These days, the average North American holds 13 different credit cards with an average balance owing of $22,100.
Without question, this amount of debt will have many people seeking credit card debt assistance.
In many cases, the debt problems will have reached a critical point by the time most borrowers realize they the are in trouble.
For this reason, the advice that most advisors provide their clients will not always be consistent.
Here are two fairly popular scenarios that many advisors face when people come to them with debt problems.
The first scenario, and by the far the most common, involves borrowers seeking credit card debt assistance because they have missed one or several payments and have no available credit anywhere else in order to keep the collectors at bay.
In these instances, the debt problems are usually rather severe and the borrowers are somewhat desperate.
What the advisor will normally do is start by pulling a credit history to determine how badly damaged the borrower's FICO score is.
Since payment history and total utilization account for roughly 65% for a credit score, understanding how badly impacted the credit has been is instrumental in seeing whether or not these borrowers can be helped with their debt problems.
In many cases, if the advisor can any relief at all, it will come at higher rates and a fairly steep monthly payment.
Put another way, the advisor cannot always help in such circumstances because the debt problems are too grave.
Any assistance at all will come at higher costs and restrictive payments.
This is not normally the type of credit card debt assistance that helps borrowers.
In the second scenario, borrowers have not yet felt the financial crunch that typically accompanies debt problems.
Here, the borrowers want to get out of debt and have put a debt management system in place to achieve this.
However, as part of their ongoing budgetary review, they noticed that something did not add up (usually the loss of income is the primary cause of such a discovery).
By now, their FICO scores are probably still solid and the advisor can offer a consolidation loan that will not only reduce their overall interest expenses but maybe even their total monthly servicing costs.
For these borrowers, credit card debt assistance is achieved through a consolidation loan that not only reduces costs (through preferred rates thanks to the good credit score), but improves cash flow.
The biggest downfall is that available credit is forfeit and without an adequate emergency fund, these borrowers will not be able to draw on unused credit to pay for large unexpected expenses.
The advisor must put a system in place that will protect these borrowers from future emergencies, which becomes difficult if income has been or is expected to be reduced.
Most advisors will agree that the best way to obtain credit card debt assistance is through credit card debt consolidation.
Some consolidation strategies are better than others in terms of rates and flexibility, but the advisor's goal will always be to improve the financial health of the borrowers and not necessarily provide a band-aid solution to the overall debt problems.
Without question, this amount of debt will have many people seeking credit card debt assistance.
In many cases, the debt problems will have reached a critical point by the time most borrowers realize they the are in trouble.
For this reason, the advice that most advisors provide their clients will not always be consistent.
Here are two fairly popular scenarios that many advisors face when people come to them with debt problems.
The first scenario, and by the far the most common, involves borrowers seeking credit card debt assistance because they have missed one or several payments and have no available credit anywhere else in order to keep the collectors at bay.
In these instances, the debt problems are usually rather severe and the borrowers are somewhat desperate.
What the advisor will normally do is start by pulling a credit history to determine how badly damaged the borrower's FICO score is.
Since payment history and total utilization account for roughly 65% for a credit score, understanding how badly impacted the credit has been is instrumental in seeing whether or not these borrowers can be helped with their debt problems.
In many cases, if the advisor can any relief at all, it will come at higher rates and a fairly steep monthly payment.
Put another way, the advisor cannot always help in such circumstances because the debt problems are too grave.
Any assistance at all will come at higher costs and restrictive payments.
This is not normally the type of credit card debt assistance that helps borrowers.
In the second scenario, borrowers have not yet felt the financial crunch that typically accompanies debt problems.
Here, the borrowers want to get out of debt and have put a debt management system in place to achieve this.
However, as part of their ongoing budgetary review, they noticed that something did not add up (usually the loss of income is the primary cause of such a discovery).
By now, their FICO scores are probably still solid and the advisor can offer a consolidation loan that will not only reduce their overall interest expenses but maybe even their total monthly servicing costs.
For these borrowers, credit card debt assistance is achieved through a consolidation loan that not only reduces costs (through preferred rates thanks to the good credit score), but improves cash flow.
The biggest downfall is that available credit is forfeit and without an adequate emergency fund, these borrowers will not be able to draw on unused credit to pay for large unexpected expenses.
The advisor must put a system in place that will protect these borrowers from future emergencies, which becomes difficult if income has been or is expected to be reduced.
Most advisors will agree that the best way to obtain credit card debt assistance is through credit card debt consolidation.
Some consolidation strategies are better than others in terms of rates and flexibility, but the advisor's goal will always be to improve the financial health of the borrowers and not necessarily provide a band-aid solution to the overall debt problems.