Has The Christmas Debt Hangover Arrived? Find Out Here
February 2, 2012

Has The Christmas Debt Hangover Arrived?

Like most Americans this past holiday season, you decided to charge up those credit cards.  Yet, with each swipe, you didn’t realize how much you actually spent.  Add to that, the prior balance on those credit cards you had prior to Christmas that you promised yourself would be gone since you were going to be “good” this Christmas and just spend a little on a few loved ones, is still there and growing like wild ivy.  Now, as the monthly bills start rolling in, you weigh your options.

One option is to pay off the entire balance, which could be an option if you had the money but you don’t.  The second option is to continue to make the minimum monthly payment and allow the interest to accrue on those balances…but you know at that rate, it’ll be a decade or more before you get the entire balance paid off, all the while putting off paying down the balance and not saving for life’s little emergencies.

The third option is to look to that line of credit that is secured by your house…you have some available credit on that line so you should use it because the interest rate is lower than the interest rate on your credit cards, or maybe you could get a second mortgage secured by your house to pay off those cards, also with a lower interest rate.  The third option is the best option, right?  WRONG!  As this article points out, you should avoid using a line of credit or a second mortgage that is secured by your residence because what was once unsecured debt on your credit cards has now become secured debt, secured by your residence.  And when you default on the mortgage or line of credit, you risk losing your house.

There is a fourth option, which is the best option, in this scenario.  You should speak with an attorney about settling your credit card debt.  The attorney can negotiate with your credit card lenders, greatly reduce the amount of the debt you owe, work out an individualized payment plan for you and get you back on track to being debt free.  Let’s all be financially savvy in 2012…know your options!



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