Signs You Need a Debt Management Program

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Right up until coronavirus gave the American economy an acute case of double pneumonia, the U.S. economy was on a multi-year tear. Jobs and wages up, unemployment down, the stock market shattering records, sending retirement accounts soaring.

Another record accompanied all this good news, and it’s one that ought to give everyone pause: At the end of 2019, American household debt topped $14 trillion — with a T — for the first time.

Household debt surged by $601 billion in all of 2019, the lion’s share in mortgages. However, according to the Federal Reserve Bank of New York, credit card debt also soared to a record high, hitting $930 billion, rising $46 billion in the fourth quarter.

Should we worry? That depends. Pre-COVID-19, most of us were in better position to manage our debts than we were the last time credit balances spiked — in 2007, just before the Great Recession. But well before the Great Quarantine of 2020, delinquencies were on the rise (to 5.32% from 5.16% in 2019’s third quarter). Burrow in and you discover young borrowers (18-29) had a delinquency rate of 9.36%, 76% higher than overall delinquencies.

Statistics are just that. Debt trouble visits every age group, for any number of reasons. And there are traditional measuring sticks to help consumers decide if they’re in, or nearing, trouble.

One of the key indicators is your debt-to-income ratio: Add your monthly debt payments (credit cards, car and/or personal loans, mortgage or rent), then divide the total by your monthly gross income. Multiply by 100 and, voila, there’s your DTI percentage.

Traditionally, a DTI up to 28% is considered healthy. But if your DTI includes making no more than minimum payments against your credit card debt, you don’t need us to tell you there’s a problem.

Warning Signs You Have a Debt Problem

So, if a 28% DTI is not necessarily the platinum standard, how do you know you have a debt problem? It could be as simple as applying the venerable psychologist’s maxim: If you think you have a problem, you do.

Let’s dive in.


The foundation of every financial strategy is to calculate a budget. The success of that strategy depends on how well you stick with it. The fastest way to money misery is persistently having more going out than coming in.

Being able to calculate, then manage a budget are two essential keys to successful adulting. Programs and apps abound to help make the task manageable, but the bottom line is, the end of the month need to get here before the end of the money.

If it’s the other way around, you need to find ways to trim your spending or increase your income — or both, until your budget (with provisions for saving and building an emergency fund) balances.

If you can’t create a budget that balances and is realistic, you might have a debt problem.

Denied Credit

Lenders, including credit card companies, are in the business of getting paid back. Too much debt can scare off potential lenders who doubt your ability to pay them back, triggering credit denials. A low credit score — along with a credit report filled with late or missed payments — can also cause you to be denied credit.

If you’ve been turned down for new credit or higher balance limits on existing cards, you may have a debt problem.

Once in a great while straying over your balance limit happens to the best of us. Having one or more cards consistently maxed out or over the limit is a certain sign of debt management trouble.

Card companies attempt to get our attention by hitting us with over-the-limit fees, an early warning system that we need to control our spending appetites. Suffering over-the-limit charges frequently, especially on more than one card, is a sign you may have a debt problem.

3 Warning Signs of Too Much Debt

Here are some warning signs of too much debt, and what you can do to relieve your debt – by Money Minute

Using Credit Card Cash Advances

If you routinely tap credit card cash advances — especially if you’re using the money to pay bills — it’s pretty much guaranteed you have a debt problem.

A cash advance is the worst sort of loan. The interest rate on any unpaid balance will be in the stratosphere, and it’ll likely come with an upfront fee — about $50 on a $1,000 advance.

We’ll forgive you for using a cash advance for an absolute, out-of-the-blue one-time emergency … although we wish you’d been building an emergency account for just such calamities. But if cash advances are how you bridge the gap to payday, you’re digging your debt hole deeper by the transaction.

You need a way to put down the shovel.


It’s no secret a substantial majority of Americans live on the financial brink. According to the Federal Reserve’s 2018 Survey of Household Economics and Decision Making, 40% of American households budgets would be wrecked by an unexpected expense of $400.

This 40% is a busted water heater, a leaky roof, or a blown car radiator away from disaster. They don’t have savings in an emergency fund. Why? Debt, says a report from the Center for Retirement Research at Boston College. For the 40%, every dime is obligated even before they’ve earned it.

This is the definition of having a debt problem.

Making Only Minimum Payments

Making only minimum payments on credit card balances is not necessarily a sign of a debt problem. Misplaced priorities, yes. Sure, low payments are great, but they’re designed to extract maximum interest rate mileage from debtors.

On the other hand, making minimum payments out of necessity — maybe the minimum payments are large, and that’s all you can scrape together — is a key symptom of debt trouble.

To get a handle on where you are, try this test (similar to figuring your DTI ratio):

  • Calculate 20% of your take-home income for the month.
  • Review your credit card statements; total up the minimum payments.
  • Compare that sum to 20% of your take-home income. If it’s higher, you could have a problem, one that puts you at risk of being unable to afford your housing, groceries, transportation, and other necessities.

You need a strategy (more income, tighter budgeting, debt consolidation) for hacking those balances down.

Balance Transfers

Transferring debt to a low- or zero-interest card can be smart, if it’s accompanied by a rock-solid plan to pay off the balance during the introductory period.

Making a credit card balance transfer simply to provide breathing room so you can go on spending as you were, running up even more balances you’ll look to shift is a sure sign of debt trouble.


If you don’t open bills — you let them pile up on the counter or you don’t open the email — because you don’t want to know what’s in them …

If you don’t know how much you owe each creditor, nor do you know how much you owe in total …

If you don’t know the total amount of the monthly minimum payments …

You’re avoiding your financial condition. You may have a debt problem.

Lying About Money

Do you find yourself hiding the truth of your financial situation to your family or friends? Do you avoid discussing your spending habits? Do you lose sleep over amounts of money owed?

Do you make up excuses not to join the gang at work for lunch a couple of days before payday? Do you worry what people would think if they knew your finances were a mess?

If any or all of this rings familiar, you might have a debt problem.

Are There Other Signs?

Do you bounce more than the occasional check (or do you rely frequently on overdraft protection)? Do you regularly make late, or partial, payments? Are you carrying more than one payday loan? Are debt collectors hounding you?

These, too, are signs you might have a debt problem.

What Should You Do If You Have a Debt Problem?

Debt worries may have you down, but that doesn’t mean you’re out. Recognizing your plight with honesty and resolve is a promising first step toward a cheerfully solvent future.

The time to act is immediately — yesterday, if possible. The sooner you begin to make positive changes in your debt situation, the sooner you will have it conquered.

Know this from the outset: You can go it alone, and maybe achieve success. Maybe you can contact your creditors and work out more favorable terms. Perhaps you can at last create and stick to a rigid budget.

It’s possible you could shrink your debt by working a side gig at the same time you pare unnecessary spending. Or maybe your situation isn’t so far gone that you could consolidate your debt.

Perhaps you are the sort with the strength of personality to singlehandedly reverse ruinous financial habits years in the making. We’ve heard of people quitting smoking cold turkey on their own, too. But they’re rare.

However, just as there are counselors for going smoke-free and programs for revving up your exercise regimen, there are those who are trained in the art of vanquishing household debt.

Which options are the most viable?

Debt Consolidation

If your credit is still relatively healthy, you may be able to score a debt consolidation loan large enough to pay off all your outstanding debt, one that would have an interest rate that’s a mere fraction of typical credit card interest rates.

Check with your bank or credit union, or investigate one of the online peer-to-peer (P2P) lenders, such as SoFi, Upstart, Funding Circle, Perform, or Lending Club.

If there’s plenty of equity in your house, you might consider a cash-out refinancing to pay off your high-interest debt.

Debt Management Plan

A debt management plan works much like a consolidation loan — your problem debt is reduced to a single monthly payment — except that you also get a counselor to help you emerge 36 to 60 months later not only in the black, but also with a sturdy foundation about how to stay that way.

Not only do professionals at a nonprofit credit counseling agency help clients change how they think about money, they work with creditors who may offer lower interest rates and waive late fees.

The upshot: Clients enrolled in a debt management program see their debts dwindle faster than they probably could have done it on their own, and their single payment often is lower than the total of their minimum payments.


Consumers overwhelmed by debt have, enshrined by the U.S. Constitution, the right to a fresh start via bankruptcy. Two programs are available for most individuals: Chapter 7, also known as “straight” bankruptcy; and Chapter 13, or reorganization.

Bankruptcy in either form is a radical, last-ditch choice. It wrecks credit scores and, because it stays on your report for 7-10 years, makes credit difficult to come by.

How Do I Choose?

If you exhibit some or several of the symptoms mentioned above, you may, as previously noted, try to work it out on your own.

Or you can get started by consulting with the credit counselors at InCharge. They’ve heard stories of fiscal misfortune or mismanagement far more harrowing than yours, so you needn’t worry about embarrassment.

InCharge counselors are skilled in recognizing you for the individual you are and the personal stake you have in setting things right. They also have the expertise to guide you to the debt-relief solution that is best for your situation.

About The Author

Tom Jackson

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.


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