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Bankruptcy May Be Your Option

Be aware of holiday spending including the interest that follows

With the holidays upon us, American traditions encourage spending: gifts for holidays, travel to see loved ones, and even celebrations like New Year’s Eve. The spending now traditionally starts with Black Friday, the day after Thanksgiving (or actually even Thanksgiving Day. ShopperTrak estimates that Americans spent over $12 billion just on Thanksgiving Day and the day after.

Many of these purchases in Oklahoma and throughout the country were likely made with credit cards.  Unfortunately many of those credit card purchases will still be part of outstanding balances on those cards when next November rolls around. And even more unfortunately, those credit card balances will be accumulating interest which, according to the Federal Reserve and other sources, averages over $6,000 per year per household.

Consider this scenario:

         You spend $2000 on holiday expenses. If your credit card has an APR of fifteen percent, paying only the minimum each month would result in a payoff period of over ten years. Part of the reason for the extended repayment period is the accumulating interest which, given these figures, would have totaled as much as $1500 or more, close to twice what you originally paid for your $2000 worth of purchases ten years earlier.

There are many ways to manage your credit card debt, but if this is only one credit card that you use and you have a similar scenario on each, you can find yourself in massive debt and no way to get out. Of course, the prudent solution is to spend within your limits and avoid the holiday temptations. But even if you start that practice this year, you could already be deeply in debt.

Filing for bankruptcy may be one option to consider to relieve yourself of the vicious cycle of debt. If you find yourself in this situation with no way to climb out, a consultation with a bankruptcy attorney can be the beginning of a better financial future. In the meantime, try to make prudent decisions in your holiday spending to avoid digging an even deeper hole.

Source: Huffington Post, “3 Tips For Dealing With Holiday Credit Card Debt,” Robert Harrow, Dec. 4, 2015

Secondary Source: New York Post, “Increased credit card use fuels household debt,” Gregory Bresiger, Dec. 5, 2015

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