It is not uncommon for consumers to overspend during the holidays or turn to their credit cards to make ends meet. Usually this kind of spending is made with the self-promise of early payback and a quick reduction of debt. Unfortunately, as many consumers tend to find out after a few months, paying back a credit card is never easy. Not only do you have to come up with additional funds you didn’t have, you have to start paying off the additional interest you have accrued. If you are dealing with the ‘holiday hangover’ of credit card debt, it is time to take a realistic look at your finances.
In addition to credit card debt, this time of year also forces consumers to be realistic about tax debt, returns, actual income, and spending habits. For many debtors, March and April can be a whirlwind of stress, compounded by mounting credit card debt and last year’s regrets. In some cases, the answer is not simply creating a budget—but considering the possibility of bankruptcy. Our Birmingham bankruptcy attorneys are committed to helping clients get ahead. We will help you explore your income, debts, and assets and determine if bankruptcy is the right option for you.
Here are some ways to face the aftermath of holiday spending and get control of your finances:
Face reality. Stuffing away bills and ignoring creditor emails or calls is not going to get you out of debt. You should also stop beating yourself up for any spending that may have been beyond your means. Sit down and take an honest look at your debt and figure out what you need to do to move forward.
Organize your debts and create a plan. How much debt are you facing? If you only have a few thousand dollars of credit card debt, you may be able to quickly establish a pay-off plan. If you have significant credit card debt, combined with medical expenses, unpaid mortgages, and other debts, it may be time to look at other options rather than a simple “budget.”
Stop using credit cards and work on pay-off debt. Credit card companies profit from the unsustainable use of a credit line. Once you are unable to make minimum payments, that’s when they start making their money. If possible, you should stop using your credit cards and consider a fixed payment to start paying them off. If you cannot afford a minimum payment and feel that you need your credit cards to make ends meet, you may be in over your head. Bankruptcy allows you to eliminate your unsecured debt so that you can get a fresh start.
Know your rights and take control. Most importantly, now is not time to stick your head in the sand. You can stop creditor harassment. You can stop a foreclosure. Chapter 7 is a totally elimination of unsecured debt. Understanding your debt and your options can help you take a realistic approach to getting ahead. Chapter 13 allows you to get on a manageable payment plan. Bankruptcy is one sure way to eliminate or restructure your debts so you finally have the opportunity to move forward.
Continue reading "Holiday Aftermath: Battling Last Year's Credit Card Debt" »