Attorney Ed WoodsThree days ago, Yahoo News reported on Americans’ love of their plastic. According to the story, the Federal Reserve reported that consumer credit card balances jumped 13% in November of last year. That means that Americans’ credit card debt now exceeds $1 trillion. How much is that? Well, let’s say you had $1 trillion in cash money in your basement (lucky you! Right?). If you decided to divide that cash into equal piles of $1 BILLION per pile, you would have 1,000 piles of cash! Or, put another way, if you had $1 trillion, you could spend $1 BILLION per day and it would take you almost three years to spend all that cash!

Debt and Delinquency

You may be wondering if this amount of debt is a threat to the U. S. economy. It is not according to Matt Schultz who is quoted in the article as saying that payment delinquencies on all this debt are still fairly low at about 7.5%. But, delinquencies have crept up slightly over the past year and that might spell trouble down the line. And the figures mentioned above do not account for the just past holiday shopping season. According to the Yahoo article, a recent survey revealed that the average respondent to the survey has $998.36 in credit card debt attributable to this past holiday season.

Assess Your Budget

So, do you have a piece of this action? If so, don’t panic. There are some simple and straightforward things you can do to address the situation. First, take a hard look at your budget. Cut out the fluff. Eating out too much? Cut back. Still spending impulsively? Stop it. Find money in your budget to start paying down the credit card debt. Set a realistic goal and stick to it.

No or Low Interest Credit

Another strategy might be to find another card to which you can transfer your existing balance. What you are looking for here is a low or no interest situation that will save you interest for a period while you are paying the balances. Obviously, this is only a temporary solution; but, it may give you time to get your balances paid way down or in full. It could save you a ton of interest along the way.

Ask a Professional

If the simple things don’t work, I would suggest that it’s time for professional help. Some advisors may suggest that you borrow against your home or other assets to pay down the balances on your credit cards. This may be a good idea in some circumstances; but, I am not at all a fan of this approach. What usually happens is that you encumber your home or other assets with this debt and then the next thing you know, your credit card balances are back up again. Then what?

I suggest that you consult with a reputable, competent consumer bankruptcy lawyer in such a circumstance. Most reputable consumer bankruptcy attorneys offer free consultations (like our firms do) and you can get some very valuable information in the process. Just because you consult with a bankruptcy attorney doesn’t mean that you must file a bankruptcy case. You should at least come away with some individualized information that would be hard to get elsewhere. Then, you can consider all your options and best case/worst case scenarios and make a decision that is right for you.

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