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ABA Family Legal Guide

Consumer Credit

Debt, Debt Collection, and Credit Repair

How Much Debt Can You Handle?

Are there danger signs that I am heading for debt troubles?

Aside from the percentage of payments to take-home pay or gross income, there are some very reliable danger signs:

  • You are making only minimum monthly payments on your credit card accounts.
  • You have to use credit for expenditures that you once paid cash for.
  • You have used a series of consolidation loans, home equity loans, or other types of loans to pay overdue bills.
  • You are borrowing from one lender to pay another. For example, you take a cash advance on your bank card to pay amounts owed to other banks or retailers.
  • You begin to run a few days late on critical payments, such as your rent or mortgage payment, or you are consistently late with all your bill payments so that late fees are piling up.
  • You dip into savings for normal living expenses.
    • American Bar Association Family Legal Guide
    Copyright © 2004 American Bar Association
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