How to Consolidate Debt with a High Debt-to-Income Ratio

Consolidating Debt and Loans with a High Debt-to-Income Ratio

Debt consolidation lenders won’t qualify you for a loan if too much of your monthly income is dedicated to debt payments. If you find your debt-to-income ratio in excess of 50 percent, you should consider consolidating without a loan.

Solutions for High Debt-to-Income Ratio Debt

InCharge Debt Solutions consolidates your credit card debt using a debt management plan – not a loan. Eligibility isn’t based on a credit score, but rather your ability to pay off the debt.

If you need help calculating your ratio, check out our article on how to calculate your debt-to-income ratio.

InCharge works specifically with clients, who may not qualify for other methods of debt relief. Others who did qualify, often find the rates they were approved for fall far short of expectations.

Anne, a high school teacher in debt, was in a similar situation at the age of 32. She was low-balled on debt consolidation rates due to a high debt-to-income ratio, but after signing up for InCharge’s debt management plan, Anne successfully paid off $17,900 in credit card debt.

Seesaw symbolizing high debt-to-income ratio

High Debt-to-Income Ratio not a Barrier to Nonprofit Consolidation

Anne got into debt when she started using credit in college to pay for books and expenses. She graduated with a small balance on two cards: $2400. As a new teacher, Anne signed up for 2 more credit cards at her favorite clothing stores to pay for a professional wardrobe, accumulating $2500 more in debt. Over the next few years, Anne experienced a number of financial set-backs. She opened another credit card to help pay for a major car repair ($1500) and another to cover expenses when her roommate moved out with no notice ($2500).

Two years ago, Anne was laid off. As a teacher, she thought she had job security, but her state had a budget crisis and teachers with little seniority were the first to go. She was unemployed for one year and then re-hired the following year. With few options, Anne lived off her credit cards while unemployed, adding an additional $9000 to her debt. At 32, she owes $17,900 on 9 different credit cards. In some 2-week spans, Anne has to make 5 credit card payments.

It feels like a big payment is always due. I try not to look at the finance charges. It’s just too depressing. I can barely keep up.”

Anne was interested in consolidating debts. “Just having one payment to worry about each month would be a godsend.” When she looked into a traditional debt consolidation program, Anne faced a number of problems. Because be she had a very high debt-to-income ratio, she did not qualify for the the best interest rates. There were also high fees associated with taking out a large loan.

Then Anne discovered InCharge’s nonprofit debt consolidation.

With InCharge’s debt consolidation alternative, Anne was able to consolidate all of her payments into one convenient monthly payment, without taking out a new loan. InCharge was also able to help Anne get lower interest rates on 7 of her 9 cards, meaning more of her payment each month would go to pay off the balance, than to interest. With the InCharge debt consolidation alternative, Anne will be debt free in 4 years and 2 months.

“Having lived with credit card debt my entire adult life, I cannot tell you what it means to me to be debt free in a few years. Every time I make my one consolidated payment, I know I’m one month closer to my financial freedom.”

About the author

Tom Jackson focuses on writing about debt solutions for consumers struggling to make ends meet. His background includes time as a columnist for newspapers in Washington D.C., Tampa and Sacramento, Calif., where he reported and commented on everything from city and state budgets to the marketing of local businesses and how the business of professional sports impacts a city. Along the way, he has racked up state and national awards for writing, editing and design. Tom’s blogging on the 2016 election won a pair of top honors from the Florida Press Club. A University of Florida alumnus, St. Louis Cardinals fan and eager-if-haphazard golfer, Tom splits time between Tampa and Cashiers, N.C., with his wife of 40 years, college-age son, and Spencer, a yappy Shetland sheepdog.