When is it time to Seek Debt Advice
Judgments and actions are extremely tricky. You are in an adverse financial situation probably because you made some bad judgments or actions. You may have spent far too much on credit cards, may not have planned for and saved for a financial emergency such as medical expenses and/or you have done something to reduce your income. With 20/20 hindsight, you probably would have done things differently but that cannot, in reality now, change your situation.
You are now trying to use good judgment and actions, but what is that? You may be in a very adverse situation because you are seeking debt advice too late. On the other hand, if you seek debt advice too soon then you may be in just a temporary phase, may be worrying unnecessarily, and may be making a mountain out of a molehill.
So, when is a good time to seek tax advice? We have found that an almost universal guideline called debt-to-income ratio works extremely well. You ought to include all of your debts, both formal and informal.
For example, if your brother has lent you some money and if he requests monthly payments, then you ought to include that in determining the ratio, even though it does not appear on any credit report. You also ought to include all of your verified and stable income. If you own a home and are renting it then you can include that rental income if you have a lease or rental agreement. If you do not have such an agreement then you should not include it because no one else (such as a bank) would consider it in extending you a loan although other companies may.
If you have income from a second job then you can include that, but if the job will end in a few weeks or a couple of months then you ought not to depend upon that.
Once you have added all of your debts and all of your valid sources of income then the debts ought not to be more than 40% of your income. For example, if you earn £4,000 per month then you ought not to have more than £800 in monthly debts (which must include your mortgage or rent). If you have less than 40% then you can probably breathe easily. If you have more than 40% then it may be time to seek advice on changing your financial situation.
Of course, as with all guidelines, there are many variables. If you are in a high tax bracket, or have a low income, then you have little discretionary spending and that can adversely affect your financial situation.
Regardless of when you seek debt advice, you also need to determine where. There are entities that serve to be debt management company. However, we have found that such companies are rarely an effective or viable to solve a person’s financial difficulties.
Speak then, to a representative at DEBT ADVISORY SCOTLAND. We offer the advice you need when and where you want and need it. If you are in England then debt solutions will vary so you may want to seek advice from www.ivapros.co.uk.