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How Much Debt is Too Much Debt

How do you know when a little “acceptable” debt becomes a potentially dangerous situation? For some, the crisis is as clear as being faced with a decision between taking on more debt or letting their families go hungry. For most, the clues are subtler. As a general rule, no more than 20 percent of your disposable income should go toward debt payments (not including your mortgage). In addition, a “yes” to any of these questions should give a pause for thought. 

  • Is an increasing percentage of your income going to pay off debts?
  • Is your savings cushion inadequate or nonexistent?
  • Are you near or at the limit of your lines of credit?
  • Can you only make the minimum payments on your revolving charge accounts?
  • Are you extending repayment schedules – paying bills that were once paid in 30 days in 60 or 90 days?
  • Are you chronically late in paying your bills?
  • Are you paying bills with money earmarked for something else?
  • Are you borrowing money to pay for items you used to buy with cash?
  • If you lost your job, would you be in immediate financial difficulty?
  • Are you unsure about how much you owe?
  • Are you threatened with repossession of your car or credit cards, or facing other legal action?

While a single red flag is not a sign of impending doom, it is an indication that you need to make a

How to Determine Who You Owe and How Much You Owe

If you do not know whom you owe or how much you owe, you should obtain copies of your credit bureau files. All of your major creditors report, on a regular basis, all of their customer's account information to the credit reporting agencies. Once you have copies of your credit bureau files, you will be able to determine whom you owe and how much you owe. To obtain your free annual credit reports under the FACT Act, visit; you can also call 877-322-8228.

How to Understand and Manage Your Debt

For help reading your credit reports, contact a trained credit counselor for debt management help. Your counselor will review your reports with you and help you to determine a course of action to pay down outstanding debts and achieve debt relief.

View All Debt Management FAQs

Q: How many creditors do you work with?
MMI is an industry leader with more than 50 years of credit counseling experience. We work with many unsecured creditors including major credit corporations, doctors, attorneys, finance corporations, and collection agencies.