The 7 Signs You Need Debt Help

Sarah Edwards | October 19, 2022

Legal Expert
Sarah Edwards, BS

Sarah Edwards is a professional researcher and writer specializing in legal content. An Emerson College alumna, she holds a Bachelor of Science in Communication from the prestigious Boston institution.

Edited by Hannah Locklear

Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

It's okay to need help managing debt

Summary: It's normal to struggle with debt, but at what point should you seek professional help to manage your debt? Here isSoloSuit's guide to 7 signs that suggest you might need debt help.

It's no big deal. At least, that's what you've been telling yourself as the monthly bills roll in. But soon, you find yourself lying awake wondering about your financial future. If it's any consolation, you're not alone. CNBC reports that the average U.S. household is $155,622 in debt, which includes mortgages, student loans, and credit card debt.

So far, you've been trying to manage your finances on your own. After all, who likes to talk about their money problems? But over time, your debt can snowball and become even harder to crawl out from underneath. Here are 7 signs that it might be time to consider professional debt help.

1. You never stick to your monthly budget

One of the earliest warning signs of debt problems is that you regularly exceed your monthly budget. In all likelihood, this means that you're simply not spending within your means, which can cause your debt to increase dramatically.

If you don't currently have a budget, make one. Then, compare your actual spending to your financial plan. You may discover that you need to reign in your spending to get your debt in control.

What if your existing debts prevent you from sticking to a monthly budget? If your debts are that unmanageable, it clearly reveals that it's time for some debt help.

2. Your debt-to-income ratio is high

Do you know your debt-to-income (DTI) ratio? You can calculate your DTI ratio with the following formula:

DTI ratio = (total monthly debt) / (gross monthly income)

For example, let's say you have the following monthly debts:

Mortgage: $1,000
Auto loan: $250
Student loan: $250
Credit card debt: $500

Your total monthly debt comes out to $2,000. Now, imagine that your gross monthly income is $6,000. In this example, your DTI ratio is 33.3%.

The lower your DTI ratio, the better. Mortgage lenders, for instance, favor applicants with a DTI ratio of 43% or below.

You may qualify for bankruptcy relief if your DTI ratio climbs above 50%. If your DTI ratio is high but not in bankruptcy territory, you might consider other forms of debt help.

3. You can only afford minimum payments

On paper, it might make sense to simply make the minimum payments on your credit card bills. Sure, this will keep the collections agencies off your back, but it can cost you in the long run.

Credit card companies make money from the interest you pay on your credit card bills. The longer you stay in debt, the more you end up paying.

Additionally, if you haven't reined in your spending, then paying the minimum balance can leave you spinning your wheels rather than realistically reducing your total debt. You need a plan to make payments that go beyond the minimum, which is why you need professional debt help.

4. You've been denied credit

Have you ever been turned down for a bank loan or credit card? If so, it could be that your credit score has dipped so low that others are unwilling to extend credit. Since your credit score is greatly impacted by your outstanding debt, this can be a red flag that your existing debt is out of control.

If you've recently been denied credit, try to find out why. If you learn that your debts are the root of the problem, it's time to get some help.

5. You have no emergency savings

According to the Federal Reserve, only 55% of Americans have set money aside as a “rainy day fund” to cover unexpected expenses. This figure means that more than two in five Americans (45%) have no emergency savings.

Granted, a lack of emergency savings doesn't necessarily indicate a debt problem. It may simply reflect a lack of planning. The problem, though, is that if unexpected expenses do occur (for example, a car breaks down, you have a plumbing emergency, etc.), how will you cover them?

For most Americans, coping means paying this expense with a credit card. Without an emergency savings plan, you could dig deeper into debt.

Most financial experts recommend three to six months' worth of emergency savings. If your debts are so high that you can't build this fund, that's another clear sign that you need some professional financial assistance.

6. Your debts have been charged off

Leave your debts unpaid, and they could eventually be charged off by your creditor. This charging off means that you've fallen so behind in your payments that your debt no longer appears on your balance sheet.

That's not good news. It means that your debt is now being handled by a debt collection agency. Even if you're able to pay off your debt, this event will show up on your personal credit history for years to come.

Have you been contacted by a debt collector? That's a clear sign that your unpaid debts have caught up with you. Securing debt help can ensure that you get your debts paid off and take steps to reclaim your financial health.

7. You're being sued for debt

Finally, if your debt has earned you a lawsuit, consider it a wake-up call. This occurrence doesn't mean you're financially ruined, but it does mean that you need some outside assistance to try to right the ship.

For starters, you may need some legal help when it comes to dealing with the actual lawsuit. You only have up to 35 days to respond to the lawsuit, depending on which state you live in. Finding the right legal resources is critical during this time.

Once you've straightened things out with your creditors, you can start rebuilding your finances with some new strategies that can help you manage your bills and avoid excess debt.

Find debt help fast

Asking for debt help can be hard, but living with debt can be even harder. If any of these 7 warning signs sound familiar, don't wait to pursue professional assistance.

SoloSuit can provide direct assistance when debt collectors contact you or if you're ever sued for an outstanding debt.

If debt collectors are contacting you about a debt you owe, try sending a Debt Validation Letter. This forces collectors to validate the debt with proper documentation. If they cannot validate a debt, they will usually cease collection efforts and won't be able to take you to court over the debt in question.

If you've been sued for debt, you can save the time, money, and stress of finding a lawyer and represent yourself with SoloSuit's help. The first step to responding to a debt collection lawsuit is to respond with a written Answer.

Follow these three steps to respond to a debt collection lawsuit and win:

Answer each claim listed in the Complaint document.
Assert your affirmative defenses.
File the Answer with the court, and send a copy to the party suing you.

To learn more about these three steps, check out this video:

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

Respond with SoloSuit

"First time getting sued by a debt collector and I was searching all over YouTube and ran across SoloSuit, so I decided to buy their services with their attorney reviewed documentation which cost extra but it was well worth it! SoloSuit sent the documentation to the parties and to the court which saved me time from having to go to court and in a few weeks the case got dismissed!" – James

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>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate