The holidays are often a time when people spend hundreds of dollars on gifts for family members and friends. It is also a time when you may spend a significant amount of money on holiday parties at your Texas home or apartment. Although you may consider holiday expenditures to be cash well spent, it’s important to have a plan to repay any credit card bills that you incur during the months of November and December.
Consider the snowball or avalanche repayment methods
The snowball debt repayment strategy has you put any extra money that you have after making minimum payments on your credit cards toward the card with the lowest balance. The avalanche method has you use extra funds to pay down the card with the highest interest rate. Although the avalanche method will save you money, it will likely be several months before you see any tangible progress. Therefore, most financial professionals suggest using the snowball method to pay your holiday credit card debts.
What happens if you can’t afford your minimum payments?
If you can’t afford the minimum payments on your credit card balances, contact your lenders right away. It may be possible to defer upcoming payments, pay a reduced interest rate or make other arrangements that will make it easier to stay current on your accounts. In the event that your lenders aren’t able to provide sufficient relief, it may be necessary to file for bankruptcy.
You’ll likely file for Chapter 7 bankruptcy
Credit card debt is usually eliminated through a liquidation bankruptcy. However, if you have assets such as a home or car that you want to keep, it may be in your best interest to consider a Chapter 13 bankruptcy.
Generally speaking, credit card debt can be discharged through bankruptcy, and the same may be true for a variety of other debt balances that you have. A Chapter 7 proceeding usually takes a few weeks to complete while a Chapter 13 proceeding may remain open for up to five years.