Having debts is not a bad thing, as long as they do not hurt your personal and household finances. Within the financial system, when a person spends more than 30% of their income on credit payments, then, by definition, they are considered over-indebted, said Juan Pablo Zorrilla, co-founder of Solve your Debt, a credit repair company in Mexico.
Currently, there is a scenario of inflation, global economic complications and unemployment, elements that can cause a person to acquire credits to face personal or household economic commitments; become over-indebted, which is to take out more loans than you can repay, or default on these commitments.
Normally, a financially healthy person should allocate 70% of their income to four basic elements of their lives: housing, transportation, education and health”, highlighted Juan Pablo Zorrilla.
He explained that the rest, which corresponds to 30% of the monthly economic perceptions, should be assigned to entertainment, savings and payment of debts.
A person with debts that represent 30% of his salary is already canceling his entertainment, he is not making any savings and he is not generating that percentage towards the payment of debt, “explained the representative of Solve your Debt.
This is how banks have it defined from the point of view of the risks they are willing to take. They do not lend a person more than he can pay and the limit is up to 30%, even the healthiest thing is that it is between 10 and 20% of the salary, Juan Pablo Zorrilla insisted.
If the level of debt you have is already suffocating your finances, you pay the minimum or you stopped paying, there are several elements that can help you get out of this financial stress, among them: debt consolidation, restructuring and repair of these.
When to seek this type of “help”?
First, it is important to do a personal and honest analysis of where you stand on the issue of debt.
Register them and verify how much is being allocated per month to pay them. What are the most expensive debts and how much of the income goes to pay all of them.
If after this review we see that the debts absorb a large part of the income, then it is time to seek help, but not without first defining which alternative is more convenient, whether debt consolidation, restructuring or repair.
According to Solve your Debt, these options have different characteristics and are designed for different types of debtors or indebtedness.
People with debts can be located in four levels: the totalero, who is paying 100% of his credit, is the one who correctly uses a card as a means of payment.
There is the one who pays less than the total but more than the minimum payment on his credit card, in the third level there are those who only pay the minimum of their debt and that means that they are always paying interest on their debt and take longer to settle. In fourth position are the people who stopped paying everything and are already delinquent.
Alternatives
Consolidation: It is when you have two or more cards with several banking institutions and decide to concentrate all the debts in a single bank. The institution assumes the risk of granting a personal credit to pay everything, and the debtor is left alone with that loan.
Restructuring: It is when a person with debts approaches the bank (after three months of not paying him) and asks him to make fixed payments, discount interest and set a longer term to achieve payment.
Repair: It consists of a credit repair company intervening between the debtor and the financial institution. Which designs a payment plan, converts the debtor into a saver and concentrates (in the form of savings) the money from the monthly payments that must be made to cover their balance.
When the repair company considers that the debtor has enough savings to negotiate, it sits down with the banks or department stores and manages debt reductions”, explained Juan Pablo Zorrilla.
According to the Condusef, “a credit repair company is a third party, between the debtor and the creditor, that can offer alternatives or support to settle or renegotiate debts.”
Some of the companies that carry out this action are: Solve your Debt, End Debt, National Credit Repair and Debt Cure.