progress on your debts. If your proposed payment would be so small that it would take decades to pay off your balances, they might recommend exploring other debt relief options instead. Explore your options for getting rid of your high-rate debt now. Debt management plans are specifically designed for unsecured debts like credit cards, personal loans and medical bills. You generally can't include secured debts like mortgages, car loans or student loans. Many agencies also have both minimum and maximum debt limits for enrollment. The minimum threshold varies from one program to the next, but it ensures that debt management makes financial sense for both you and the agency. For very small debt amounts, the monthly fees might outweigh the benefits. On the other hand, if you owe more than $50,000 to $100,000 in unsecured debt (limits vary by agency), you might need to explore alternatives like debt forgiveness or bankruptcy. The outcomes also tend to be better for clients who have multiple creditors. The goal is to roll multiple monthly debt obligations into one payment while lowering your fees and interest charges, so if you only owe money on one credit card, you might get the same results without the monthly fees by working with the card issuer directly instead. Perhaps the most challenging requirement is the commitment aspect. Enrolling in debt management isn't just about making the required monthly payments. It requires you to make fundamental changes to your financial habits and lifestyle, too. For example, most programs require you to close the credit accounts included in your plan, which means that you can't continue to use those cards while you're paying them off. Many agencies also ask you to avoid taking on any new debt during the program, at least without their approval. This can feel restrictive, especially if you're used to relying on credit for emergencies or unexpected expenses. You'll also need to commit to the financial counseling and education components. Most reputable agencies require participants to complete budgeting workshops or check in regularly with counselors to track their progress and address any challenges that arise. Debt management can be a powerful tool for the right person, but if you don't meet the criteria, don't lose hope. Consider working on building a stable income, paying down some debt independently or exploring other debt relief options. The most important thing isn't qualifying for debt management. It's finding a solution that matches your specific financial situation that sets you up for long-term success.
Bloomberg
4 days ago
- Business
- Bloomberg
Debt Demands Rise in Canada as Carney Prepares More Spending
The supply of Canada's government debt is set to hit a record this fiscal year as Prime Minister Mark Carney pledges to use the federal balance sheet to make investments in the economy. Gross issuance — the amount of government of Canada bonds and treasury bills put to market — is expected to rise to C$612 billion this fiscal year, according to an updated debt management strategy released by the Department of Finance on Wednesday.
CBS News
5 days ago
- Business
- CBS News
Can you consolidate debt while on Social Security?
It's no secret that living on a fixed income can make managing your debt feel like an uphill climb. For retirees or those receiving Social Security, even small monthly payments can strain already tight budgets. And when you add in sticky inflation, which is driving up costs for everything from groceries to healthcare, it's easy to see how credit card balances and other debts can quickly spiral out of control. If you're in this situation, you may be wondering if debt consolidation is a way to get some breathing room. After all, rolling multiple debts into one loan with one monthly payment sounds appealing, especially if it comes with a lower interest rate. But when Social Security is your primary or only income, the options for debt consolidation may look different than they would for someone still working full time. So, can you consolidate debt while on Social Security? And if so, is it the best route to take, or are there other strategies that might work better? Here's what you need to know before making your next move. Find out how you can start tackling your high-rate debt today. Yes, it's possible to consolidate your debt even if your income comes solely from Social Security. But there are some important nuances to understand, and qualifying for a traditional debt consolidation loan may be challenging in some cases. Your Social Security benefits count as income when applying for a debt consolidation loan or other financial products, so lenders will typically consider them as part of your application. However, because many retirees are on fixed or limited budgets, qualifying for a large enough loan, or one with favorable terms, can sometimes be difficult. Paying a much higher rate for a debt consolidation loan negates a lot of the benefits that come with this strategy, so it may not be worth consolidating if the rate is just a point or two lower than your credit cards. Lenders may also look closely at your debt-to-income ratio to ensure you can afford the consolidated payment. A higher debt-to-income ratio can make approval harder, even if you've been diligently making the minimum payments on your current debts. So, if your Social Security benefits are modest and your debt levels are high, it could be tough to qualify. That said, if your credit is strong and you own a home, a home equity loan or home equity line of credit (HELOC) might be a viable way to consolidate your debt. These borrowing options allow you to use the equity in your home to consolidate higher-rate debts like credit cards into one lower-rate monthly payment. But this approach comes with tradeoffs, and if you fall behind on payments, you could risk losing your home. For those without significant assets or excellent credit, credit counseling can offer an alternative in the form of a debt management plan. With a debt management plan, the credit counseling agency works directly with your creditors to lower interest rates and eliminate certain fees, making your debt more affordable and manageable. And, you send one monthly payment to the credit counseling agency, which essentially "consolidates" all of your debt into one obligation. Unlike a debt consolidation loan, though, there's no requirement that you'll need to meet based on your income or credit score. Explore your debt relief options and find the right fit now. If debt consolidation isn't feasible, don't lose hope. There are other ways to tackle debt while living on Social Security, including: Consolidating debt while on Social Security is possible, but it's not always a straightforward process. Whether it's through a debt consolidation loan, home equity or a debt management plan, the right approach ultimately depends on your income, credit and overall financial picture. If debt consolidation isn't an option, the good news is that there are still paths to relief, including debt settlement, hardship programs, and, in some cases, bankruptcy. Talking to a credit counselor or debt relief expert can help you weigh your choices and find the safest, most effective way to manage your debt on a fixed income.
